The smartphone penetration in India saw a growth of 16 percent in the first quarter of 2017. According to Kantar Worldpanel study, Indian smartphone penetration reached 48 percent due to the rapid expansion of 4G infrastructure and low-cost 4G data services from Reliance Jio. The research shows that smartphone sales have surpassed 90 percent of the potential market in the US, China and the European Union. The sales in markets like Latin America especially Brazil and Mexico have reached 80 percent. With a penetration of 48 percent, India is seen as the next major focal point for smartphone vendors around the world.
Korean and Chinese smartphone players are seen to dominate India's smartphone market share. "Xiaomi, Oppo, Vivo, and Lenovo have made significant investments in India to disrupt the local vendors," the report says. The Chinese vendors have increased their sales share in India from 27 percent in Q1 2016 to 50 percent in Q1 2017. Samsung continues to maintain the lead with 27 percent sales followed by Xiaomi and Vivo tied for second place with 12 percent sales. Lenovo Moto and Oppo were third and fourth with 11 percent and 10 percent of total sales. The sales of Micromax has dropped to 5 percent and it is trying to stage a comeback with the launch of new products like Dual5 and Evok Note. "Local brands Micromax, Intex, Lyf, and others now capture only 12% of India smartphone sales."
Kantar says Apple's sales for the quarter accounted for 3 percent but the company is making strategic moves in India. Lauren Guenveur says Apple's move to partner with Reliance Jio to offer free 4G service for one year with iPhone 7 and 7 Plus and plans to manufacture iPhones will help it expand its footprint. A recent report suggested that Apple is planning to make iPhone 5s available for Rs 15,000 only on online retail channels and make iPhone SE – the entry-level iPhone in the offline market.
4G is now seen as the decisive sale driver in the smartphone segment while "quality of the camera and battery life remain the top motivators." Over 50 percent of smartphone users in India plan to upgrade their device over the next 12 months. Almost 26 percent of these users prefer Samsung as their next smartphone brand while Apple is favoured by 15 percent users. Between 7 and 8 percent of consumers plan to buy a Vivo or Oppo smartphone. This contradicts Strategy Analytics' previous report that claimed 26 percent Indians prefer Xiaomi as their next smartphone brand.
The report also shows the divide between online and offline retail segment. Only 21 percent smartphones are being sold online while 68 percent smartphones are sold via brick and mortar stores. "While many consumers in India don't initially consider Oppo and Vivo they pick up share because of their strong in-store presence," the report adds. It says more than two-thirds of the market continues to spend less than $180 (around Rs 12,000) on a smartphone. Yet, there has been sales growth for vendors like Xiaomi, Oppo and Vivo in the price range of $180 to $300. Apple and Samsung dominate the over $300 price segment but it is a small fraction of the market.