If you believed that the record 12% decline in the global smartphone market in the first quarter was bad, then the decline in the Indian smartphone market in the second quarter makes that double-digit decline seem manageable by comparison. India, the world’s second-largest smartphone market behind China, saw shipments drop 48% in the second quarter, according to estimates released by Canalys last week.
The massive drop was caused by a confluence of factors, many of which were related to the current COVID-19 pandemic.
Image source: Getty Images.
Shipments cut almost in half
Both supply and demand were affected by the coronavirus outbreak. The government had imposed a drastic blockade across the country on its 1.3 billion citizens, the world’s largest blockade. The restrictions were eased in May, but the Indian government has reinstated the blockades now that COVID-19 cases have reached one million.
India has been trying to make smartphone companies expand manufacturing operations in the country in recent years, taking advantage of import tariffs and local sourcing requirements to incentivize foreign multinationals. Canalys estimates that 96% of all smartphones sold in India in 2019 were locally assembled. Those efforts include agreements with Apple (NASDAQ: AAPL) and its largest contract manufacturer, Foxconn. However, Apple is a small player in the Indian smartphone market.
Here are the top five sellers for the second quarter.
|
Seller |
Second quarter 2020 shipments |
Market share of the second quarter of 2020 |
Growth (YOY) |
|---|---|---|---|
|
Xiaomi |
5.3 million |
30.9% |
(48%) |
|
Alive |
3.7 million |
21.3% |
(36%) |
|
Samsung |
2.9 million |
16.8% |
(60%) |
|
Oppo |
2.2 million |
12.9% |
(27%) |
|
Real me |
1.7 million |
10% |
(35%) |
|
Others |
1.4 million |
8.1% |
(64%) |
|
Total |
17.3 million |
100% |
(48%) |
Data source: Canalys. YOY = year after year.
Apple’s shipments fell “only 20%,” which is not as bad as the larger vendors. The Cupertino tech giant has long struggled to increase its presence in India, largely due to high iPhone prices and relatively lower levels of discretionary income for average Indian consumers. Apple sold approximately 250,000 iPhones in the second quarter, according to Canalys, representing a paltry 1.4% market share.
In a statement, Canalys analyst Madhumita Chaudhary said:
It has been a difficult road of recovery for the smartphone market in India. While suppliers witnessed increased sales as soon as markets opened, production facilities struggled with staff shortages in addition to new manufacturing regulations, resulting in lower production. The fluidity of the shutdown across India has had a deeply ingrained effect on vendor marketing strategies.
To make matters worse, India has been dealing with flooding and mounting geopolitical tensions with China. The border dispute with the Middle Kingdom is fueling anti-China sentiment, which should be bad news for Chinese smartphones. (Vivo, Oppo, and Realme are subsidiary brands of BBK Electronics of China, and Xiaomi is one of China’s leading brands.) However, Chinese brands are still the most affordable.
“Despite the sentiment, the effect on Xiaomi, Oppo, Vivo and Realme is likely to be minimal, as the alternatives from Samsung, Nokia or even Apple are hardly competitively priced,” according to Canalys Adwait analyst Mardikar.
