Decoding The Smartphone Shipment Data: Q3 2023
The data on smartphone shipments from four research agencies is out. Before we start making judgement on who has done well and who has not, let us first understand that the data is 'shipment data' and not sales data. Shipment data should always be reviewed QoQ for at least two, if not 3 quarters to get a true picture of how the brand is doing in terms of actual sales. This becomes even more relevant, in fact vital, in case of the quarter preceding the festival quarter.
Q3 precedes the festival period of Diwali in November this year, and most brands would have brought in new models in high volumes in preparation of anticipated high sales during the festival season. A clearer and better picture of how well each brand is doing will be available only in Q4, as everything depends on the sell-out in Q4 which will determine the shipments and hence the market shares next quarter. If the sell-out does not happen as per expectations, inventory with brands will be high and hence the shipments and hence the market shares of brands will go down.
Remember Q3 2019 when #Realme reported a share of 14% in Q3 based on shipments?This collapsed to 9% in Q4 as the expected sell out in Q4 did not happen and the inventory carry forward dissuaded the brand from getting in high shipments in Q4.
Trying to collate the data from all the research agencies, the findings reveal the following:
A. Taking an average figure based on research agencies data, the shipments in Q3 2023 were approx. 44 million, flat or marginally down as compared to Q3 2022.
B. The decline QoQ has been reducing which is a positive sign. In totality, the fact is that the market is still below last year and may remain so for 2023.
C. Though #Samsung and #Xiaomi are at No. 1 and 2 respectively, both have shown a highest decline in the shipment units in Q3 2023 over Q3 2022.
D. In total terms, the market share of the top 5 brands has taken a beating by approximately 5% with ‘Others' gaining. The key gainers as I have been saying, are the #ATOM brands -#Apple, #Transsion, #OnePlus and #Motorola. My estimate would place the gain of #ATOM brands at 4%. At 4%, the additional numbers would be 1.8 million not a small quantity over 3 months.
The approximate weighted market share for the top 3 brands is between 15-17% with #Samsung at the top followed by #Xiaomi and then #Vivo. The difference in market shares between each brand would therefore be just about 0.7%. Considering the average shipment to be in the range of ~44 million as mentioned above, the difference in shipment volumes would be 3 lacs for the quarter or 1 lac a month which is not too high. Gives us more reason to wait for the shipment data in Q4 and market share data for entire 2023 to decide the true rankings.
Focusing on #ATOM, my estimate is that they grew by 4%. Even IDC data shows a gain in market share of #Apple (0.5%), #Transsion excluding #Itel (1.1%), and OnePlus (2%). Apple, as per #Counterpoint, witnessed its highest-ever smartphone shipments during Q3 at 2.5 million. Things will only get better for them this year and I won’t be surprised if they hit the 10 million mark as per my article https://telecom.economictimes.indiatimes.com/blog/can-apple-india-hit-the-10-million-units-mark-in-2023/100351186. Even IDC feels that this figure is achievable.
Agencies are saying what I had written in my article in the ET Telecom dated 6th October -https://telecom.economictimes.indiatimes.com/news/blog/2024-a-challenging-year-for-the-indian-smartphone-industry/104203983. I had said that while the sub Rs.10k segment may decline due to the K-Shaped economic recovery in India, the Rs.10-20k price segment will play an important role for brands to build volumes. Xiaomi had a strong response to its Redmi 12 5G and Samsung to its Galaxy A14 in this segment. To put things in perspective, 5G phones overall contributed to over 50% of the shipments in Q3 due to a 9% drop in ASP.
#IDC has shared some nice data on the performance YoY in different price categories:
Notes:
1. 64% of the market is still < Rs. 17000.
2. 86% of the market is still < Rs. 34000.
3. Mass budget segment though the largest is the fastest declining segment.
4. Mid-premium and above segment though showing high growths are still small at 12%.
Affordability has been a key factor to the growth starting the entry premium segment. Please do read my LinkedIn post - A Decade Into EMI Dated 26th October of the rise of EMI in sales of smartphones in India.
As per agencies, foldable smartphones seem to be gaining popularity in the ultra-premium segment due to their unique form factor. Their shipment touched the half a million mark as per IDC with Samsung having 2/3rd market share. The entry of Tecno and Motorola got the ASP of folding phones down by approx. 10%. Expect it to continue to go down further. Do read my Linkedin post Point To Ponder (Dated 18th October) for more insights on the foldable phone market in the future.
My Linkedin profile is www.linkedin.com/in/ajaysharma1958