Smartphone sales in India likely to surge 14% in 2020, says analyst

Notwithstanding the ongoing slowdown gripping most consumer goods categories, the sale of smartphones in India -- the largest market for handsets after China – is expected to grow by up to 14 per cent in 2020, according to analyst firm TechArc.
 
The sale of smartphones in 2019 surged 12 per cent to 145 million units, and according to early projections, with repeat buyers looking to upgrade their existing handsets, this figure may jump to unprecedented 165 million units in 2020, recording 13.8 per cent growth year-on-year, it said.
 
Shipments of smartphones, however, may remain tepid – thanks to over-enthusiastic vendors who shipped in a significantly higher number of handsets during the second half of 2019 than what they could sell. According to Faisal Kawoosa, lead analyst at TechArc, players like Realme shipped in millions more than their retail offtake during the September quarter, in anticipation of the peak festive demand. Estimates suggested 7-10 million smartphone units were lying in the inventory at the end of 2019.
 
Navkendar Singh, research director at IDC India, said it is unlikely that smartphone shipment growth will overtake that of 2019. “For 2019, smartphone shipment growth may be in mid-to-high single digit. This year, the shipment growth rate may not surpass that,” he said.
 
The inability of top smartphone players to lure feature phone users to upgrade to smartphones is a key factor. None of the top brands like Xiaomi, Samsung, Vivo, Oppo, and Realme is focused on the entry-level segment (Rs 3,000 to Rs 5,000). Thus, the cost of acquiring a smartphone remains at least 60 per cent higher than a feature phone.
 
Further, rising telecom tariffs and, consequently, the cost of mobile data has emerged as a new barrier for the shift, he said. In last one month, all the three major telecom companies raised tariffs by 40 per cent, taking the cost of ownership even higher.
 
This, according to experts, has  driven many willing first-timers towards the secondary market. The sale of refurbished and second-hand smartphones has surged in double digits. The share of pre-owned handsets is expected to rise to 23 per cent (48 million units) of the overall market in 2020.
 
“For the first-timers, because of lack of good options, pre-owned smartphones will be the favourite choice as they are offering better experience in an affordable range,” TechArc noted.
 
Consequently, the sale of feature and smart feature phones (Jio phones) is expected to drop 13 per cent and 34 per cent in 2020, respectively.

 
In the new devices space, repeat buyers who are already driving smartphone growth in India are expected to further bolster growth in the mid-to-premium segment (Rs 20,000 to Rs 35,000). The segment is already the fastest growing.
 
“The constant push by leading players in the Rs 10,000 to Rs 20,000 price segment for the past two years have created a large pull on consumers who are now ready to upgrade to higher price points. This is expected to further drive growth,” said Kawoosa.
 
According to Madhav Seth, chief executive officer of Realme, while shipment growth until mid-2020 may remain similar to that of 2019, the firm is gearing up to launch new models and venturing into IoT (internet of things). Realme is preparing to launch a flagship device in the above Rs 30,000 price segment because of the rising demand.