India now the world’s second largest smartphone market

After a slow start in which it seemed India’s smartphone adoption would not match the size of its population, sales of the devices in India have exploded, reports market analyst Canalys.

Canalys reports that smartphone shipments growing 23% year on year in Q3 2017 to reach just over 40 million units, making India the world’s second-largest smartphone market after China, pushing USA into 3rd spot.

“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.”

Counterpoint Research reports almost 50% of phone sales are now smartphones, with 84 million phone devices in total shipped in Q3 2017.

Samsung and Xiaomi, which shipped 9.4 million and 9.2 million units respectively, accounted for almost half of the total market as the top five vendors continued to post strong growth in Q3 2017.

The top five vendors (Samsung, Xiaomi, Vivo, Oppo and Lenovo) account for 75% of total shipments in India. Samsung shipped 9.4 million smartphones, almost 30% more than in Q3 last year. Second-placed Xiaomi increased shipments by over 290% to 9.2 million units.

“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 INR15,000 and INR20,000 [US$230 and US$310]), 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.”

The market is heavily skewed towards low-end smartphones, but Apple still managed to double shipments to 900,000 units in Q3 2017 compared with Q3 2016, after starting local smartphone production.

“The Indian economy is proving very strong in the second half of 2017, now that the twin shocks of GST and demonetization are behind it,” added Doshi. “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.”

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