India to overtake US as the 2nd largest smartphone market by 2017

Smartphone shipment up 44% y-o-y; overall mobile phone market continue to shrink

With 26.5 million smartphones shipped in the second quarter of India representing a 44 per cent growth year-on-year (y-o-y), IDC predicts by 2017 India will overtake US to be the second-largest smartphone market globally.

IDC expects India to maintain a double-digit growth rate over the next few years as people switch to smartphones and gradually upgrade to 4G.

This strong June quarter performance saw smartphone shipments grow 19 per cent following a sluggish March quarter, said International Data Corporation’s (IDC) Quarterly Mobile Phone Tracker. A total of 18.4 million units were shipped for the same period last year.

However, this growth was specific to smartphones only as the overall Indian mobile phone market shrunk six per cent in the June quarter on a y-o-y basis. Vendors shipped 59.4 million units in April-June period of 2015 compared to 63.2 million units shipped in the same period a year ago.

According to Kiran Kumar, research manager with IDC's India Mobile phone team, e-tailers opened additional avenues for growth for many vendors in India, who would have otherwise struggled to get a hold in the complex distribution network. Although India remains a retail dominated market, vendors such as Lenovo and Xiaomi have used e-tailing channels in India to rapidly expand their presence. “The share of smartphone shipments through e-tailers increased for most of the key vendors in June quarter,” added Kumar.

In addition, Chinese vendors have tripled their shipments y-o-y in India and doubled quarter-on-quarter (q-o-q). Lenovo, Xiaomi, Huawei and Gionee alone accounted for 12 per cent of the total smartphone market in the June quarter, double from a year ago.

"As China started to slow down, most vendors from the country have targeted India as the next big growth market for smartphones," said Kiranjeet Kaur, research manager with IDC's Asia/Pacific Mobile phone team. The new entrants to the Indian market have utilized specific strategies to drive sales growth, according to Kaur.  “Key to the success of the Chinese vendors has been popular flash sales through online players such as Flipkart, Snapdeal and Amazon. At the same time, they also focused on bringing more 4G phones at affordable $100-150 price points, which has been left unattended by Indian and global vendors.”  

Except for Lenovo, the top vendors in the June quarter still had majority of their shipments going through traditional channels.



Among the vendor ranking, Samsung continues to be the leader in the Indian smartphone market despite q-o-q shipment decline, while growing shipment on a y-o-y basis. The resultant volume growth y-o-y came from their phones in the affordable segment such as the relatively new Galaxy J1, and older models such as the Galaxy Core.  Performance was not boosted by the first full quarter of sales for the new Galaxy S6 and S6 edge.

Micromax made a comeback this June quarter with 60 per cent q-o-q growth. Even though its AndroidOne phones and the Yu Yureka phones got off to a slow start, its other smartphones in the $50-150 price segment, where it is traditionally strong, performed well. Intex captured the third position.