Indian smartphone market witnesses highest-ever decline in sales; here's why

India’s smartphone market experienced its highest-ever Q1 decline of 19 per cent YoY in Q1 2023 (January-March), according to Counterpoint’s Market Monitor service. This was the third consecutive quarterly decline seen by India’s smartphone market.

The primary reasons provided in the report include sluggish demand, high inventory build-up, and a growing consumer preference for refurbished phones. However, 5G smartphones’ contribution to total smartphone shipments reached a record of 43 per cent, registering 23 per cent YoY growth.

Samsung continued to lead the Indian smartphone market for the second consecutive quarter with a 20 per cent share in Q1 2023, and was also the top 5G brand. Vivo captured the second spot and became the leading brand in the affordable premium segment (Rs 30,000-Rs 45,000). Apple continued to lead the premium and ultra-premium segments, with strong growth in offline channels, while OnePlus was the fastest-growing brand, followed by Apple.

Senior Research Analyst Shilpi Jain commented on the market dynamics, “We are observing a change in consumer behaviour – demand is now concentrated around promotional periods. The beginning of the quarter saw a surge in demand across channels around the Republic Day sales period. However, demand dropped significantly after the sales period. Channel players are now focussing on getting rid of existing inventory instead of creating a fresh inventory of new models. It is crucial for OEMs to align their strategies with changed consumer and market dynamics. The quarter’s silver lining came from 5G smartphones, whose contribution (43 per cent) crossed 40 per cent for the first time, registering 23 per cent YoY growth as consumers kept upgrading to 5G devices. We believe these situations will remain similar in Q2 2023 as well with growth coming back in the second half of the year owing to faster 5G upgrades, easing macroeconomic pressure and festive season.”

Despite Samsung’s dominance in the Indian smartphone market, the brand experienced a significant drop in its growth rate, while Vivo managed to maintain its position with a 3 per cent YoY decline due to its robust omnichannel presence and cost-effective pricing. Xiaomi, on the other hand, fell to the third spot with a 44 per cent YoY decline, the largest the brand has ever recorded. The report attributes the dip to weak demand in the sub-Rs 10,000 segment and more dependence on online channels even when demand is higher in offline channels.

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OPPO and Realme followed in the fourth and fifth positions, respectively, with OPPO registering 9 per cent YoY growth and Realme experiencing a 52 per cent YoY decline, resulting in the brand slipping to fifth place with a 9 per cent share.

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