Indian Smartphone Market Blues Continue — Xiaomi Loses Steam; Apple, OnePlus Flourish: Counterpoint

Xiaomi still leads, but Samsung looks to regain the top spot.

Xiaomi enjoyed 19 percent share of the market, as per Counterpoint. ( Image Source :Getty )

After two quarters, the Indian smartphone market finally registered positive growth in Q2 2022, as per the latest research from Counterpoint's Market Monitor service. However, this was a bit of a mirage, as the growth was in comparison to a COVID-affected Q2 2021. Although most brands did see their year-on-year numbers go up (again, thanks to the lower performance in Q2 2021), the market continues to face a number of challenges in terms of rising component prices and inventory issues. The quarter also saw the battle for the top spot suddenly become a very close one with both Vivo and Realme closing the gap on Samsung and Xiaomi. Here are the highlights of what Counterpoint's research revealed about the Indian smartphone market in the second quarter of 2022:

Year-by-year growth, quarter-by-quarter decline

On paper, Q2 2022 seems to have been a good one for the Indian smartphone market, with shipments growing 9 percent as compared to Q2 2021. Counterpoint, however, has been quick to point out that this growth is deceptive and is actually because of a poor Q2 2021 performance when the Indian market had been badly hit by COVID-19. A better reflection of the state of affairs was the fact that quarter-on-quarter growth was down by 5 percent, with total shipments of 37 million units. This is down from the 38 million units shipped in Q1 2022. The total installed base of smartphones in the country went beyond 600 million in this period. Only China, with more than 850 million, has a greater number. 

Consumers in ‘repair and retain’ mode

According to a Counterpoint analyst, a key reason for the decline in demand quarter-on-quarter was the fact that a number of consumers were preferring to repair their existing devices or purchase refurbished ones. Interestingly, this trend was seen in the entry and budget segments, which contribute the highest to the Indian smartphone market.  

This seems to have put a temporary stop to the rapid update cycles which were being seen in the segment, leading to quite a few headaches for phone brands. 

Brands stuck with inventory, come out with offers

With a number of lower- and mid-segment consumers opting to repair their phones or purchase refurbished ones, phone brands found themselves stuck with large inventories. According to Counterpoint, at the end of June 2022, the Indian smartphone market was stuck with 10 weeks of inventory. This is double the normal inventory size. There is a silver lining for the consumer in this inventory cloud — phone brands have been coming out with special offers to clear this inventory.

Higher-priced devices thrive once again

One of the notable features of the Indian smartphone market in Q1 2022 was the fact that there was significant growth at higher price points, with the average selling price of a smartphone hitting a record high. 

This phenomenon has been repeated in Q2 2022, with impressive growth in the upper and premium segments. This growth has been fuelled by a number of offers and financing schemes from brands. The result is that for the first time ever, smartphones priced above Rs 20,000 have comprised as much as 22 percent of the Indian smartphone market in Q2 2022. The average selling price of a smartphone also increased by 10 percent in this period, although Counterpoint has not exactly specified what it is in the excerpt of its research made public (just as it did not in Q1 2022).  

The competition for the top spot gets tough

The Indian smartphone market has been basically a two-horse race at the top between Xiaomi and Samsung, with Vivo sometimes stepping in. That could be changing if Q2 2022 is any indication. On paper, it was still Xiaomi at one and Samsung at two.  The difference between them was, however, a very tiny one — so tiny as to barely register on the market shares. Counterpoint has credited both Xiaomi and Samsung with 19 percent shares of the market, although it says the Chinese brand was ahead of the Korean one. What is even more interesting is the fact that the competition is not too far behind — Vivo is third at 17 percent, and Realme at fourth, just one percentage point behind. Contrast this with Q2 2021, when Xiaomi was well ahead with 28 percent, Samsung a distant second at 18 percent, and Realme and Vivo at 15 percent each. In Q2 2022, the difference in market share between the leader and the brand in fourth place was a wafer-thin 3 percent! This is the most crowded top four we have seen for a while in the Indian smartphone market. It is so close that one major success from any brand could tilt the scales in its favour. We would not bet against a rearranged top four by the end of the year! 

Xiaomi still leads, but only just

The 19 percent share of the market in Q2 2022  is the lowest that Xiaomi has had for a while, and is perhaps the first time its share has slipped below 20 percent in more than a year. Although it remained number one in the market, Xiaomi's shipments dipped by a significant 26 percent in Q2 2022, which Counterpoint attributes to component shortages, inflation, and increasing competition in the entry-level segment. There is also a feeling in many parts of the industry that Xiaomi has shifted its focus to its slightly higher price points, where revenue is greater but sales are relatively low. It will be interesting to see if the Chinese brand tries to win back lost ground. 

Samsung is back in the running for the top spot (and is 5G top dog already)

Xiaomi's dip in fortune has opened the door for former market leader Samsung to get back into contention for the top spot. As per Counterpoint, the South Korean brand had a good Q2 2022, recording a growth of 14 percent. The brand's revamping of its M series seems to have paid off, and there was also a high demand for the Galaxy S22 Ultra flagship. It emerged as the top brand in the 5G phone market in Q2 2022 with a 25 percent share and was also the numero uno in the "affordable premium segment" of Rs 30,000 - Rs 45,000 — no mean achievement when you consider that the likes of Xiaomi, OnePlus, Vivo and even Apple had devices in that segment. A lot is going to depend on how Samsung approaches the rest of the year - there is a line of thought that claims that the brand will switch its attention to more premium devices with the upcoming launch of its new foldable range and rumours of a FE edition of its S22 flagships making the rounds as well. 

Vivo climbs, Realme gains, and Oppo remains consistent

The other three members of the top five of the Indian smartphone market are Vivo at third (17 percent of market share), Realme at fourth (16 percent), and Oppo at fifth (11 percent). Vivo took back the third spot from Realme with 22 percent year-on-year growth, spurred by good performance in the offline segment and the success of its T series online. Vivo also did well in the 5G segment, taking the second spot behind Samsung in the Indian market.  Realme slipped to fourth place in spite of recording a very impressive 23 percent year-on-year growth with its C series doing well and also meeting with considerable success in the budget 5G phone segment. Three of the top five models of the quarter came from Realme, an indication of the brand's popularity. Counterpoint, however, says that Realme could face issues with high inventory in the coming days. As for Oppo, the brand continued in fifth place and recorded 18 percent year-on-year growth, thanks to the good performance of its A16, F21, and K10 series of devices.

Boom time for Apple, OnePlus continues to do well

They might not be part of the top five in the Indian smartphone market but Apple and OnePlus have had an excellent 2022. The two brands had a very good Q1 2022, and repeated their success in the second quarter of the year.  Apple grew by a surprising 63 percent and continued to be the top brand in the ultra-premium segment (above Rs 45,000). Counterpoint says that the iPhone SE 2022 and offers on the other models will see Apple continue to do well in the year. Of course, there are also new iPhones just around the corner. OnePlus also notched up an impressive 45 percent growth, riding high on the success of the Nord CE 2 series and OnePlus 10. What's more, its totally 5G-supported portfolio helped it grab the third position in the 5G smartphone market — no mean achievement for a brand that is not even in the top five. 

The 5G era cometh

The number of 5G phones shipped in Q2 2022 reached record levels. As per Counterpoint, 5G smartphones accounted for 29 percent of all shipments in the quarter, which is the highest ever. Of course, as we have pointed out earlier, a lot of this can be attributed to the fact that almost all new devices in the mid and upper-mid segment are coming with 5G support, and that this feature might have more to do with new processors coming with 5G, rather than consumer demand for the network.  

That said, with 5G auctions having taken place, the adoption of 5G phones is expected to further increase as the network finally arrives in India in the coming months. In the 5G smartphone segment, Samsung was the leader with Vivo in second and OnePlus in third. 

Could Q3 2022 see a recovery?

Counterpoint itself has not commented on what could happen in the coming days in the Indian smartphone market in the excerpt of the research we have seen, apart from comments on a few brands. There is, nevertheless, a feeling that Q3 2022 could potentially spark a recovery in the Indian smartphone market, with a number of online sales and festive offers. The quarter has already seen very high-profile launches from Google, Vivo, Xiaomi, and OnePlus, and is set to see new offerings from Samsung and Apple too. 

The quarter also has seen Motorola becoming more aggressive in terms of launch and pricing. Combine that with an increasing number of offers and financing schemes from brands burdened by inventory, and there is hope that figures will surge in Q3 2022, notwithstanding the fall in the value of the Rupee. This could be a massive quarter for the Indian smartphone market. Needless to say, we will be keeping a close eye on it. Stay tuned.