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India beats US as the world’s 2nd largest smartphone market

India has overtaken USA as the second largest smartphone market during the July-September quarter as shipments touched a record high of 40 million units. Samsung shipped about 9.4 million smartphones which is almost more than 30% from September 2016. Based on a recent report, after facing a slowdown in June, the country’s smartphone market recovered quickly and the shipments grew 23% year on year in September. The growth comes as a relief to the smartphone industry. This growth dispels any doubts about the India’s market potential in terms of smartphones. There are close to 100 mobile device brands sold in the country with more vendors arriving each quarter. In addition to the same, India has also one of the most complex channel landscapes that come with the advantage of low barriers to entry. It is expected that growth will continue due to the low smartphone penetration and the explosion of LTE.

Despite posting exceptional results, the market continues to be dominated by the top five vendors led by Samsung. The market leader is followed by Xiaomi, Vivo, Oppo and Lenovo respectively. They account for 75% of the total shipments in the country. Samsung shipped 9.4 million smartphones while Xiaomi increased shipments by over 290% to 9.2 million units in the quarter ended September 2017. Xiaomi’s growth is seen as a clear example of how successful an online brand can effectively enter the offline market while maintaining low overhead expenses. Xiaomi only focuses on the low end. It struggles in the mid-range devices which are priced between Rs.15,000 and Rs.20,000. Compared to Xiaomi, Samsung, Vivo and Oppo are particularly strong in the mid-range segments. Experts predict that Xiaomi’s go to market innovations will allow it to overtake Samsung in a few quarters. During the quarter, Xiaomi closed in on market leader Samsung which is currently ahead by only a half percentage point market share, according to reports.

Apple also began local production in India during the year and its shipments of iPhone more than doubled and reached to 900,000 units in September quarter in 2017 as compared to September 2016. This is seen as an impressive growth in a market which is skewed towards low end smartphones. After a slow start to GST, the market is showing good signs of stability in July-September quarter with most of the channels adapting the new rules in time. The economy is proving to be very strong in the second half of 2017, with the twin shocks of demonetization and GST behind it. Reduced indirect taxes have also added new equity in the market and the distributors and retailers are now able to serve areas beyond their home regions as inter-state operations have become easier.

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