Why Mobile Phone Manufacturers Are Having A Shrink Phase

Bangalore: Samsung, the South Korean business conglomerate maintained its lead position in the Indian smart phone market in the fourth quarter of 2014 i.e., October to December. At the beginning of this quarter, the market shrank down for the first time as most mobile phone manufacturers had an inventory pile up.

"This (the fall) was largely owing to a high channel inventory at the beginning of the quarter amongst general trade which in turn was caused by the surge witnessed in online sales during festive season," IDC said in a report issued Tuesday.
The mobile phone market was at 64.3 million units in the fourth quarter of 2014, which reflects a sequential drop of 11pct over Q3 and an on year drop of 5pct.
Smartphones made up 35pct of overall mobile phones business in the country.
However, Samsung's smartphone market share went down two percentage points due to stiff competition from Apple and online exclusive brands like Xiaomi and Motorola. IDC said that online brands are going ahead of Samsung in the value for money category.
Xiaomi's "online only" strategy worked well. The brand held 4pct market share in the fourth quarter, IDC said.
Micromax retained its second spot with 18pct market share.
Intex was in the third spot followed by Lava. Lava remains consistent and stable with a good amount of visibility of its distributors.
"In the current market scenario, there is a drive in demand for products pitched with high specification at low price points. This trend is likely to continue over the next 4 to 6 quarters, post which consumers are expected to turn back to the handset vendors who charge premium for quality," Karan Thakkar, Senior Market Analyst at IDC India, said in the report.
The first quarter of 2015, IDC expects a slow state. Few global vendors which were in the inventory correction phase are expected to exhibit big shipment numbers starting this January-March quarter.
"Operators are gearing up for 4G network rollout. For vendors and ecosystem partners, greater emphasis on 4G enabled handsets at competitive price points will be the order of the day," said Kiran Kumar, Research Manager, client devices, IDC India.

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