NEW DELHI: India’s smartphone shipments are expected to grow 37% on year, higher than the 32% average growth for the previous three years, in 2016 in a year when the smarter devices are likely to overtake featurephones on the back of proliferation of 4G handsets and expansion into smaller cities and rural areas, as per Cybermedia Research.
In 2015, 95 million smartphones were shipped while 144 million featurephones were shipped, according to data provided by the agency. This ratio, however, is expected to change in 2016, with more smartphones than featurephones being shipped, though the latter segment will be around for some more years. The agency also pegged the total number of handset units expected to be shipped in India at 250 million in 2016, 4% higher than 2015.
Smartphone shipment growth though slowed to 23% on year in 2015 from an 88% jump in 2014 when 77 million of such devices were sold, mainly due to the high base effect.
Analysts said that while the low-cost phenomenon picked up in 2014, it increased the reach of the potential market. But in 2015, the rate declined since whatever growth was to happen would happen on the existing base.
“So, while it has been time and again proved India is a low to medium priced handsets market, 2015, has not added some great feature sets to enrich the user experience,” CMR noted.
It that while the average selling price (ASP) for a smartphone has fallen sharply – to Rs 10,700 at a volume of 95 million units by the end of 2015, from Rs 13,000 at 41 million units in 2013, specifications of the devices improved “substantially”. This indicates that the industry has been able to offer more for the same or less.
CMR expects 4G shipments to cross 50 million units in 2016, which coupled with reach into Tier II and Tier III markets, besides the rural hinterland would be main reasons behind the continued smartphone growth. Also, due to expanding their markets, brands would use online sales as a channel to rapidly amplify the pitch, but at the same time, will focus on strengthening the physical channels of distribution.
The agency further added that three of every four smartphones shipped would be less than Rs 10,000 in 2016 as handset vendors will widen their portfolios in this price bracket, while the contribution of sub-Rs 5,000 smartphones will rise. “We don’t expect any vendor to exit any price bracket in 2016 to focus only on a few niches,” analysts added.
With the US Dollar rising to Rs 66 from Rs 63 over 2015, procurement of components as well as fully imported handsets will put further stress on margins, as the market alignment towards sub ?10,000 further strengthens, the agency said, flagging its concerns of the Rupee depreciation on rising Make in India contributions.
