Mobile handsets market dips by 15% in the first three months of 2015

Experts attributed the downward sales to the lack of customers’ interest in new models and change in duty structure.

The Dollar Business Bureau

The Indian mobile handsets market declined 15% in terms of overall sales in the first three months of 2015 even as the market leader Samsung managed to retain its leadership position, a study said on Wednesday. Sluggish sales registered in both smart phone and feature phone segments. However, smart phones sales declined by only 7% as compared to more than 18% in the case of feather phones segment. Of the total 53 million mobile handsets sold during the first quarter of this year, 37% (19.5 million) were smart phones, said the report released by Cyber Media Research (CMR) on Wednesday. Experts attributed the downward sales to the lack of customers’ interest in new models and change in duty structure. In the annual budget, the government had increased duty benefits for domestic producers to boost local manufacturing of mobile phones. Excise duty structure for mobiles handsets, including cellular phones, has been changed to 1% without CENVAT (Central Value Added Tax) credit or 12.5% with CENVAT credit. Earlier the duty for mobiles was 6% with CENVAT credit. The move will benefit domestic manufacturers against those importing such items. Besides, local manufacturers can also claim duty benefits on VAT paid on purchase of various components. “With major announcements of new handsets and entry of some new brands happening in a big way in 4Q CY 2014, there wasn’t really something very exciting in the market for customers that could push up sales in 1Q CY 2015. At the same time, change in duty structure and the consequent impact on the supply chain due to the Chinese New Year festivities contributed to the market contraction,” said Faisal Kawoosa, analyst at CMR. Notwithstanding reduction in overall sales, Samsung has been able to garner a higher market share in feature phones between January and March 2015 as compared to the previous quarter. The company’s share also increased in the smartphones segment at 27.9%, up from 23.7% in the previous quarter. “Samsung’s ability to add to its portfolio in all the major price segments within smartphones, by launching new models in each of the entry-level, mid-range and high-end segments of the market contributed to this increase,” Faisal added. The CMR report said that Micromax, at second spot, registered a decline to 12.1% in terms overall mobile handset shipments, while in the smart phones segment, its market share was 16.2% as compared to 14% and 17.8% in the 4th quarter of the calendar year 2014, respectively. The third position in smart phones is maintained by Intex in this quarter, the report said. In the smart phones segment, Intex continued to strengthen its ranking with a 9.2% market share between January and March, an increase of 1.3%. Karn Chauhan, telecoms analyst at CMR, said “While seasonality had its play in this quarter, some players also need to revisit their strategies and perhaps not rely very heavily on online sales.” He said e-retailing works effectively only for small players who do not have a wide range of products like Xiaomi and OnePlus. “But, if you are Micromax, having a double-digit market share of middle to higher order price segment handsets, trying to replicate what Xiaomi and OnePlus are doing isn’t a very good idea,” Chauhan said. At the same time, one has to look at the segment contribution. “While Xiaomi, OnePlus and other emerging brands are ‘smart phone only’ brands, Micromax still gets around half its contribution from feature phones,” he added.      

May 6,  2015 | 6:46 pm IST.

The Dollar Business Bureau - May 06, 2015 12:00 IST