New Delhi: Market trackers have started revising their smartphone volume estimates downwards for 2024 following tepid demand in the ongoing festive season, amid longer replacement cycles and low organic conversion from feature phones to smartphones. Increasing consumer preference towards premium devices, however, is expected to aid value growth.
Counterpoint Research cut its forecast after sales volume growth of 3% in the July-September missed its previous estimate. The research firm now estimates volumes to stay flat at around 152 million units in 2024, after initially estimating a 3% rise.
Research firm Canalys also revised its volume estimate downwards. Analyst Sanyam Chaurasia said he was estimating a 7% increase in volumes from 148.5 million last year to 158 million in 2024. Now, that has been lowered to 157 million, or around 6% growth.
Volume growth comes from addition of new users and repeat buyers, which is directly proportional to the replacement rates,” Counterpoint Research director Tarun Pathak said. “We are seeing that the replacement cycles have now gone up by five months and new user additions are down by around 15-25%, which is hurting volume growth.”
Replacement buyers in the market are now driving up revenue for the industry, Pathak said. However, smartphone value growth in the three months through September surged 12% on-year to an all-time high for a quarter, Counterpoint said. The research firm did not disclose the revenue figure for the quarter.
Counterpoint’s estimate on sales value growth for 2025 remains unchanged at 12%. Canalys also retained its value growth estimate of 13% at $42 billion (excluding GST).
“The value growth was driven by an ongoing premiumisation trend while the volume growth was driven by the earlier onset of the festive season when compared to 2023. OEMs (original equipment makers) proactively filled channels, ensuring that retailers were well-prepared for the expected surge in sales during the festive season. However, festive sales started at a slower pace compared to last year,” Counterpoint said in a report released Wednesday.
Canalys’s Chaurasia estimates the sub-$200 segment to see a significant decline in volume this year, even as the premium segment is expected to expand on the back of an ongoing replacement cycle which will last till about the first half of 2025.
“We expect a lot of launches in the sub-$100 segment in 2025, which will help volumes surge to an extent, but consumers are not too keen on buying entry-level smartphones, and would rather go for a premium handset,” Chaurasia said, adding that for 2025, Canalys estimates even lower volume growth at around 2-3% from the previous year.
Research firm IDC though has kept its forecast unchanged for now, choosing to relook at the forecast later in the ongoing fourth quarter. The research firm estimates that volumes in 2024 will close at 153-154 million, growing 6-7%. It estimates mid-single-digit volume growth in the third quarter.
“It needs to be seen how the sell-outs are happening by the end of the festive season, which will guide as to how the market will behave next year. Last year, shipments were higher in the last quarter, anticipating high sales during the first few months of 2024. It needs to be seen what the inventory situation is this year after the festive season is over,” said Navkendar Singh, associate vice president, IDC India.
Market trackers predict that the Indian smartphone market will see low volume growth going forward, while aggressive financing offers and trade-ins from replacement buyers will aid an increasing shift towards value growth.
( Originally published on Oct 30, 2024 )
Counterpoint Research cut its forecast after sales volume growth of 3% in the July-September missed its previous estimate. The research firm now estimates volumes to stay flat at around 152 million units in 2024, after initially estimating a 3% rise.
Research firm Canalys also revised its volume estimate downwards. Analyst Sanyam Chaurasia said he was estimating a 7% increase in volumes from 148.5 million last year to 158 million in 2024. Now, that has been lowered to 157 million, or around 6% growth.
Volume growth comes from addition of new users and repeat buyers, which is directly proportional to the replacement rates,” Counterpoint Research director Tarun Pathak said. “We are seeing that the replacement cycles have now gone up by five months and new user additions are down by around 15-25%, which is hurting volume growth.”
Replacement buyers in the market are now driving up revenue for the industry, Pathak said. However, smartphone value growth in the three months through September surged 12% on-year to an all-time high for a quarter, Counterpoint said. The research firm did not disclose the revenue figure for the quarter.
Counterpoint’s estimate on sales value growth for 2025 remains unchanged at 12%. Canalys also retained its value growth estimate of 13% at $42 billion (excluding GST).
“The value growth was driven by an ongoing premiumisation trend while the volume growth was driven by the earlier onset of the festive season when compared to 2023. OEMs (original equipment makers) proactively filled channels, ensuring that retailers were well-prepared for the expected surge in sales during the festive season. However, festive sales started at a slower pace compared to last year,” Counterpoint said in a report released Wednesday.
Canalys’s Chaurasia estimates the sub-$200 segment to see a significant decline in volume this year, even as the premium segment is expected to expand on the back of an ongoing replacement cycle which will last till about the first half of 2025.
“We expect a lot of launches in the sub-$100 segment in 2025, which will help volumes surge to an extent, but consumers are not too keen on buying entry-level smartphones, and would rather go for a premium handset,” Chaurasia said, adding that for 2025, Canalys estimates even lower volume growth at around 2-3% from the previous year.
Research firm IDC though has kept its forecast unchanged for now, choosing to relook at the forecast later in the ongoing fourth quarter. The research firm estimates that volumes in 2024 will close at 153-154 million, growing 6-7%. It estimates mid-single-digit volume growth in the third quarter.
“It needs to be seen how the sell-outs are happening by the end of the festive season, which will guide as to how the market will behave next year. Last year, shipments were higher in the last quarter, anticipating high sales during the first few months of 2024. It needs to be seen what the inventory situation is this year after the festive season is over,” said Navkendar Singh, associate vice president, IDC India.
Market trackers predict that the Indian smartphone market will see low volume growth going forward, while aggressive financing offers and trade-ins from replacement buyers will aid an increasing shift towards value growth.
( Originally published on Oct 30, 2024 )
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