After posting stellar growth for four years, Korean consumer durable maker Samsung
saw its smartphone marketshare in India recede steadily in the second half of calendar year 2012.
From 46.4 per cent market share in volumes in July, Samsung's share fell to 35.8 per cent in December, according to market research firm GFK's urban market retail report on smartphones.
Its share of retail sales, by value, fell 4.1 percentage points to 43.3 per cent during the same period.
Samsung is still the market leader in the smartphone category
, but it has started facing competition from home-grown brands such as Micromax, Karbonn and Lava, among others. These brands have seen their combined share rise from 4.2 per cent to 12.1 per cent in volumes.
Nokia, too, has eaten into Samsung's share with its Asha series of smart-feature phones. The Finnish handset maker's marketshare went up from 24.4 per cent to 31.1 per cent.
On the retail sales front, Apple has strengthened its position and commands 6.7 per cent of the urban market. Taiwanese smartphone maker HTC has also held its ground with a 5.7 per cent share in volumes and 7.5 per cent in value.
In Delhi, Samsung's share declined from 44.1 per cent to 24.9 per cent. In the Punjab, it suffered an erosion of close to 15 percentage points, to 41.8 per cent.
Samsung declined to comment on market-share specifics, but chose to talk about the entire year. "In 2012 itself, you would see that Samsung's value market-share jumped by more than 20 per cent and volumes by more than 10 per cent," says Asim Warsi, Vice President at Samsung Mobile, in an email response. "I am confident we can further consolidate our market leadership in the smartphone market this year."
The Indian market is growing at about 80 per cent annually, and is expected to be the world's third-largest smartphone market.
Competition in the smartphone category is ever increasing. HTC, whose prices range from Rs 9,000 to Rs 46,000, is getting aggressive. "We do not build televisions and refrigerators, we only build smartphones," says Faisal Siddiqui, country head of HTC India. "We are targeting 20 per cent market share in the smartphone category in the next 12 months." To make this happen the company is investing in marketing and strengthening its retail and distribution reach in the 100 cities it is present in. In 2013, Siddiqui expects India to be a 20-22 million smartphone market, and he hopes about 4.4 million of those will be HTC phones.
Nokia's Windows phone portfolio ranges from Rs 10,000 to Rs 36,000.
But for Samsung and the other multinational companies, the challenge from domestic brands is also a big threat. These brands, which are transitioning into formidable smartphone makers, offer such handsets at a significantly lower MRP than Samsung and HTC.
Samsung has been caught off guard by some of their moves. For instance, when domestic handset maker Micromax launched its 5" screen Canvas HD smartphone over e-commerce site Snapdeal, it sold 9,000 units at Rs 13,999 in just 24 hours.
"The smartphone market is getting commoditised," says Arvind Singhal, Chairman of research firm Technopak Advisors. "Customers are becoming less brand sensitive."
Being the market leader, Samsung is fighting many battles to retain its status as the most sought-after smartphone brand. In the past couple of months, it has lowered the price of the Galaxy S3 and also introduced the 5" screen Galaxy Grand, which experts say is an answer to domestic Indian brands' 5" screen handsets. It has also launched the REX series of smart-feature phones, seen as direct competition to Nokia's Asha series.
Singhal believes that Samsung's decline is a "short-term aberration".
In the days to come it will be interesting to see how the dynamics of the Indian smartphone market change, and who emerges the winner.
Note: GfK's panels represent the Urban Indian market (4,378 cities with population of at least 50,000 each). It has extended the coverage to rural India (more than 600,000 villages).