Xiaomi Stays On Top, Apple, OnePlus Flourish Despite Supply Issues In India — Key Takeaways From Q1 Counterpoint Report

The Indian smartphone market got off to a sluggish start in 2022, recording a 1 per cent fall in shipments in Q1, Counterpoint Research report says.

This is the first time shipments in the Indian smartphone market have declined in the first quarter

Source : Getty

By Akriti Rana and Nimish Dubey 

It might have had a record breaking 2021, but 2022 is turning out to be a challenging year for Indian smartphone players. After a challenging end to the previous year, with sales declining in the final quarters, the Indian smartphone market got off to a sluggish start in 2022, recording a 1 per cent fall in shipments, as per the Counterpoint Research. The research also highlighted a number of trends and drew attention to performance of key players as well as the growth of different price segments in the first quarter of the year. Some of the notable trends and pieces of information to emerge from this research are :

First time ever Q1 decline — blame it on supplies and Covid 

This is the first time shipments in the Indian smartphone market have declined in the first quarter. Over 38 million smartphones were shipped in the quarter, which is about 1 per cent lesser than the number shipped in Q1 2021.  The agency attributed the decline in shipments in the first quarter to supply constraints due to component shortages and a decline in demand during the third wave of Covid. For us, the decline in demand is a telling point, for it might indicate that there is a point beyond which the Indian consumer will not invest. It is particularly noticeable too that this demand seems to have declined only at phones below Rs 15,000, which takes us to the next point. 

Market declines, premium segment thrives 

One of the most intriguing facets of the quarter was the fact that even though the smartphone market declined overall, the upper tier and premium segments recorded growth. This resulted in what the agency called the highest ever market retail average selling price (although it did not disclose this in the excerpt made public) - the average selling price of a phone in India was USD 227 at the end of 2021, which in itself was a record high at that time. 

As per the research, all segments above Rs 15,000 recorded double digit growth, which seems to indicate that the sub-Rs 15,000 part of the market might just have reached its saturation point, with growth now moving to higher levels. It will be interesting to see if this growth is sustainable, though as right now, the growth is being registered on smaller base numbers. As per most researches, a large number of Indian consumers purchase phones at prices below  Rs 15,000 and that segment seems to have lost a bit of steam, perhaps because of rising prices. 

Xiaomi, Samsung stay on top in spite of decline

Xiaomi and Samsung have been holding the top two slots in the Indian smartphone market for quite a while now. That did not change in Q1 2022, even though both brands faced slowdowns. Xiaomi's shipments dipped by 13 per cent and its market share fell from 26 per cent in Q1 2021 to 23 per cent in Q1 2022, but it retained the number one spot in the market. Samsung had a smaller decline in shipments (1 per cent), but its market share remained at 20 per cent - the same as in Q1 2021. We think the brand's revival of the A and M series and the return of Exynos chipsets is expected to boost its prospects in the next quarter. Xiaomi too is expected to come out with a number of devices in the second quarter, and has already released its premium segment Xiaomi 12 Pro as this is being written.

Realme records stunning growth, thanks to UNISOC 

In a quarter where most of the major brands experienced declines, Realme bucked the trend and recorded and amazing 40 per cent growth as compared to Q1 2021. It took the brand's market share to 16 per cent, carrying it to third place in the market - it had been fourth in Q1 2021 with an 11 per cent market share. The agency attributed Realme's dramatic growth to its decision to go for UNISOC processors for its lower priced, mass market models. Interestingly, Xiaomi has never used a UNISOC processor in any of its models in India and even Samsung has used the processor in limited models. Realme's more extended use of the chip, which did not face as many supply issues as MediaTek and Qualcomm did, paid rich dividends. The challenge for the brand is going to be to sustain this level of growth, as UNISOC has not really caught on in the market and its rivals seem to be getting over their chip supply issues. 

Apple grows steadily, OnePlus rockets up!

Apple and OnePlus might not be among the top five smartphone brands in India, but they both enjoy significant following. And Q1 2022 was good for both! Apple continued its impressive showing in India, growing by 5 per cent, but the real surprise came from OnePlus, which recorded a staggering 347 per cent growth. Apple, however, remained the top brand in the premium segment (above Rs 30,000), while OnePlus was in third place and Samsung in second. Samsung incidentally was the leader in the "affordable premium" segment of Rs 30,000 - Rs 45,000, beating off OnePlus' challenge (OnePlus was the leader in this segment in 2021) and Xiaomi's recent rise.  

Vivo, Oppo get hit by offline problems 

Both Vivo and Oppo also had a tough quarter. Vivo suffered a decline of 8 per cent, while Oppo lost 18 per cent. Vivo's dip saw its share fall to 15 per cent, which made it lose third place in the market to the rapidly-growing Realme. Oppo's share of the market fell from 11 per cent to 9 per cent, keeping it in fifth place, as in Q1 2021. As per the research agency, both brands suffered from the Omicron wave of COIVD which hit the offline market, which is key for both players. Both brands will be watching the rising cases in India at the moment with concern. Vivo has already being making efforts in the online space with the iQoo brand, and market rumours indicate that Oppo might be considering something similar - after all, Realme started life as an online brand for Oppo!

5G shipments continue to rise, although there's no sign of 5G itself

The network might not be in India yet, but the shipments of 5G phones continue to grow. 5G phone shipments grew by an amazing 314 per cent in Q1 2022, and made up 28 per cent of the total smartphones shipped in the quarter. While Samsung was the top brand in 5G phones, Xiaomi took second spot. OnePlus' Nord CE 2 was the highest selling 5G device of the year. Vivo, which was the top 5G brand in 2021, lost ground to Samsung and Xiaomi in this quarter, but took the top spot in the Rs 10,000 - Rs 20,000 band of the 5G market, thanks to its T series, which was launched in the quarter. We expect OnePlus to make waves in that segment in the next quarter, thanks to its just released OnePlus Nord CE2 Lite at Rs 19,999

Itel leads a declining feature phone market 

The feature phone market fell even more steeply in Q1 2022, going down by 39 per cent. Itel continued to be the leading player in it with a market share of 21 per cent. Not too many might have noticed its progress, but as per the agency the brand has been the leader of the feature phone market for a total of nine quarters now. Unfortunately, we do not see this segment growing in the coming years, given trends, and the fact that smartphones themselves are getting more affordable. We would love to be proved wrong - imagine a super affordable 5G feature phone!?

Q2 2022 also likely to be a tough one

Although brands and manufacturers are doing their best to combat supply issues, taking measures like expanding supplier portfolio and increasing local sourcing of materials, even the second quarter of 2022 is unlikely to witness a massive improvement. As per the agency, the market is likely to be "modest" in the second quarter, thanks to the COVID19 situation in China, which has again disrupted supplies. If Q2 2022 too witnesses a decline, it would mark an entire year of negative growth for the industry, and could well result in some tough decisions.