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India’s smartphone market overtakes US to claim second spot

28 Oct 17

India’s smartphone market has recovered from a brief hiccup in Q2 2017 with shipments growing 23 percent year on year in Q3 2018 to exceed 40 million units.

The research comes from Canalys’ Smartphone Analysis report, revealing India has now overtaken the United States to become the world’s second largest smartphone market after China.

Samsung and Xiaomi, which shipped 9.4 million and 9.2 million units respectively, accounted for almost half of the total market as the top five vendors continued to post strong growth in Q3 2017.

“This growth comes as a relief to the smartphone industry. Doubts about India’s market potential are clearly dispelled by this result. There are close to 100 mobile device brands sold in India, with more vendors arriving every quarter,” says Canalys Research analyst, Ishan Dutt.

“In addition, India has one of the most complex channel landscapes, but with low barriers to entry. Growth will continue. Low smartphone penetration and the explosion of LTE are the main drivers.”

However, within these excellent results is a general concentration of the top five vendors (Samsung, Xiaomi, Vivo, Oppo and Lenovo) who now account for 75 percent of total shipments in India.

Samsung’s 9.4 million units represents an almost 30 percent growth from the same time last year. The big disrupter though is Xiaomi, as the company’s 9.2 million units represents a staggering 290 percent from the year before.

“Xiaomi’s growth is a clear example of how a successful online brand can effectively enter the offline market while maintaining low overheads,“ says Canalys analyst, Rushabh Doshi.

“But Xiaomi focuses on the low end. It struggles in the mid-range (devices priced between INR15,000 and INR20,000 [US$230 and US$310]), where Samsung, Oppo and Vivo are particularly strong. Nevertheless, we predict Xiaomi’s continued go-to-market innovations will allow it to overtake Samsung within a couple of quarters.”

Apple officially began local production in India earlier this year, and its iPhone shipments more than doubled to 900,000 units in Q3 2017 compared to the year before – Canalys reports this to be impressive growth in a market that is skewed toward low-end smartphones.

Canalys also says after a shaky start to GST, the market has shown strong signs of stability in Q3 with most of the channel adapting to the new rules on time.

“The Indian economy is proving very strong in the second half of 2017, now that the twin shocks of GST and demonetization are behind it,” says Doshi.

“Reduced indirect taxes have added new equity to the market, with distributors and retailers able to serve areas beyond their home regions as inter-state operations become easier. As the infrastructure matures, consolidation in distribution is inevitable.”

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