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Smartphone imports to miss estimates

Yearly sales target revised to 120 million, down from 135 million predicted earlier

Smartphone imports to miss estimates

Arnab Dutta New Delhi
Smartphone shipments are expected to miss 2016 estimates, despite a 20-per cent increase in the first half of the calendar year. Around 54 million smartphones were shipped in first six months.

Experts say shipments are unlikely to match the estimate of 135 million, though it grows significantly during the second half of the year.

Shipments of smartphones grew during the January-June period by 20 per cent – from 45 million in 2015 to 54 million. However, that still leaves a gap of about 80 million units for the second half of the year. Last year, around 58 million smartphones were shipped into the country in the period. After observing subdued shipment in the first half of the year, analysts have revised their estimates at to 120 million units.

Lower uptick in the first half of the year, supply constraints and increase in sales of feature phones have impacted shipments this year.

According to Neil Shah, partner, Counterpoint Research, during the quarter ended March, shipments remained grossly below estimates as higher inventory with major players led to lower imports.

“Last year, markets slowed after Diwali leading to huge inventory in the hands of many smartphone players,” he said.

An earthquake in Taiwan in February, the hub of chipsets, impacted supply of handsets in March and April. “Most handsets sold in India till now are below Rs 10,000 ($100), which have MediaTek chipsets, made in Taiwan. While, supply for bigger players like Samsung, which procures its own chipsets and displays, did not got impacted. Many Indian firms faced supply issues leading to a fall in market share,” Shah said. He expects shipments to remain between 120 to 125 million during the year.

Smartphone imports to miss estimates
 
The industry was also hit by the shutting down of a number of manufacturing units in China, which led to a shortage in supply of display panels, worsening the situation for brands operating in the country.

These developments, however, helped Chinese majors such as Oppo and Vivo, which posted volume growth of around 50 per cent during the April-June quarter in India.

“The lukewarm response could be attributed to the fact that many users in the tier-I and tier-II markets had purchased Smartphones between 2013 and mid-2014, and it’s now their turn to go for an upgrade. It is the upgrades and replacements market that is driving the shipments. However, new customer acquisition could be seen in peripheral areas of the country, which is giving impetus to the feature phones,” said Krishna Mukherjee, analyst, CyberMedia Research (CMR).

CMR predicts the smartphone market to touch 120 million this year “on the back of robust uptake” between July and December.

Feature phones shipment, meanwhile, witnessed some traction. According to Counterpoint data, around 67 million feature phones were shipped in during the first six months of this year, compared to 65 million last year. Apart from affordability, growth in feature phones has also been attributed to increased activity by brands as conversion of feature phone users to smartphones remained below expectations.

“We could see Chinese brands replicating their smartphone strategy for feature phones. This is why we are seeing a spurt in growth of Chinese feature phone brands, besides existing ones getting stronger,” Mukherjee said.

GOING BUT, ALBEIT SLOWLY
  • Smartphone shipment remains way behind the estimated 135 million units during H1, 2016
     
  • Last year during July-December some 58 million smartphones were shipped
     
  • Till 30 June 2016 shortfall is over 80 million, which experts say would be tough to meet
     
  • Feature phone shipment meanwhile have grown marginally to 67 million in H1 from 65 million in 2015
     
  • Earthquake in Taiwan, factory shut downs in China affected supply of handsets for many Indian players
     
  • Upgrading feature phone users to smartphones remain below expectations

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First Published: Sep 20 2016 | 12:26 AM IST

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