Indian mobile sales have dropped for the
first time in 20 years, raising the
question: Is a slowdown at hand for the
world's fastest-growing smartphone
market?
Mobile (feature phones and smartphone
combined) sales dropped 14.5 percent
the first quarter (Q1, January-March)
2015, on a quarter-to-quarter basis,
compared to Q4 (October-December)
2014. Sales fell from 62 million handsets
in Q4 2014 to 53 million handsets in Q1
2015, according to a report of
CyberMedia Research, a consultancy.
The decline in smartphone sales from
quarter-to-quarter was 7.14 percent.
Cheaper feature phones performed worse
with an 18.3 percent sales decline over
the same period. India became the
fastest-growing market for smartphones
in Asia-Pacific in 2014, and is supposed
to overtake US as the second-largest
smartphone market globally, with 204
million smartphone users by 2016,
according to a study by eMarketer, a
research firm.
Is this a cyclical issue or part of a larger
problem? Does the data indicate that
India's mobile phone growth is topping
out? Experts believe cyclical glitches
account for the downturn in mobile
phone sales: unexciting phones, tax
issues, increased competition and even
extended Chinese new-year festivities.
"With major announcements of new
handsets and entry of some new brands
happening in a big way in Q4 2014,
there wasn't really something very
exciting in the market for customers that
could push up sales in Q1 2015," said
Faisal Kawoosa, lead analyst, Telecom
Research at CyberMedia.
"At the same time, a change in duty
structure and the longer continuation of
Chinese new year festivities which
generally conclude by mid-February eac
year, affected the supply chain and
inventories."
In an attempt to push local
manufacturing, the government in a
budget announcement increased the
excise duty on mobile handsets to 12.5
percent from 6 percent, pushing the cost
of handsets by around 4 percent.
Experts said there were two more
reasons: First, sales have fluctuated for
vendors, with one vendor dominant in
one quarter and another in the next.
Second, as Kawoosa put it, "a maniacal
focus" on online flash sales.
"Though there is an Internet revolution i
India and brands do need to focus on
building their online base, it only works
well for new brands (for example, Xiaomi
willing to enter the Indian market," said
Kawoosa.
"Established brands, such as Micromax
and Samsung , should focus on their
existing legacy. The differentiating
strength of these brands lies in their
distribution network, built and invested i
over the years across India, which they
should leverage to increase sales."
Overall, the industry will get used to
changes (such as the increase in excise
duty) and pick up again, he said.
The year 2014 saw the entry of many
new players in the mobile market,
especially Chinese firms. With an 18.5
percent market share, Samsung
continues to occupy the top spot,
followed by India's Micromax with 12.1
percent and Microsoft with 9.6 percent.
Within the smartphone segment,
Samsung has an even bigger lead, a
market share of 27.9 percent, followed b
Micromax with 16.2 percent and Intex,
an Indian brand, with 9.2 percent.
http://m.gadgets.ndtv.com/mobiles/news/indian-mobile-phone-sales-drop-for-first-time-in-20-years-693563
