Smartphone shipments fall in festive quarter for the first time

The Indian smartphone market registered a 11% year-on-year (YoY) drop in shipments in the festive quarter, despite the fact that electronics were among the most bought products during festive sales. According to a report by market tracker Counterpoint Research, the market also saw a rise in the average selling price (ASP) of smartphones by 4%, to over ₹20,000. It attributed the drop in shipments to weak demand and large unsold inventories.

To be sure, the ASP of smartphones in India have been on the rise over the past four quarters. In January this year, Counterpoint’s year-end report for the Indian smartphone market pegged the ASP close to ₹17,000, which has now grown beyond the ₹20,000. While the firm pegged a 4% YoY rise based on the dollar value of new phone shipments in India, the rupee rise of the average smartphone price in the country is above 20% YoY — taking the rise of the dollar into account.

Interestingly, Counterpoint noted that Apple’s iPhone 13 was the single highest shipping smartphone in India during this quarter, which led to the smartphone being one of the highest sellers in the early days of this year’s smartphone sales. This, too, further pushed the ASP of smartphones in the country.

Tarun Pathak, research director at Counterpoint India, told Mint that the rise in smartphone ASPs will likely continue until at least the June quarter of 2023. “This is a reverse trend of sorts, where the ASP will continue to rise upward, and shipments will either remain flat or decline annually. This could start changing from the September quarter next year, when a larger number of brands should start offering more affordable 5G phones in the country,” he said.

In terms of shipments, India saw an 11% YoY decline — down to 45 million devices in the September quarter this year, from 51 million devices in the corresponding quarter last year. Pathak said that an all-time-high unsold inventory, which was at above 10 weeks at the start of the September quarter, combined with macroeconomic headwinds and flat consumer demand in the festive quarter this year, led to the “first ever” decline in smartphone shipments during the festive quarter of a year.

The September quarter always attracts the highest shipments of new devices in anticipation of strong festive season sales. While this year’s festive sales still saw sequential shipment growth — up from 37 million devices in the June quarter — the overall market sentiment remained muted.

Further, four out of the top five smartphone brands in India, witnessed YoY shipment declines, according to Counterpoint. Xiaomi continued to lead the market with a 21% market share, despite a fall in shipments. Samsung was the only one whose numbers didn’t drop, with the company acquiring 19% of the market.

Manish Khatri, partner at Mumbai-based retailer Mahesh Telecom, said that while the starting days of the festive sales, which took place in the last week of September this year, did see some rise in consumer demand, the same has tapered off since.

“The weeks following the Diwali period are typically slow in terms of device sales every year, but the consumer demand this year is exceptionally low — and sales in the past week have been extremely weak,” Khatri said.

He added that consumers are putting off purchases since heavy discounts on flagship devices have been withdrawn, but acknowledged the rising trend of ASPs.

“There are hardly any sub-₹15,000 5G smartphones in the market, and the ones that are there are out of stock. This is leaving consumers with no choice but to either put off their purchases, or go for more expensive devices,” Khatri added.