Phone shipments slip 20% in January-March on poor demand; stock pile-up a worry for cos

India's smartphone market declined an unprecedented 16-20% year-on-year in the first quarter of 2023, with Realme and Xiaomi falling sharply, as brands struggled with sluggish demand and remained vulnerable to stock build-up, said market trackers.

While Canalys pegged the shipment fall at 20% year-on-year, Counterpoint Research's preliminary estimates, shared exclusively with ET, showed a 16% decline, in a market led by South Korean firm Samsung.

"2023 will be challenging as the mass-market segment is still moving slowly. Nonetheless, the premium segment is poised for growth, boosting the ASP (average selling price) growth of the overall market," said Sanyam Chaurasia, analyst at Canalys. "Canalys expects modest growth this year, driven by organic growth drivers. However, to stimulate the upgrade cycle, 5G devices and other market drivers must offer compelling utility for consumers."

Realme, Xiaomi recorded the largest declines during the quarter of 52% and 38% year-on-year, respectively, said Canalys.

In Q1, Samsung consolidated its leadership position while Chinese rival Oppo overtook Vivo (ranked third), and Xiaomi (ranked fourth) to take the second spot, while Realme came in fifth, said Canalys. All brands recorded year-on-year declines, except for Oppo.

"Q1 2023 showcased that brands must balance channel contributions to keep business operations stable and maintain share," said Chaurasia, adding that brands with efficient channel management have proven to be more resilient to market volatility.

"Post-pandemic, vendors (brands) who have nurtured mainline retail channels, have demonstrated stability even during market downturns...Samsung has been efficient with its fast-moving model placement in the offline space," he said.

Counterpoint also named Samsung as the market leader, followed by Vivo, Xiaomi, Oppo and Realme. "The decline was due to high inventory build-up in 2022 which was carried forward to Q1 2023 as well leading to constantly lower shipments from OEMs (original equipment makers)," said Shilpi Jain, senior analyst at Counterpoint. "Though the sales were better during Republic Day sale, the overall situation was not optimistic as demand remained sluggish for rest of the time period."

She said the market showed some signs of recovery towards the end of the quarter as shipments from major brands increased in the last month.