Smartphones brace for one more lacklustre festive season

Last yr, smartphone manufacturers launched an early onset to festive season gross sales in a bid to clear stock and drive demand. This, nonetheless, couldn’t save the phase from seeing one among its largest dip in shipments within the September quarter, which precedes the festive season interval. Market analysis agency International Data Corporation (IDC) tabulated a ten% year-on-year (y-o-y) decline in shipments throughout this era.

The business analysts and retailers, whom Mint spoke with, projected smartphone shipments to stay flat in the course of the ongoing September quarter, and even decline additional.

“Smartphone shipments this yr in India are anticipated to witness de-growth, and never simply stay flat since final yr. The decline in shipments is predicted for the general calendar yr of 2023, with the festive season accounting the most important chunk of it,” said Navkendar Singh, associate vice-president at IDC India.

The festive season, which begins from the last week of September and extends until December-end through the new year’s first week, typically accounts for 60-65% of India’s annual smartphone shipments, according to industry experts.

The industry is also seen as a bellwether for the broader consumer electronics market. According to IDC data, smartphone shipments fell 10% to 144 million units in 2022, with the second half of the year clocking shipments of 73 million units.

Tarun Pathak, research director at market research firm Counterpoint India, said in January that the decline in shipments during the festive period last year occurred due to record-high unsold inventories of more than 10 weeks. Typically, smartphone retailers keep around 3-4 weeks of inventory.

“Inventories have somewhat normalized now–down to about 7 or 8 weeks. There has been a slight uptick in demand even as the launch of new devices has seen the average selling price (ASP) of smartphones come down to between ₹17,000 to ₹18,000 now from over ₹20,000 at the start of the year,” Pathak mentioned on Monday. This, he mentioned, may result in “low single-digit development” in smartphone shipments within the present quarter.

However, shopper demand stays tepid. Manish Khatri, accomplice at Mumbai-based retailer Mahesh Telecom, mentioned system gross sales and shopper curiosity “proceed to stay low”.

“The mid-range price bracket of smartphones has continued to decline and remain low in demand. There are some isolated demand factors in the premium segment such as in Samsung’s Galaxy Flip series, and Apple’s iPhones. However, the bulk segment shipments remain weak, and there is no sign of revival from the previous year,” Khatri mentioned.

Kailash Lakhyani, founder and chairman of business physique All India Mobile Retailers’ Association (Aimra), mentioned there isn’t a indication of any demand revival to this point in addition to festive season presents.

“Most of the retailers proceed to see lukewarm demand, and till the majority of the low cost presents start publish Independence Day, there isn’t a signal of an increase in demand,” he said.

IDC’s Singh added that a clear reason could be the void left in the market by a lack of compelling device options in the mainstream price categories of under ₹20,000—pushing more buyers towards the second-hand smartphone market.

“Xiaomi and Realme, two of the largest brands by volume, are likely to remain conservative this festive season, and the entire year. Xiaomi is struggling to pick up their device shipment figures, which has left a void in the market that multiple brands such as Samsung, the Transsion group and homegrown Lava are trying to fill-up. This is for devices in the mainstream market at a price range of around ₹15,000. However, high component costs in the supply chain are preventing brands from lowering the price of 5G smartphones to this point. As a result, buyers looking for 5G phones in the price range of ₹7,000 to ₹12,000 are moving to the second-hand market for their devices,” Singh mentioned.

Industry projections peg smartphone shipments within the June quarter at round 35 million items, which can cumulatively account for round 65 million items of smartphones shipped within the first half of the yr. With a scarcity of demand out there, smartphone shipments thus look unlikely to choose up tempo within the second half of the yr—resulting in a possible decline of one other 10% y-o-y, this yr.

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Updated: 24 Jul 2023, 10:55 PM IST