Smartphones in India will become more expensive in 2021: Canalys
The Indian smartphone market did quite well in Q1 2021 as it recovered fully from the effects of the Covid-19 pandemic. Xiaomi continued to maintain its hegemony in the market, with Samsung, Vivo, and Relame hot on its heels. The market grew by a healthy 11 percent in the quarter. However, market research firm Canalys speculates that Q2 will be quite the opposite as the second wave of COVID-19 infections continues to ravage the country. What’s more, even after it passes, smartphone buyers will end up paying more out of their pockets, especially those who purchase handsets priced under Rs 15,000.
Smartphone prices to rise in 2021
“Looking further into 2021, unfavourable macroeconomic factors will lead to a rising smartphone ASP [Average Selling Price],” said Canalys analyst Varun Kannan. “A combination of the ongoing supply crunch on key imported components and a weaker Rupee will make it increasingly difficult for vendors to maintain margins at current price levels.”
He continues, saying that consumers will these costs will be transferred to the customers in the form of a price hike. This increase in smartphone prices in 2021 will hit buyers in the sub-$200 (~Rs 15,000) smartphone segment particularly hard. As many as 81 percent of the smartphones shipped in India last year were priced under Rs 15,000, he says.
Smartphone sales to dip in Q2 2021
But while there is still time for this price hike, Canalys expects a drop in smartphone sales in the ongoing quarter. Given the massive spike of COVID 19 cases in the country, most people will not be in the market for a shiny new smartphone. Furthermore, the growth recorded in Q1 2021 was largely in part due to the absolute barrage of smartphone launches in February and March. April was relatively quiet and May is expected to follow suit.
Elaborating on this, Canalys says it expects smartphone shipments in India to take a deep dive in Q2 2021 amid the second wave of COVID-19 infections. “Regional lockdowns could hamper transport of raw materials and devices due to limited inter-state travel. Hence, for smartphone brands and channels, building up optimum inventory could prove to be a hurdle in the second half of the year,” said analyst Sanyam Chaurasia.
As shown in the graph above, smartphone shipments in Q2 2020 didn’t do so well either. This was mostly due to the strict lockdown restrictions imposed by the central government. In 2021, many states such as Maharashtra and Delhi already have a quasi-lockdown in effect. It should not be long before others follow suit. An indirect consequence of said lockdowns is that e-commerce platforms are disallowed from delivering non-essential items. Unfortunately, smartphones happen to fall in that category, completely eliminating the online market.
The offline market is no better off, as all non-essential commercial establishments have also been instructed to cease operations until the situation improves. That, combined with relatively fewer releases will cause a dip in the number of smartphones shipped in Q2 2021. Given the dire situation that our country is in, it makes little sense for OEMs to even launch new smartphones, as it would come off as a bit insensitive.
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