Smartphone companies no longer keen on mass segment

The Indian smartphone market is seeing a fundamental shift in the way it operates due to high input costs and changing consumer trends, with smartphone makers finding it hard to make and sell phones in the segment under ₹10,000, which used to drive the highest volumes even till last year.

The mass segment, under ₹10,000, has seen a 15% decline in shipments in the first quarter of 2022, according to market trackers, resulting from the prevailing chip shortage, high logistics costs and softening demand, which is driving the volumes up in the subsequent – ₹10,000-20,000 – price segment.

As a result, the average selling price (ASP) has increased to ₹16,000 in the first quarter, according to IDC India. Counterpoint Research also found the ₹10,000-20,000 price band grew by 9% on-year in the quarter, the same time when the sub-₹10,000 segment shrank by 15%.

Smartphone Cos No Longer Keen on Mass Segment

Till May 2022, only 20 smartphones have been launched priced under ₹10,000; that number was at 27 the same time last year. Market leaders Xiaomi and Samsung have moved up the price ladder, reducing the number of launches in this segment, while brands like LG have exited the market altogether.

“As a consequence of the supply chain constraints, higher logistics costs and prevailing chip shortage, smartphone brands are finding it tough to cater to the entry-level affordable smartphone segment. Average selling prices (ASPs) are increasing,” Prabhu Ram, head – Industry Intelligence Group, CyberMedia Research (CMR), told ET.

ET’s emailed queries to top smartphone brands didn’t elicit a response.

The segment, which used to see launches from the popular Redmi Note lineup, and Realme‘s Number series now only has one new addition each from Redmi and Realme, while Samsung, which launched five phones under ₹10,000 last year till May, also has just one new addition this year, according to ET’s analysis. However, despite launching fewer devices, Xiaomi and Samsung still command the lion’s share with 57% of the shrinking market. Counterpoint Research attributes this to older devices from the brands still in stock, and to iterative additions this year.

“Prices of sub-10k offerings from Xiaomi, Realme and the likes have increased over the months because of the high component prices that have been passed on to the consumers. Most launches, as a result, are now happening in the 10-12k price band,” Prachir Singh, senior analyst, Counterpoint Research, told ET.

The segment is now getting refreshed by China-based Transsion Holdings, which operates under sub-brands – Tecno, Itel and Infinix. Together, they launched more smartphones in this segment than any other brand this year, giving strong competition to both entrenched players like Xiaomi and Realme as well as Indian manufacturers Lava and Micromax.

Tecno increased its market share by 3.8% on-year. Itel and Infinix, the other two Transsion brands, also made single-digit increments to their market share in January-March 2022, according to CMR data. Together, Transsion Holdings has a combined share of 21.1% of the sub-10,000 segment.

Lava and Micromax held 2.7% of the market.


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