After hitting a zero revenue period in April due to the nationwide lockdown beginning March 24, smartphone companies in India are gearing up to tap the pent-up demand in the world’s second-most populous country.
Mobile handset companies such as Xiaomi, RealMe, OnePlus, Oppo, Vivo, Motorola, Huawei, and Apple, among others, are expected to bring new devices in the country that they have either unveiled or are planning to launch.
Some of the upcoming smartphones that may flood the India market over the next couple of months include Xiaomi Mi10, Huawei Y9s, Samsung Galaxy M11, Google Pixel 4A, Motorola Edge, Microsoft Surface Duo, Oppo A31, and Redmi Note 9 Pro. Just earlier this week, the Realme Narzo series, Poco F2 Pro, Vivo V19, and Honor 9X Pro were launched. OnePlus8 and Apple iPhone SE that were announced globally last month are expected to go on sale later in May.
Analysts expect more launches in upcoming months as smartphone manufacturers reorganize their product launch plans for the year which have gone off the track during the seven-week lockdown period. Earlier this month, the Indian government had extended the lockdown till May 17 with some relaxation for businesses in order to revive the economy. Reportedly, the next phase of lockdown will be announced the coming Sunday.
During the complete lockdown that lasted till May 3, while the production facilities, distributors, and retail outlets shuttered shops and supply chains were disrupted, online sellers were barred from selling anything but essential items such as food, groceries, and medicines. Consequently, smartphone manufacturers either launched new devices online or delayed their upcoming product launches. However, there was no actual sales that happened either online or offline due to the pan-India shutdown. Handset companies have been lobbying with the Indian government to include smartphones in the essentials category, but so far they have had little success.
In the first week of May, e-commerce companies were given the go-ahead to deliver non-essential items in the country, barring red zones, the government identified neighborhoods where the risk of the virus is more prominent.
According to American market intelligence firm IDC, the smartphone shipments in India showed an abysmal growth of 1.5% to 32.5 million units in the first quarter of the year due to seasonally low demand and the nationwide lockdown. Another Gurugram-based consulting company CyberMedia Research puts growth in smartphone shipments in India at 4% in the March quarter of the year. It attributes the growth to the consumer demand that was there before the COVID-19 pandemic hit the world.
“Given that smartphone sales in April were zero, capturing the pent-up demand is very crucial for phone brands to make revenue in a bleak business environment,” said Neil Shah, research director at Counterpoint Research told local media Economic Times (ET) recently.
Shah said about 20 million smartphones were expected to be sold during April and that “70-80% of this pent-up demand may play out in May and June.”
However, the demand is not expected to revive significantly until the July-September quarter, which is when some of the pre-festive demand is expected to come back. In India, the October-December quarter constitutes the festive season during which the country celebrates Dussehra, Diwali, and Christmas.
“Faced with personal and economic uncertainties, consumer spending will remain muted for the better part of the year. Unless absolutely necessary, such as replacing a mobile phone, consumers may choose to conserve,” Anand Priya Singh, analyst- Industry Intelligence Group, CMR, noted in a report released late last week. “However, we expect the market to recover lost ground in the run-up to the festive season.”
IDC expects the Indian mobile phone market to follow a U-shaped recovery from the third quarter onwards.
While India will see the potential supply chain disruptions and slower-than-expected consumer demand for smartphones for the next few quarters, “the pent-up demand from the first half of the year will gradually shift to the second half, rolling over to 2021 as well,” Navkendar Singh, research director, IDC India, said last week in a statement. A revival in consumer demand is expected around the festive quarter (October-December) with amplified marketing and promotional activities, he added.
A handful of companies, expecting consumers to not splurge money on their non-essential purchases, may reduce handset prices to catalyze the market revival. For instance, Samsung has already slashed the prices for many of its models.
“Going forward, we remain cautious about the speed of recovery in India’s smartphone market this year. Our best-case scenario suggests a decline of 11-12% in overall smartphone shipments for 2020,” said Prabhu Ram, Head-Industry Intelligence Group, CMR.
IDC’s Singh believes brands will need to relook at their marketing investments, “supporting offline channels with hyperlocal delivery initiatives in key cities and try to make up for the lost ground in the all-important second half of year, under the assumption that normalcy will gradually resume Q3 onwards.”