India's Smartphone Market Records Steepest First Quarter Decline Of 19%

India's smartphone shipments dipped to about 31 million units in the January-March quarter, thereby recording the steepest fall of 19% in the first quarter on a year-over-year basis, market research firm Counterpoint said on Thursday.

Mobile phones priced below Rs 30,000 apiece recorded a sharp decline, while shipment in the premium and ultra-premium categories registered a 60–66% increase.

"This was the highest ever Q1 decline seen by India's smartphone market, besides being the third consecutive quarterly decline. Sluggish demand, high inventory build-up carried over from 2022, growing consumer preference for refurbished phones, and a pessimistic channel view of the market contributed to this decline," Counterpoint's market monitor service report said.

5G smartphones' contribution to total smartphone shipments reached a record 43%.

"With a 20% share, Samsung led the Indian smartphone market for the second consecutive quarter." "It was also the top 5G brand," the report said.

Samsung's new 5G-capable A series performed well in the offline market, contributing 50% of the shipments.

Samsung's ultra-premium segment (priced above Rs 45,000) grew 247% YoY in the March 2023 quarter, driven by the successful launch of the S23 series and financing options, the report said.

Apple grew 50% YoY and acquired a 6% share in the March 2023 quarter.

Apple maintained its lead in the overall premium segment (Rs 30,000) as well as in the ultra-premium segment (above Rs 45,000) with 36% and 62% shares, respectively.

The shipment by the iPhone maker was fueled by its new financing scheme with HDB Financial Services and promotions on the latest iPhone 14 series in offline channels.

"The premiumization trend is becoming stronger with each passing quarter. The premium segment's share almost doubled in the first quarter of 2023 compared to the first quarter of 2022," Counterpoint senior research analyst Prachir Singh said.

Singh said affordability is the key here as more financial schemes are being launched, like Apple's 'no-cost EMI with zero down payment' offers on the latest premium segment, an increase in trade-in offers, and a push from retailers.

"The premium segment's growth is reducing the mid-tier share as consumers are upgrading to higher-priced smartphones," Singh said.

Mobile phone prices in the range of Rs 20,000–30,000 recorded a 33% fall in shipment, the Rs 10,000–20,000 segment registered a 34% decline, and phones priced below Rs 10,000 recorded a 9% decline in shipment on a YoY basis.

"We are observing a change in consumer behaviour; demand is now concentrated around promotional periods. The beginning of the quarter saw a surge in demand across channels around the Republic Day sales period. However, demand dropped significantly after the sales period. Channel players are now focusing on getting rid of existing inventory instead of creating a fresh inventory of new models," Counterpoint senior research analyst Shilpi Jain said.

She said the quarter's silver lining came from 5G smartphones, whose contribution (43% of total) crossed 40% for the first time, registering a 23% YoY growth as consumers kept upgrading to 5G devices.

"We believe these situations will remain similar in the second quarter of 2023 as well, with growth coming back in the second half of the year owing to faster 5G upgrades, easing macroeconomic pressure, and the festive season," Jain said.

Vivo also maintained its second position during the reported quarter with a 17% market share despite a 3% YoY decline in shipment.

Xiaomi experienced a 44% YoY drop from the first quarter of 2022, falling to the third spot during the reporting quarter with a 16% share.

"The decline was due to weak demand in the sub-Rs 10,000 segment, more dependence on online channels even when demand is higher in offline channels, and a confusing portfolio." "The Redmi Note 12 series received a positive response from consumers, contributing to over 14% of Xiaomi's total shipments," the report said.

OnePlus was the fastest-growing brand, with 72% YoY growth in the March 2023 quarter.

"Among local brands, Lava did well with its refreshed portfolio in the sub-Rs 10,000 segment. Lava continues to offer the cheapest 5G smartphone (Blaze 5G). It was also the third fastest-growing brand in Q1 2023, with 29% YoY growth," the report said.