India now 2nd-largest smartphone market; Xiaomi catching up on Samsung
27 Oct 2017
India is now the world's second-largest smartphone market thanks to a spirited recovery in shipments in the third quarter of 2017, research firm Canalys reported.
As shipments grew 23 per cent year on year in Q3 2017 to reach just over 40 million units, India overtook the United States and moved to second position behind China. It has also become the world's fastest-growing smartphone market.
Samsung shipped 9.4 million smartphone and continued to top the table, but Xiaomi was seen fast closing the gap, as it recorded 9.2 million unit shipments with a 290 per cent growth rate. If Xiaomi continues at the same rate, it is expected to dethrone Samsung in a couple of quarters.
The two accounted for almost half of the total market where the top five vendors continued to post strong growth in Q3 2017.
''This growth comes as a relief to the smartphone industry. Doubts about India's market potential are clearly dispelled by this result,'' said Canalys Research Analyst Ishan Dutt.
''There are close to 100 mobile device brands sold in India, with more vendors arriving every quarter. In addition, India has one of the most complex channel landscapes, but with low barriers to entry. Growth will continue. Low smartphone penetration and the explosion of LTE are the main drivers,'' Dutt added.
Samsung and Xiaomi accounted for close to 50 per cent of total shipments among the top five mobile vendors, the othera being Vivo (3), Oppo (4), and Lenovo with Motorola (5).
The top five vendors now account for 75 per cent of total shipments. While Samsung recorded 30 per cent growth, Xiaomi increased shipments by a staggering 290 per cent.
''Xiaomi's growth is a clear example of how a successful online brand can effectively enter the offline market while maintaining low overheads,'' said Canalys analyst Rushabh Doshi.
''But Xiaomi focuses on the low end. It struggles in the mid-range (devices priced between Rs15,000 and Rs20,000), where Samsung, Oppo and Vivo are particularly strong. Nevertheless, we predict Xiaomi's continued go-to-market innovations will allow it to overtake Samsung within a couple of quarters.''
Apple meanwhile doubled its shipments to 900,000 units in Q3 – more than double from the same period last year - even as it started local production of its phones in Bengaluru.
Doshi said the Indian economy is proving very strong in the second half of 2017, now that the ''twin shocks of GST and demonetisation'' are behind it. ''Reduced indirect taxes have added new equity to the market, with distributors and retailers able to serve areas beyond their home regions as inter-state operations become easier. As the infrastructure matures, consolidation in distribution is inevitable.''
