Rediff.com« Back to articlePrint this article

Smartphone market may remain flat in 2020

April 02, 2020 10:32 IST

Even as most manufacturers are still assessing the overall impact on their businesses, early projections suggest the market may grow at its lowest ever rate, in 2020.

The country’s robust smartphone market is heading for its worst-ever snag, caused by the virus outbreak.

Even as most manufacturers are still assessing the overall impact on their businesses, early projections suggest the market may grow at its lowest ever rate, in 2020.

 

According to IDC India’s estimates, smartphone sales are expected to remain flat.

Other industry analysts and market research firms project the growth rate to remain below 5 per cent - also lower than its earlier worst performance.

Smartphone sales in India have always maintained a growth rate in double digits.

In 2012, for example, the market grew 120 per cent, with the launch of 3G services in all major cities.

Despite a fall in growth rate over recent years and an overall slowdown, sales grew 10 per cent in 2019.

To date, the worst show was in 2016, when demonetisation kept its growth at 6 per cent.

In 2020, however, the lack of component supply has hit manufacturing plans of all major vendors since February.

The lockdown has added to woes, with the market having now come to a halt.

According to Navkendar Singh, research director at IDC, sales during the first half of 2020 will be severely hit.

Research agency CyberMedia (CMR) has revised its market guidance for 2020.

It said smartphone production is likely to tumble 38-40 per cent from January-June.

During this period, 46 per cent of overall smartphone sales usually take place.

“We anticipate a significant drop of around 20 per cent year-on-year (YoY) in shipments in Q1CY20.

"There will be a full-blown impact in Q2, with a sharp decline of around 28 per cent YoY,” said Prabhu Ram, head (industry intelligence group), CMR.

With consumer sentiment getting hurt by the bleak economic outlook, CMR estimates consumer spending to remain muted for most of the year.

Most leading handset manufacturers Business Standard spoke to said they were yet to estimate the final impact.

While some are anticipating recovery after July, others are still unable to redraw their plans.

Between March and June, nearly 35 per cent of all new launches take place.

This is the period when plans for the upcoming festive season are set. However, industry players said they are waiting for the lockdown to be over before they can assess any loss.

The pandemic will force manufacturers to reflect and realign their market strategies.

Supply chain disruptions will now push brands to seriously ramp-up their localisation strategies in India, said CMR.

Market analysts like IDC and CMR estimate some growth during the second half of the year.

“If the situation begins to normalise from end-May, then we can expect a surge during the festive season - beginning September,” said Singh.

Normally, 37-40 per cent of total sales take place during the festive season.

Photograph: Lucas Jackson/Reuters

Arnab Dutta in New Delhi
Source: source image