According to Hong Kong-based market tracker Counterpoint Research, the average period of people retaining smartphones in India last year was 25 months for devices costing Rs 25,000 to Rs 40,000, and 30 months for those priced above Rs 40,000.
Lack of compelling innovation in the high-end segment, roll-out of models with premium features in camera, memory and screen quality in the sub-Rs 30,000 range, imposition of a 20% duty on imported handsets that made India one of the highest priced markets for brands like Apple, and poor discretionary spending impacted the demand and replacement cycle of premium smartphones, industry executives said.
“The addressable market for premium smartphones is not growing much,” said Atul Kapoor, chief executive at Spice Hotspot, which runs more than 100 cellphone stores in the North and East.
“Whenever a new premium handset gets launched, the euphoria lasts for two months. Only consumers with a lot of disposable money are buying them. Otherwise, there are many handsets with premium features in the sub-Rs 20,000 segment right now,” said Kapoor.
The 15% smartphone volume growth which the industry is projecting this year will come from the Rs 8,000-20,000 price segment which accounts for 70-75% of the total units sold, said Ajey Mehta, vice-president and country head (India) at HMD Global, which makes the Nokia smartphones. “The premium segment is stable and not growing. The Rs 20,000-30,000 price band is growing only when there are compelling launches.”
Counterpoint’s research analyst, Anshika Jain, said the increasing average selling price of premium smartphones would lead to longer holding periods for such devices, with consumers not having enough incentives to upgrade. “This can change in the 5G era along with factors like foldable smartphones. India is the only major market where the (overall) replacement cycle is shortening as compared to other regions. In mature markets such as the US, western Europe and China, the upgrade rate has slowed down considerably over the last few years,” said Jain.
Counterpoint estimates the Rs 20,000-30,000 range to contribute 6% of the smartphone sales and the Rs 30,000-plus segment to account for around 4%. The overall smartphone market grew 10% in 2018, while the Rs 30,000-plus category expanded 8%.
Brands like Samsung, Xiaomi, Vivo, Oppo and Nokia are focusing primarily on the Rs 8,000-25,000 segment with multiple launches. Retailers said premium brands were forced to undertake multiple promotions to drive sales, like Apple earlier this month slashing the price of the iPhone XR and OnePlus running discount and buyback schemes.