NEW DELHI: Consumers seeking a smartphone upgrade ahead of Diwali may be spoilt for choice as a battle is brewing in the premium segment with aggressive entrants Xiaomi, Vivo and Huawei trying to shake the dominance of segment leader OnePlus, besides historically strong players such as Samsung and Apple.
This fight is likely to help expand India’s premium smartphone segment–Rs 30,000 and above–by as much by 20% in the July-September quarter alone, compared with the overall smartphone space that’s expected to stay flat in the three-month period, analysts said. Similar growth in the segment is expected in the next three to four quarters as well, they said.
The first move will be made by South Korea’s Samsung this month itself with the launch of the latest Note 9 smartphone, followed by devices from OnePlus, Vivo, Huawei and Xiaomi, through the latter’s sub-brand Poco, ahead of the festive season, which typically starts in October and contributes at least a third to a handset maker’s annual revenue in India.
“The $500 premium segment has been traditionally split between Apple and Samsung in India,” said Navkendar Singh, an associate director with International Data Corp. “With new players like OnePlus… successfully carving a niche in the $500-700 segment, other players like Oppo, Vivo, Xiaomi, Huawei are sensing an opportunity.”
A number of brands, mostly Chinese, are looking at moving up the price ladder by launching new models in the $500-plus segment to showcase innovations and leverage the brand positioning they have been able to build over time.
Recent research by CMR suggested that 59% of the smartphone market is accounted for by replacements or upgrades as against 41% new buyers. Of the replacements, over 95% are moving to the next price level, a finding which top brands–looking for higher margins and profitability–are seeking to capitalise on. The segment offers low volumes, around 3% of the overall market, but higher value at 12%.
Huawei, now the world’s second largest smartphone maker, is aiming to top the high-end segment.
“Nobody can ignore India… it’s the fastest growing market,” said Allen Wang, director, product centre, Huawei India Consumer Business Group. “This is the right time to push for our Huawei-branded smartphones. Our target is to become the top player in the high-end or premium segment in India.”
Nipun Marya, director of brand strategy at Vivo India, said, “India is such a strategic market for Vivo… focus on the premium segment is part of the new strategy.”
Poco, focused on the high-end space, is aimed at leveraging the rising average selling price (ASP) for smartphones in India, Xiaomi’s India head and international vice president, Manu Jain, said recently.
Karn Chauhan, research analyst at Counterpoint Research, said most of the launches will be in the Rs 30,000-40,000 range as brands look for high profit margins at a time when the spending power of consumers is rising. “Indian consumers are becoming more mature and aware in terms of experience, features and specifications which eventually lead them to the premium segment,” Chauhan said.
Analysts said demand in the segment is being fuelled by incentives such as cashbacks, equated monthly installments, data bundling and exchange offers aimed at reducing the affordability gap. The premium segment grew 19% from the year earlier and 10% sequentially in the second quarter, when OnePlus surpassed Samsung to become the leader, with Apple a distant third.
But both Samsung and Apple are looking to strike back.
IDC’s Singh said that Apple, with its new launches, will gain share in the premium segment toward the latter part of this year. Samsung, on the other hand, “with its Note 9 launch and the ongoing success of S9 range, will remain a strong brand in this segment,” he said.