The top five smartphone brands — Xiaomi, Samsung, Oppo, Vivo and Huawei — currently control over 72% of the market against 63% in 2015, albeit with a different brand combination. The top 15 have cornered over 90%, of the market according to Counterpoint Research and experts believe exits and consolidation will gather pace this year.
Singapore-based research firm Canalys data showed that the top five — Xiaomi, Samsung, Oppo, Vivo and Lenovo — had about 77% of the smartphone market in the March quarter and Micromax, Intex and Lava, the three Indian players in the list in 2015, fell off. “The fast changing dynamics and fierce competition in the India smartphone market will lead towards consolidation in the market,” said Shobhit Shrivastava, research analyst at Hong Kong based Counterpoint Research.
Counterpoint sees some five new entrants in 2018 versus 10 exits. Analysts say roughly 15 of the total 50-60 have the required strength or a niche strategy to stay for the long run. Some of the notable players not in the top five include Apple, Motorola/Lenovo, Nokia, OnePlus, and Lyf besides local players such as Micromax and Lava. At its peak in 2014-15, the mobile phone market had over 300 smartphone players.
“Smaller players are struggling to set up local level manufacturing, especially after the 10% duty on printed circuit board (PCB) assembly, since they don't have enough volumes to justify large investments. Due to competition, they cannot raise prices,” said Jaipal Singh, senior market analyst at International Data Corporation (IDC) India.
In 2015, of the 15 new players, nine Chinese and five Indian entered the smartphone growing at more than 20% every year and only one player exited. By 2016 when the market growth slowed to just 5%, 13 new players entered, five each of Indian and Chinese origin, and an equal number exited, Counterpoint data show. In 2017, when the market growth rebounded to about 14%, 13 players exited and only nine new players moved in, five of them Chinese.
The handset market reflect the telecom sector in India where the entry of disruptor Reliance Jio forced rampant tariff cuts and sparked the need for top dollar investments, triggering rapid consolidation that left only three main operators from 10-12 a couple of years back. Over 60% of the subscriber share and 70% of the revenue share was with the three top players – Bharti Airtel, Vodafone and Idea — even before the cull and the latter two merged.
On the smartphone front, disruptor and new No. 1Xiaomi and long-time leader and now No. 2 Samsung together cornered 58% of the market in the January-March quarter. “This is happening for the first time in a single quarter… could accelerate exits and possibly consolidation,” said Counterpoint research analyst Anshika Jain.
Sector watchers don’t expect the dominant players to loosen their grip on market share anytime soon as competition in the sub- Rs 10,000 segment – where most new players come in – has become tougher with the presence of Xiaomi. Besides, new players have to spend more on marketing, sales and distribution where margins have been slashed, commissions cut and shop floor employees eased out across brands.
“The sales channels have changed, there isn’t anyone now who can spend like Oppo and Vivo did, going into the deepest pockets and giving shopkeepers rentals to put up their glow signs. Now, even Oppo and Vivo have curtailed spends,” IDC’s Singh cautioned.