India is the second largest market in the world in terms of smartphones. A market that is therefore particularly interesting for builders. There is one who has managed to stand out, it is Xiaomi. But Samsung and BBK Electronic's brands are not far behind. After our record on the United States and China, here we are at our third stop of this world tour of the smartphone market.
When we think of the global smartphone market, we tend to project a fairly French vision. This is logical, since the French market is roughly similar to the global ranking with the presence of Huawei, Samsung and Apple in force.
Nevertheless, some markets are quite relevant for recognizing the disparities that may exist from one country to another. We have already seen in the United States how LG and Motorola managed to succeed, then in China as Samsung is in a tumble, while Apple manages to stay somehow. We arrive this time in India, the second country in the world both in terms of population and smartphones equipped.
More than 10% of smartphones sold worldwide are in India
It must be said that while India has 1.37 billion inhabitants, more than a quarter of them are equipped with smartphones. Admittedly, many countries have a higher penetration rate, but given the number of inhabitants, this makes India the second most equipped country in smartphones with 345 million users according to NewZoo, behind China and its 851 million smartphones. In the second quarter, 37 million smartphones sold in India, accounting for 10.45% of the 354 million smartphones sold worldwide during the same period.
To get a glimpse of the state of the Indian smartphone market, let's take a look at each brand's market shares in the third quarter of 2019, according to the research institute Counterpoint Research:
- Xiaomi: 26%
- Samsung: 20%
- Vivo: 17%
- Realme: 16%
- Oppo: 8%
- Other: 13%
The first thing that strikes is obviously the strength of Xiaomi who arrived at the first position in India more than two years ago and managed to stay there since. We also note the absence of major global manufacturers like Apple and Huawei. Finally, the power of BBK Electronics Group brands (Oppo, Vivo and Realme) is very strong in the country, the three brands together representing 41% of market share, without even counting OnePlus.
India, a country acquired by the Xiaomi cause
To understand the power of Xiaomi in the Indian market, we must understand what is one of its particularities. As explained by Rajeev Nair of the Institute Strategy Analytics, India is a country in which the vast majority of smartphones are bought bare, without subscription, and therefore out of the circuit of operators and their subsidies: "Operator shares in smartphone distribution account for less than 0.1% of overall smartphone volume sold quarterly". An analysis shared by Navkendar Singh, Director of Research at IDC India: "Consumers do not think of telecom operators as a way to buy smartphones". Especially, for the IDC manager, "Subsidized offers have never worked in India for smartphones. Even if the operators wanted to do it, they could not, because they have other battle horses like 5G. ". A market that contrasts sharply with the United States for example, where operators still have a role pregnant.
Due to the virtual absence of the distribution network operators, the manufacturers have to deal themselves with the sale of smartphones, whether online or in physical shops. And in this little game, Xiaomi is particularly strong as confirmed by Rajeev Nair: "It's the most aggressive brand online and its devices have been among the top sellers during most promotional periods on platforms like Amazon and Flipkart". If Xiaomi took the trouble to get into the physical stores in 2017, two years after her arrival on the Indian market, it was also to accelerate the trend explains Navkendar Singh: "They first went online only for the first two years, then they started selling in physical stores while increasing their marketing dollars and it worked very well.".
Above all, Xiaomi can count on another particularity of the Indian market – which results from the absence of subsidies: the desire for consumers to find powerful smartphones at an aggressive price. "Young consumers with an appetite for value-for-money and good buying power have turned to Xiaomi's Redmi range and have allowed the brand to surpass Samsung"explains the Strategy Research analyst.
As an example, at the time of writing this article, the best-selling smartphone on Amazon India was the Xiaomi Mi A3. The Redmi Y2 was also in fourth place and Redmi 7 in tenth place. Smartphones available between 7000 and 13000 rupees (87 and 164 euros HT) that allow the Chinese brand to offer smartphones entry and mid-range for almost all portfolios.
Apple and the Huawei Group lagging behind in the Indian market
One of the most amazing things about the state of the Indian smartphone market is not so much the presence of unexpected brands, but especially the absence of two behemoths, Huawei and Apple. Neither brand is able to climb into the top 5 of the biggest smartphone vendors. To find Huawei in fifth place, we must go back to the second quarter of 2018. And even at this time, the Chinese group had only 3% of market share.
It must be said that unlike the European markets, Huawei has never actively sought to attack the Chinese market as explained by Rajeev Nair. The group is implanted through its Honor brand, but its Indian management "Experienced some turmoil months ago" tells us the analyst. Indeed, like Europe, India is one of the markets most impacted by the US embargo on Huawei products. Google and Android services are there and because of this embargo, Honor's Indian smartphones are also no longer entitled to Google services. As for the Huawei brand, it is mainly present in India through its telecom business, since it is essentially content to sell antennas to operators. "Huawei missed the boat. There has not been sufficient investment in marketing. They probably thought they would be helped by operators as in other markets ", Navkendar Singh analysis. Nevertheless, given the weak influence of operators on the market, it was a vain hope.
For its part, Apple suffers the logical setback of a market in which operators are to absent subscribers for Rajeev Nair: "The fact that India is a market where people do not buy subsidized smartphones has not helped Apple's cause". In India, 80% of smartphones sold are priced below 180 euros and 30% of models sold even show a price below 90 euros. With an iPhone 11 launched in India at 65 000 rupees (823 euros), it is well beyond the median income of the country, 554 euros. For comparison, brought back to the median income in France (1 789 euros), it is as if the iPhone 11 cost 2 657 euros.
For the analyst of Strategy Analytics, Apple still has something to be optimistic: "Things will improve in 2020, as the manufacturer will increase the production of devices in India and it should also launch a smartphone at an affordable price (note: the likely iPhone SE 2) ".
Realme, OnePlus, Oppo and Vivo: one group, four brands and three distinct strategies
If Huawei is present only discreetly in India, one can not say the same for his compatriots of the group BBK Electronics. As we saw earlier, the brands Realme, Oppo and Vivo take not only three places on the top 5 most sold brands, but they together represent 41% of market share in the country.
Let's go quickly to Vivo and Oppo, two historical brands that manage to innovate and which have a strong communication especially as explained by Rajeev Nair: "Vivo and Oppo are very aggressive in their marketing spend and will sponsor all the major sporting events in the country. They have signed with the biggest movie stars to promote their devices and have a strong presence in the physical shops ". For Navkendar Singh of IDC, it is also thanks to this establishment in physical stores – which still represent 60% of sales of smartphones – that the two Chinese brands have been able to win in a few years: "They started with a very big marketing budget. We saw a lot of shops being painted in green and blue (Ed .: the colors of the Oppo and Vivo logos) ".
The most amazing remains the latest BBK Electronics Group: Realme. Launched last year, the brand was specifically created to tackle the Indian market, its specificities and its leader. In the viewfinder: Xiaomi. "BBK's goal with Realme was to launch a brand that could compete with Xiaomi"says Navkendar Singh. Same goes for Rajeev Nair of Strategy Analytics: "Realme based its strategy on the same model as Xiaomi. The brand is very aggressive on the online distribution and offers a very effective catalog on the entry and the mid-range ». And the least we can say is that the result is felt. For a brand that is just over a year old, with only 3% market share in the third quarter of 2018, Realme has already risen to fourth place in India and is near Vivo with 17% market share. "If you want to face Xiaomi, you have to give yourself the means to fight on the segment between 90 and 180 euros. And Realme succeeded »says IDC's research director.
Finally, even if OnePlus does not appear in the top 5 in India, the brand of the group is not negligible so far. As Counterpoint Research explained last July, OnePlus is the first brand in India in the segment "Premium" (above 380 euros), ahead of Apple and Samsung. To do this, the manufacturer has also adopted an online sales strategy with prices more affordable than the competition. "This approach has allowed it to target the premium segment with some of the best devices in terms of features, but at prices much lower than those of Apple and Samsung"Rajeev Nair explains. A view shared by Navkendar Singh of IDC: "OnePlus has done well by focusing on young urbanites with good buying power. They have a strong community that considers it a good brand in which to invest in terms of high end ".
Samsung is resisting
Faced with its four counterparts in the top 5, Samsung is the only non-Chinese manufacturer to succeed in India. Historically, the Korean firm was however much stronger in the country, since it was in first place with 28% market share before being overtaken by Xiaomi.
The brand still managed to stabilize in second place in India, thanks to the redesign of its entry and its mid-range. We know in France the new Galaxy A range, but in India, it is especially the Galaxy M range that has allowed Samsung to maintain a very competitive entry-level segment: "The A and M ranges were well received in India and allowed them to maintain their second place in the third quarter. Nevertheless, Samsung will have to be more aggressive with its online sales strategy to regain first place », Rajeev Nair's analysis of Strategy Aanalytics. It must be said that unlike Xiaomi or Realme, Samsung's sales are mainly in the physical stores, with consumers less interested in the price performance ratio.
Nevertheless, if these last two years have seen the explosion of Xiaomi in India, Samsung does not have to blush its performance as the IDC Navkendar Singh recall: "Samsung never went below 20% market share. Xiaomi did very well in the Indian market, but it did not hurt Samsung. These are smaller brands and Indian builders who had lower market shares who have been a victim and have almost disappeared today ". He explains that three quarters of the market are now concentrated on the top five manufacturers and that this trend is here to stay: "Big players continue to grow, kids continue to be marginalized".
Still, at the time of writing this article, Amazon India still manages to focus on Samsung devices with three devices in the top 10 most popular smartphones on the site, the Samsung Galaxy M10, Samsung Galaxy M20 and Samsung Galaxy M30. Especially, like Apple, Samsung could count on new production lines in India to give a boost to its sales in the country.
It must be said that in India, 90% of smartphones purchased are local devices. While the brands are mostly Chinese – with the exception of Samsung – but these devices are already assembled in large part in India. A relocation of production that began a few years ago and is expected to increase further according to Navkendar Singh: "The brands must be in India, because the production costs in China are not as competitive as a few years ago. If you install production in India, you can satisfy the second largest market in the world, with huge growth ".
And in terms of growth, IDC's director of research has some ideas. It must be said that feature phones still account for 47% of mobile phones sold in the country, compared to 53% for smartphones: "The challenge for the Indian market is to successfully lower the price of smartphones whose cheapest models are 55 euros to attract users of feature phones that are used to pay 9 euros. Currently, the cost of the first smartphones is still too important ».