The shift means that the smartphone wars in India have just ratcheted up a notch, but Samsung is still in the game, says analyst firm Canalys.
Samsung just lost the No. 1 smartphone sales title in India for the first time, but that shift is just the start of what is expected to be a continuing sales tussle in the region for some time. That’s the view of Chris Jones, an analyst with research firm Canalys, which released a report on Feb. 3 that showed Micromax passing Samsung in smartphone sales in India for the fourth quarter of 2014, which is the first time that Micromax has led Samsung in the Indian market. Micromax captured 22 percent of smartphone sales in India for the fourth quarter, ahead of Samsung’s 20 percent, according to Canalys’ figures. “We have seen it coming, if you look at the momentum of the two companies in the Indian market then this was in the cards,” Jones told eWEEK in a Feb. 4 telephone interview. “[Micromax] almost made it [into the lead] in Q3.”
The lead swap is interesting because India is the world’s third-largest market for smartphones, behind China and the United States and because Samsung is continuing to try to battle out of a slump caused by cheap smartphones from China and the release of the new and improved iPhone 6 models from Apple. Samsung has been losing market share and revenue to its rivals and is already in the midst of plans to pare back its model line and cut production costs to better compete, according to earlier eWEEK reports.
In its research report, Canalys said that Micromax’s “incredible performance is partly due to Micromax’s continuing appeal to mobile phone users upgrading to smart phones. Its flagship line of products has also very effectively targeted the $150 to $200 segment, with products such as the Canvas Nitro and Canvas Hue.” Micromax is the largest mobile vendor in India, and is the 10th largest mobile phone maker in the world, according to the company. Micromax said it sells more than 3 million mobile devices every month through 130,000 retail outlets in India. Some 23 percent of smartphone shipments in India in the fourth quarter were devices priced under $100, while 41 percent were of devices in the $100 to $200 bracket, showing that Indian consumers are looking to spend less to get smartphones that suit their needs, according to Canalys research.
Jones said that Micromax is able to compete well with Samsung on price as well as features because it and its other Indian competitors “are sourcing their devices particularly from OEMs in China,” where prices are cheaper. “They are shopping around and sourcing the best deals at different price points. They know the market well. They see where Samsung has priced its products and then do what they can to do it cheaper.” Samsung has been having trouble competing with Chinese and other lower-priced competitors because, “in many cases, Samsung is selling global phones” that are built for a wide range of markets, which then sell for higher prices due to their higher-end features, said Jones. “Then they discount the previous models but they end up having too many devices on the shelves.”
While this has been frustrating for Samsung and helped fuel its global sales and earnings slump, it doesn’t mean that Samsung won’t bounce back, said Jones. “Samsung hasn’t given up at all,” he said. “[Sales figures have] been very close the last few quarters. It’s still very close. They are aware of the situation and they know what they need to do. They need an efficient supply chain, and to execute on every product launch in every market.
This is a complicated place to be in. It takes Samsung and other vendors a bit longer to get things out in so many markets.” For Samsung, Micromax and their other competitors in the Indian market, there are still a lot of smartphones to be sold, said Jones. “India is still under-penetrated, so more growth is to come there and Samsung can still compete well.” Less than 50 percent of the phones being used by consumers in India today are smartphones, so the potential market is there, he said. To be successful there, “Samsung can’t take its eye off the ball,” said Jones. “It’s got to focus on the growth markets. It can’t afford to keep on losing the leadership in key strategic markets, but it can’t change overnight.
It’s a big organization.” One of the issues Samsung has been facing is that consumers like change, so after two or three years, they want to try a different phone, said Jones. “It needs to have relevant products for those markets. Other vendors are learning what made Samsung successful” and are mirroring its strategies, he said. “It’s very fluid and we could see the leadership change again in 2015, once or twice,” said Jones. “It’s a huge opportunity for growth for many vendors in India.” Samsung is already rumored to be working on a new curved version of its flagship Galaxy smartphone, according to a recent eWEEK report. The new device is scheduled to be unveiled at a special March 1 event a day before the opening of the Mobile World Congress event in Barcelona, Spain