Samsung faces tough smartphones market

NEW DELHI: In the first week of February, as a number of analyst-firms released their tracking results for the mobile phones segment, Korean company Samsung emerged as the overall CY 2014 (Calendar Year) leader in the India mobile phone market that recorded sales of 257 million units, which is a shipment growth of over 4% over CY 2013.

However, India mobile phones market is becoming a hotly contested segment. The market complexion is changing. Unless Samsung comes up with a strategic product plan for India market, it is likely to continue to lose market share, not necessarily to Micromax – even though Micromax is a close second with 13.3% overall shipment-share.

Samsung is at precarious 16.5% overall shipment share for CY 2014, as recorded by the CMR India Monthly Mobile Handsets Market Review report, released in February 2015. Samsung is said to be losing its firm grip on the market, as its market share showed a downward trend during the year, as compared to Micromax that gained primarily in 2Q (April-June) 2014, but then continued to remain flat during the rest of the year. Samsung share was over 20% at the beginning of CY 2014.

The smartphones segment crossed 30% of all shipments in CY (Calendar Year) 2014, for the first time in India market, recording sales of 77 million smartphone units, growing at 46% vis-à-vis CY 2013. It is in this segment that the fiercest handset-battles of 2015 will be fought.

In the India smartphones segment, of the ’Top 3’ leadership positions the first and second are held by Samsung and Micromax, respectively.  Samsung saw a considerable fall in its market share, primarily at the hands of Apple gaining in the premium segment and a plethora of Chinese brands/OEMs hitting the mid-range smartphones segment. Micromax was able to retain this market share in smartphones throughout the year despite stiff competition at the hands of Chinese brands/OEMs and a few Indian brands. Micromax also launched its brand YU that has an innovative “at-your-home” service model, for the severely under-served India market.

The third spot in the India smartphones segment was not held firmly by any single brand, with Lava, Karbonn, and Intex vying for this position throughout the year, according to CMR data. A number of other market-analysts have recorded gains for Intex Technologies and Chinese brands and a downward trend for Karbonn. The third spot is unlikely to have a clear leader in 2015 as well, as players who understand local preferences and have the distribution and service reach in pockets will continue to rule those pockets.

The landmark smartphone growth in CY 2014 was propelled primarily by the availability of a wide range of models and brands under Rs 15,000, pickup in online sales, increasing mobile data consumption and a decline in data tariffs with telcos extending their data network footprints, according to the CMR Monthly Handset Review, led by Faisal Kawoosa, Lead Analyst for Telecoms Research at CMR.

According to GSMA Intelligence, since year 2008 smartphone prices have declined by 30% in Asia however, the majority of smartphones in the developing world are still priced above the $100 mark, whereas the 'sweet spot' for these regions is considered to be in the $25-$50 range.

Mozilla, one of the pioneers of low-cost smartphones, had announced a $25 smartphone design at Mobile World Congress in 2014. The company’s COO, Li Gong, had explained that Mozilla’s success in driving down the cost of smartphones using its Firefox OS was down to optimizing its software for lower-cost hardware. Gong said that “sometimes the margin on the low-cost phones could be actually bigger than higher cost hardware because it’s a question of what OS you put on and what optimization you can get from the OS. We heard lots of demand for lower prices — below $50, below $40 phones. And we hear loud and clear that the market for that sort of segment, where you convert feature phone users to smartphone users, a huge market for us”.

The smartphones battle of 2015 has just begun. There are brands like Microsoft (Nokia), Blackberry, Sony, Motorola along with Indian and Chinese brands that will likely add punch to the battle of smartphones in India, as it will be played on the best experience coupled with irresistible price points. Innovation will rule.

The smartphones saturation point is said to be 70 percent of the overall mobile phones market. In that light, India market potential at just 30% penetration will inspire action and some stiff competition for the players. The shift from basic and feature phones to smartphones is likely to be rapid in 2015.