India’s Q1 smartphone sales point to $45 bn mkt in FY25
After enduring two consecutive years of a decline, India, the world's second-largest smartphone market, is showing signs of a recovery.
The first quarter of the year has ushered in a wave of optimism, signalling a resurgence for brands, such as Samsung, Xiaomi and Vivo, with the industry witnessing an impressive 18% rise in market value, soaring to $9.5 billion— the highest first-quarter revenue in the past five years.
Despite the first quarter of a fiscal year being a relatively subdued period for sales historically, a consensus poll of four industry analysts by Mint, project a robust growth trajectory for the full year.
Forecasts indicate a potential 15% revenue surge, breaching the $45 billion mark in FY25, compared to $39 billion in the previous fiscal year. Interestingly, this bullish outlook is despite the market volumes, which is expected to remain flat compared to 2023 levels, with projections hovering at 151-155 million units.
On Thursday, Counterpoint India said in a report that smartphone sales recorded an 8% growth from a year earlier, with shipments likely surpassing 33.5 million units. While this marks an improvement over last year, it falls short of the market's post-pandemic highs.
The driving force behind this revival is the rise in average selling prices (ASPs) of smartphones. As per Mint’s analysis, the ASP stands at $295, or around ₹24,600—up 20% in the past two years. This trend, hints at a premiumization of India's smartphone market, after enduring eight consecutive quarters of stagnation.
Samsung, for instance, achieved its highest-ever ASP in India in Q4 FY24, reaching $425 (₹35,500). Despite ranking third in terms of volumes, the Korean firm claimed the top spot in overall market value, capturing 25% of the $9.5 billion revenue generated during this period.
Meanwhile, Apple, which does not rank in the top five in sales volumes, secured the second spot in revenue share, with a 19% share.
Email queries to Apple, Samsung and Xiaomi did not elicit any response till press time.
Pundits attributed this resurgence to a combination of factors, including lucrative financing schemes, lack of compelling offerings in the low-price segments, increasing disposable incomes, and a strategic shift towards high-margin market strategies by leading brands.
As per Mint’s analysis, smartphones priced under ₹15,000 yielded a modest 4% margin for retailers. In contrast, devices priced above ₹25,000 witnessed
As per Mint's analysis, devices priced above ₹25,000 saw margins of 8-10% with incentives from brands
margins of 8%, potentially rising to 10% with brand incentives—a testament to the allure of premiumization driving India's smartphone renaissance.
“Brands are bringing along a heavy push for internal financing options, targeting users in tier-II cities, and beyond—even for those who do not have an existing credit line or cards. Internal financing options at zero interest are piquing users’ interests, which are in turn, pushing users to buy more expensive devices,” said Shubham Singh, research analyst, Counterpoint Research.
The margin dynamics add an interesting dimension to the narrative. With quarterly revenue surging to $9.5 billion, and ASPs on the rise, retailers and brands alike stand to benefit from higher profit margins on smartphone sales. Manish Khatri, a partner at Mumbai-based multi-brand electronics retailer Mahesh Telecom, echoed similar views, following the uptick in smartphone demand during the first quarter.