After record October sales, smartphone market will witness lean period in Nov-Dec: IDC

October was a rewarding month for the domestic smartphone market as not only did vendors sell a record 22 million handsets, but also shipments hit a high of 21 million units, said IDC India. It warned however that November and December will be lean due to the cyclical dip.

Smartphone shipments rose 42% year on year in October driven by multiple online festival sales and continuing pent-up demand from Q3 2020. The shipment figure of 21 million units was the highest ever for October and the second highest for a month, after 23 million units were shipped in September 2020 — an all-time high for a single month.

IDC India associate research manager (client devices) Upasana Joshi said while 140 million smartphones were sold in India in 2019, IDC expects 2020 to exit with a single-digit decline in final sales to consumers.

“Though the first half of Q4 2020 will witness high sales owing to festivities, the second half will be lean with a cyclical dip as inventory cycles normalise and stocks get replenished. With the smartphone market still concentrated around the leading 50-70 cities of India, the industry must address the untapped potential in lower tier cities with affordable entry-level offerings to offset the large feature phone base and ensure steady year-over-year organic growth in upcoming years,” she said.

According to IDC’s India monthly city-level smartphone tracker, which tracks sell-out units (final sale to consumers) for 50 leading cities and the rest of states, a record 22 million smartphones were sold in October, registering a strong 38% year-on-year growth driven by consumer purchases in the pre-Diwali month.

“Twenty-five per cent of the market sat in top tier cities, namely New Delhi, Mumbai, Bengaluru, Chennai and Kolkata, registering more than 50% year-on-year growth in October. E-learning initiatives fuelled demand in bigger cities,” IDC said.

The next set of emerging markets — Jaipur, Gurgaon, Chandigarh, Lucknow, Bhopal and Coimbatore — also grew by around 50% year on year. However, the rest of states (up-country markets) registered slower growth (average around 25%), primarily owing to looming economic concerns and consumer spending narrowing to essentials only, it said.

The leading 50 cities accounted for around 55% demand nationally. The remainder is in the next set of evolving towns and cities, with huge untapped potential in the up-country geographies (feature phone-heavy markets).

Despite delayed deliveries due to restrictions in several zones, online purchases, especially on third party e-tailer platforms, registered 23% year-on-year growth with a 50% share. Bigger cities leaned heavily towards online channels, with 57% online share in the top five metros. But supply constraints remained, impacting offline channel sales as a result of fewer retail walk-ins.