Consumer sentiment looking up but cellphone shipments erode in Q3 CY23

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The sale of smartphones that has emerged as some sort of a bellwether for consumer demand in the country has suffered declines for five consecutive quarters, The Economic Times has in a report. Shipments for the July-September quarter (Q3) this year went down by 3% year-on-year running up 4.3 crore units. Despite the dip, experts interpreted the numbers as a sign of recovery.

The quarter recorded improved consumer sentiment. It paved the way for vendors to push new devices. A report by Canalys that was made public on October 19 stated that most brands witnessed improved inventory positions.

However, all the major brands witnessed a dip in shipments compared to the July-September quarter in 2022. The rate of shrinkage ranged from 1% for Vivo at a minimum to 17% for Xiaomi, the maximum.

“In Q3, smartphone brands strategically promoted their festive product line-up, with a strong emphasis around budget-friendly 5G options. The entry-level segment experienced a surge in demand as vendors introduced mass-market 5G models,” said Sanyam Chaurasia, senior analyst at Canalys.

Over the past few months, market analysts have been predicting that 5G models priced around Rs 10,000 would help in boost sagging sales of smartphones.

Counterpoint Research, another industry research major, observed that the overall market is likely to post a single-digit decline in Q3. However, it acknowledged that the Rs 10,000-15,000 segment recorded a leap in demand due to the affordable 5G models. These models were launched by price warrior companies such as Xiaomi, Realme, Motorola, and Transsion. “4G demand was practically killed in that segment as the Redmi 12 5G model drove huge demand,” said Shilpi Jain, senior research analyst, Counterpoint Research.

Among the brands, South Korean chaebol Samsung continued its leadership position in the July-September quarter. It had 18% of the market under its belt and recorded 79 lakh shipments. The second position was grabbed by Xiaomi and its sub-brand POCO with 76 lakh shipments. Vivo was at the third position (17% share, 72 lakh shipments), Realme was the fourth brand (13%) and Oppo, the fifth biggest brand in the market (10%).

However, compared with the sales in the Q3 of CY2022, all brands suffered a decline in shipments. The shrinkages were – Samsung 3%, Xiaomi 17%, Vivo 1%, Realme 6% and Oppo 16%.

IDC’s Upasana Joshi remarked that online channels recorded brisk sales in August. The first phase of festive sales began in September. “September and October usually witness the highest smartphone sales in the year, but this year, the majority of sales is expected to happen in October with Diwali falling in November,” she said.

Looking forward to 2024, Chaurasia felt that the path to recovery might face headwinds of global economic concerns. This is likely to impact the entry-level segment. He advised brands to reduce channel pressures and build a lean product portfolio. He felt that each price segment should have a model that will lead the charge in that segment.