According to the latest research from Counterpoint’s Market Monitor service, India’s overall mobile phone shipments grew 48% YoY in Q1 2018. The market was driven by the feature phone segment which doubled in Q1 2018 due to strong shipments of Reliance JioPhone, while the smartphone market remained flat YoY.

Q1 2018 started off with some brands sitting on inventory post the festive season in Q4 2017, which continued throughout the quarter as industry moves to a full view display portfolio. Furthermore, the quarter was also marked with less than normal smartphone launches as very few brands refreshed their portfolio, except for Xiaomi and Samsung which benefitted from the new launches. However, we expect the demand to start picking up from early Q2 2018 onwards, driven by faster replacement rate of existing 2G and 3G smartphone users upgrading to 4G mobile phones.

This is the first time that the top five smartphone brands accounted for more than 70% market share in a single quarter, which could accelerate exits and possibly consolidation. Xiaomi and Samsung alone captured 58% of the total smartphone market. Xiaomi’s performance is driven by rising product-pull in the offline market, building upon its strong presence in the online channel where it captured a record 57% share. Xiaomi’s Redmi Note 5 and 5 Pro were the most popular models for the Chinese brand, whereas Samsung Galaxy J7 NXT and J2 (2017) drove volumes for the Korean vendor.

The demand for JioPhone continued through Q1 2018 as Reliance Jio’s feature phone market share raced from 0% last year to 36% in Q1 2018. This demand was catalysed by the introduction of a cheaper data plan, for the JioPhone in January: INR 49 (< US$ 1) per month including unlimited voice calling and 1GB of data per month. Additionally, Jio has been aggressively promoting JioPhone as “India’s free smartphone” though technically, a smart feature phone to attract the large base of 2G voice users which prefer the simpler feature phone form-factor. Further, the lack of vernacular/regional content, UI and good quality smartphones below INR 2,700 (US$ 40) has been some of the driving factors for JioPhone’s growth.

Market Summary:

• The Indian mobile phone market grew by 48% YoY in Q1 2018 driven by strong demand from the featurephone segment. The smartphone market remained flat YoY.
• The performance of Chinese brands remained strong, accounting for 57% of the total smartphone market in Q1 2018, up from 53% during Q1 2017. This is the highest ever contribution by Chinese players in the Indian smartphone market.
• In the smartphone segment, Xiaomi maintained its lead in Q1 2018 with a record 31% market share followed by Samsung (26%), vivo (6%), OPPO (6%), and Honor (3%).
• Huawei’s Honor brand captured the fifth position for the first time ever, in the Indian smartphone market due to the strong performance of Honor 9 Lite and Honor 7X across online channels.
• China based Transsion Group (the holding group of Tecno, Itel and Infinix) has become the fifth largest player with 4% market share in Q1 2018 (combined for all three brands). Tecno, which debuted in April last year, has emerged as a leading smartphone brand and is close to entering the top ten list. The brand grew 23% QoQ in Q1 2018.
• The race for the fifth position is quite close between Lava, Micromax, Honor, Nokia (HMD) and Lenovo (+Moto) brands.
• Honor (146%), Xiaomi (134%) and OnePlus (112%) were the fastest growing smartphone brands in Q1 2018.
• In the featurephone segment, Reliance Jio now captures more than one-third of the total featurephone market – the highest ever in a single quarter, since what Nokia achieved at its peak.
• Itel, is the third largest player in the feature phone segment with 17% growth YoY in Q1 2018.
• Premium segment (>INR 30,000, US$ 452) remained flat YoY during Q1 2018. Samsung grabbed the top position in the premium segment, capturing half of the total premium market due to new flagships – S9, S9 Plus and A8 Plus. OnePlus maintained the second position with one-fourth share of the total premium smartphone market.
• 96% of the smartphones were assembled or manufactured locally due to increased focus on the Make-In-India program and rising import duties. As the Indian government has increased duties on CBU and PCBA this quarter, going forward, the market will shift from SKD to CKD level manufacturing.