India Smartphone Market Exits 2018 with Highest Ever Shipments of 142.3 million, IDC India Reports

India Smartphone Market Exits 2018 with Highest Ever Shipments of 142.3 million,
IDC India Reports

NEW DELHI, February 11th, 2019 - As per IDC’s Asia/Pacific Quarterly Mobile Phone
Tracker, India smartphone market shipped 142.3 million units in 2018, registering a healthy
14.5% year-on-year (YoY) growth as compared to 2017. After a strong quarter of 2018Q3,
the smartphone market saw a sequential decline of 15.1% in 2018Q4 owing to high channel
inventory, but saw a healthy annual growth of 19.5%, driven primarily by multiple rounds of
sales by e-tailers beyond the festive Diwali period lasting into December.

“Amongst the big highlights of 2018 were the online-focused brands that drove the share of the
online channel to an all-time high of 38.4% in 2018 and a whopping 42.2% in 2018Q4. This was
primarily driven by several rounds of discounts by e-tailers driving affordability through various
financing options, cashback offers and buyback schemes. Shipments of the online-exclusive
portfolios of Xiaomi, Honor, Realme, Asus, OnePlus etc., further fueled this growth, resulting in
a year-on-year growth of 47.3% in 4Q18 for the online channel,” says Upasana Joshi , Associate
Research Manager, Client Devices, IDC India.

However, the offline channel had a rather muted year with a modest 6.7% annual growth in 2018
and growing 5.0% sequentially in 2018Q4. The offline channel was unable to keep pace with the
deep discounts and go-to-market initiatives from the e-tailers almost throughout the year. Having
said that, offline remains the largest channel for mobile phone distribution in India and is crucial
for the long-term success for any brand in India.

With the government initiative to push local manufacturing in India, 2018 witnessed further duty
hikes on mobile phone components, coupled with weakened rupee further added to the challenges
of the long tail of brands outside the Top 5.

The overall smartphone average selling price remained flat in 2018 at US$158, with high
shipments in the mass segment of US$100-US$200 which accounted for more than half of the
smartphone market in India. Commenting on the price segment trends, Joshi further adds, “The
premium end of the market (above US$500) outgrew all other price segments in 2018 with 43.9%
YoY growth, although it still constitutes a meager 3% share of the overall smartphone market.
OnePlus emerged as the leader in US$500-US$700 segment on the back of the OnePlus 6 and
the newly-launched OnePlus 6T. However, in the super premium segment of US$700+, Samsung
surpassed Apple for the top position with its Galaxy S9 series," adds Joshi.

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The feature phone market, which makes up 56.0% of the total mobile phone market clocked
181.3 million-unit shipments in 2018, with 10.6% YoY growth. This was primarily driven by Jio
Phone shipments through the year, contributing to 36.1% of overall feature phone shipments. The
2G/2.5G market declined by 23.0% YoY in 2018 owing to high demand for 4G enabled feature
phones in the market.

Company Highlights: CY 2018 and 2018Q4

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Top 5 smartphone vendor highlights

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Xiaomi continued to dominate, growing YoY by 28.6% in 2018Q4 on back of its affordable
Redmi series devices aided by high decibel marketing campaigns and offline expansion with
its Mi preferred partner program and opening of rural stores. Xiaomi’s Redmi 5A and Redmi
Note 5/Pro series emerged as the fastest selling devices of 2018 across brands driving 10 million
shipments each in the entire year. The brand continued to lead in the online channel with a share
of 47.2%, climbing to the second slot in the offline channel by surpassing Vivo in 2018Q4.

Samsung remained in the second position, however with a YoY decline of 7.9% in 2018Q4. The
newly-launched Galaxy A7 (2018) with triple cameras picked up demand in 2018Q4 followed by
its Android Go model, the Galaxy J2 Core. The brand is expected to make a comeback with its
new online exclusive “M series” to be made available in February’19 via flash sales.

vivo continued at 3rd position with high YoY growth of 79.6% in 2018Q4. Its affordable models
- namely Y81 and Y71 - continued to generate maximum demand along with the flagship range
of V11 and V11 Pro series. The brand continued to invest heavily in marketing and promotional
activities and offering lucrative channel margins.

Realme entered the top 5 vendor list at 4th position on the back of its affordable and aggressively
priced Realme 2 and Realme 2 Pro series. The brand also moved from the fourth position in
2018Q3 to the second position in the online space with a share of 17.3% in 4Q18. The brand
plans to extend its footprint into offline channel initially through Large Format Retail Stores like
Reliance Digital and gradually scale up to traditional brick and mortar stores.

OPPO continued at 5th position, with high YoY growth of 71.7% in 2018Q4. The brand’s “A
series” with models like the A3s and A83 generated middling demand. However, it continues to
face stiff competition from Vivo in the offline channel owing to lower channel incentives and
consumer schemes.

IDC India Forecast:

Commenting on the outlook for 2019, Navkendar Singh, Associate Research Director, Client
Devices & IPDS, IDC India mentions “Almost all the brands which were able to find traction in
2018 via e-tailers partnerships have already started their offline foray to establish themselves for
the long-term. This has become more crucial as the new e-commerce guidelines come into force
from 1st February 2019.

In 2019, we will see improvements in design like thinner bezels, eliminated notches, hole-punch
screens, and increased promotions around three or four rear cameras, of which the utilitarian
factor remains for – bokeh, wide angle, portraits, etc. We might also see innovations like on-
device AI for superior video and photography experiences enabled going forward.”

About IDC Trackers

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For more information contact:
Shabi Hussain
sshussain@idc.com
9951545511
Shivani Anand
sanand@idc.com
9910466896

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