Smartphone shipments may shrink 18% in Oct-Dec

Shipments of feature phones are expected to decline 25% and smartphones 18% sequentially in the December quarter because of demonetisation, according to International Data Corporation (IDC). 

Also, shipments of personal computers are likely to shrink 33% and tablets 23% as sales suffer due to the cash crunch. During the September quarter, shipments of personal computers rose 31% and tablets 8%, IDC said.

Since the Prime Minister announced Rs 500 and Rs 1,000 currency notes cease to remain legal tender on November 8, the sale of various consumer goods including mobile phones, tablets and personal computers have suffered. Retail sales of mobile handsets by major brands have declined by 20-60% since demonetisation of Rs 500 and Rs 1,000 currency notes. Offline sales are down by over 30% and e-commerce majors have seen sales dropping by 20-30%.

 

“The impact may be less for top-selling smartphone brands. Vendors who are behind the curve are expected to be impacted more,” said Faisal Kawoosa, lead, telecoms, CyberMedia Research. 

Counterpoint Research said the feature phone market was dominated by Samsung (21.1% share), followed by four Indian brands, Lava (12.9%), Intex (12.2%), Micromax (10.4%) and Karbonn (8.4%). According to Kawoosa, mobile phone vendors who dominate the feature phone space may be worst hit. 

“Sales of handsets have declined by 20% since demonetisation. The impact is similar for feature phones and smartphones,” said Naveen Chawla, chief operating officer, Lava International. 

“Around 50% of our annual sales used to take place during the December quarter. Since demonetisation, sales have fallen nearly 60%,” said an executive with another handset manufacturing company.

Around 65% of smartphones and 90% of feature phone are bought in cash in India. “Although the early indications of October shipments were healthy, due to relatively poor sales in November, the inventory in the channel is piling up which could take some time to liquidate,” said Jaipal Singh, market analyst, client devices, IDC India.

To tide over the crisis, various dealers and retailers have increased the credit limits and started offering schemes with easy payment options for consumers. However, industry executives said sentiment could take a hit if the liquidity crunch continued for another month. Vendors operating in the country are estimating the extent of cut they need to make in the import of handsets during December.