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Indian mobile sales slow down to a crawl, thanks to demonetization

New Delhi, February 16  2017:  Poor growth characterised  the Indian mobile phone market in the last quarter of 2016 -- and the ones smiling  were mainly Chinese,  and Korean  players  who between them scooped up 46 percent of the business,  knocking all Indian companies for the first time, from the Top Five. This is the, finding of  International Data Corporation (IDC). 
(This is consistent  with the global scenario, where also  top Chinese players are slowly growing their market share, according to Gartner)
According to the IDC Quarterly Mobile Phone Tracker, India registered 109.1 million units of smartphone shipments with a marginal 5.2 percent annual growth in CY2016. In CY Q42016, smartphone shipments clocked 25.8 million units, registering similar volumes as that of CY Q42015 but declining sharply by 20.3 percent over the previous quarter. This is mainly due to a seasonal decline after an all-time high festival quarter and demonetization in the month of November, which led to relatively lower consumer sales in November and December.
“This is relatively lower than expected smartphone shipments for India owing to sluggish first half and demonetisation at the end of year” says Karthik J, Senior Market Analyst, Client Devices, IDC. “Feature phone to smartphone migration has slowed down as prices of smartphones are still quite high for a feature phone user. Also, ease of use, long battery life and durability of feature phones continue to be relevant for large numbers of users of this category,” adds Karthik.
In the smartphone market, the share of China-based vendors touched a whopping 46 percent in CY Q42016, as their shipments doubled over the same period last year, while the share of homegrown vendors further slipped to 19 percent. “This is first time when none of the homegrown vendors were able to make their position in top five,” says Jaipal Singh, Market Analyst, Client Devices, IDC India. “The decision of sticking with a 3G-heavy portfolio and prioritising the price game over product experience is working against the dominance of homegrown vendors,” adds Singh
Also, the trouble is going to aggravate further for homegrown vendors as China-based vendors have now entered the high volume feature phone market, which has traditionally been dominated by the homegrown vendors. China's Transsion Group which entered the Indian market in CY Q22016 with their “itel” brand climbed to the 2nd spot in the overall mobile phone market with aggressive shipments of feature phones in CY Q42016. Transsion is also expected to launch few more brands in the later half the year within the same price bands where homegrown vendors are competing.
Feature phones remain the dominant category in the total mobile phone market, with annual shipments of 136.1 million units. The category declined by only 9.4 percent in CY2016 as compared to 16.2 percent in CY2015.
Online sales in the smartphone market remained at 31.2 percent in CY Q42016 with Xiaomi and Lenovo accounting for more than half of the channel’s volume. Interestingly, in the marginally growing smartphone market, online smartphone shipments volume grew over 10 percent annually in CY2016.
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India smartphone  Big Five in 2016

1. Samsung     24.8%
2. Lenovo        8.9%
3. Micromax    8.8%
4. Reliance Jio 7.1 %
5. Xiaomi         6.6%   
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India  smartphone Big Five in Q4 2016

Samsung        25.1%
Xiaomi            15.3% 
Lenovo           9.9%
Oppo               8.6%
Vivo                7.6%
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