With Major Knock Offs, Rising Competition, Indian Mobile Handset Market Heads to Create a ‘Do or Die’ Moment in 2017

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According to CMR’s India Annual Mobile Handset Market Review, the market recorded a 22% rise in revenues at INR 1,359,975 million in CY 2016 as against INR 1,117,571 million in CY 2015.

Samsung garnered 33% market share during the year with its revenues standing at INR 453,713 million, followed by Apple (8%) and Lenovo (7%) with INR 112,975 million and INR 99,806 million revenues, respectively.
The 4G revenues of the industry increased by over 100% to INR 992,74 million in CY 2016, while 3G declined by about 60% to INR 165,978 million

Scope of Feature Phones: CMR predicts that this year, the buzz would be around making the feature phones smarter with upgraded cameras and introduction of new features. The 4G-capable feature phone is, however, going to cannibalize the below INR 5K Smartphone market.

Although, the revenues from feature phones constitute a very small chunk of around 14%, in terms of volume they hold about 57% of the market. Overall, there’s a scope to play around feature phones and brands like itel, Zen and Ziox would get aggressive in this space.

Technology: In terms of technology, 4G is going to be synonyms to smartphones. Feature phones would be here to support the voice-centric market. In CY 2016, 4G constituted about 69% of total smartphone shipments, while 3G was 29%. In CY 2017, 4G is all set to cover near 100% of Smartphones.

China vs India Vendors: The war between MILK (Micromax, Intex, Lava, Karbonn) and LOVE (Lenovo, Oppo, Vivo and Xiaomi) brands is going to be aggressive.
In CY 2016, in terms of volume the total market share of MILK brands stood at 35%, while for LOVE it was at 10%. However, in terms of value, LOVE brands managed to beat MILK, with the combined revenue of former standing at 22% as against 17% of latter.
Indian brands need to brace themselves up for a terrific war against the Chinese players.
Price Bands: The Indian players would look forward to INR 6K-INR 10K Smartphone market, where they will primarily fight it out with Xiaomi and Lenovo, having wide portfolio in this segment as well.

The INR 5K-10K market is going to see some new specs and upgrades.
In the premium segment, new models of Samsung, Apple and OnePlus would be worth to watch.

Domestic vs Imports: ‘Make in India’ has provided the right impetus to the mobile manufacturing in the country. Today, about 66% of the total shipments are domestic manufacturing, in 2017, the share would touch 90%.

CMR believes, in 2017, there would be major knock offs and the industry will see consolidation. 2017 is going to be a disruptive year as vendors come out with their unique propositions such as more RAM, higher battery capacities, among others. The re-entry of Nokia in Smartphones and exist of smaller players will be some of the important factors driving the Indian Mobile Handset Market.

Tablet Market Sees No Sign of Turnaround, Dips 18% in CY 2016

According to CMR’s India annual Tablet PC Market Review, CY 2016, 3.5 million Tablet PCs were sold (shipped) in India, registering a decline of about 18% over CY2015

In the fourth quarter, the shipments recorded a 16% fall over the same period of CY 2015 on account of lukewarm sales. The total sales stood at 0.81 million in Q4 of 2016, compared to 0.97 million in the year-ago period.

Datawind retained the top position with 34% market share, followed by Samsung (18%), Pantel (12%) and Micromax (10%) in CY 2016. In terms of technology, 2G shipments showed a sharp fall of 92% in CY 2016 over CY 2015, 3G declined 71% and 4G rose by 6%.

Commenting on the tablet market, Menka Kumari, Analyst at CMR, said, “Iris-enabled and biometric tablets will see a bigger uptake in CY 2017. Datawind will continue to enjoy number one position on the back of its expansion spree. The company is entering into strategic tie-ups with mom-and-pop stores to expand its reach. Overall, the market will see traction towards institutional and government sales.”

“The tablet market will emulate the strategy of mobile market, with data bundling turning out be aggressive this year. This will be an exciting factor for the overall tablets market, leading to improved sales,” she adds.

Future Outlook
As the price band shifts from INR 5-INR 10K to sub INR 5K levels, the Indian tablet manufacturers will see this as an opportunity with a line of sub 5K products. The market is moving towards a consolidation phase and 2017 will see further shrinkage with only 6-7 serious players remaining in the list. We have seen about 40 players exiting the market in the past 3-4 years.

Unless the tablet industry comes out as a gateway for a particular solution, the turnaround would be difficult for the market. While smartphones are taking care of the masses, the tablets industry should cater to particular segments and customized their specs accordingly. For example, applied usage of tablets holds massive potential in retail, QSR, healthcare and for cab aggregators and, therefore, the vendors should come out with specified specs such as heavy batteries, to cater to the demand of that particular segment. In the absence of any such initiatives, the market would remain stagnant in CY 2017 too.