India’s Ultra Premium Smartphone Market Witnessing Intensified Competition; 60-80% Growth Likely Driven by Apple

SmartphoneThe ultra-premium smartphone segment is witnessing intensified competition with established players Apple, Samsung and OnePlus vying with new entrants like Vivo for a greater share of consumer wallets in the festive season.

The over $700 segment is expected to surge 60-80% on-year in 2021 on pent-up demand, market trackers said, as consumers who did not upgrade their smartphone in 2020 due to the Covid-19 pandemic que up to buy expensive devices.

“The significant growth in these segments can be attributed to increased consumer spending on luxury/costly product segments, re-allocating spends from holidays, shopping, travel, dine out, etc,” Navkendar Singh, research director at market insights firm IDC. “We expect this momentum to only grow further in the upcoming festive season, driven by upgraders within the premium and from the $500-$700 segment.”

Counterpoint Research has forecast that Apple, Samsung, OnePlus, and Vivo will drive the ultra-premium market, which is expected to witness more than 60% on-year growth in 2021.

“Competition will be very high in this segment, with Apple likely to corner the lion’s share of around 40% in Q3. We have seen high shipments of iPhone 11 and 12 in August, and it will continue coupled with the iPhone 13 series,” Prachir Singh, senior research analyst at Counterpoint, said. “Apple is filling channels.”

IDC data for the April-June period showed that the $700-$1,000 segment grew 80% compared to 2019, while the $1,000 segment surged over 200%, with 2020 being a washout year owing to the pandemic.

“Almost 97% of the India market is under $500. However, there is a strong uptake in the $700-$1,000 price segment over the past few quarters,” Singh said.

The $700+ segment has gone up from 1% share in 2019 to 2.3% in 2021, he added.

Due to supply constraints impacting the entire mobile phone ecosystem, premium players have tried to push inadequate stocks, including older models, ahead of the festive season, market trackers said. They are also offering upfront discounts and cashback besides financing schemes and trade-in programs to attract buyers. The premium segment – over Rs 30,000 – contributes 7% by volumes, but 23% by value in the overall smartphones space.

A person familiar with Samsung’s sales trends said the total sales of Z Fold3 and Z Flip3 in India are trending higher than its Note 20 Series.

“By the end of the festive season this year (October end), Z Series devices will surpass Note 20 sales in India. Dealers and retailers across several states are stocked out and waiting for more supplies of the Galaxy Z Series. Nearly 60% of Indian consumers have gone for the pricier Galaxy Z Fold3,” the person added.

Vivo India, which recently launched its premium X70 series, wants to be player in all price segments, Nipun Marya, director – marketing strategy.

“In the last 12-18 months, in offline space, we have been no 1 both volume and value. Customers have given feedback that they want premium products from Vivo. In 2-4 years, the premium segment will continue to grow as customers are upgrading with rising income. Customers are willing to pay a premium for meaningful innovation,” Marya said.

In two to four years, the premium segment will continue to grow as rising incomes will help consumers will be willing to pay a premium for meaningful innovation and upgrade their phones, he added.

“It is great timing by Vivo to launch its X70 series since the IPL is ongoing,” said Counterpoint’s Singh.

OnePlus India, which ventured into the ultra-premium segment in 2019 with 7 Pro and 7T Pro, has cornered 32% share in the ultra-premium segment in the second quarter.
“This year, we closed our second quarter with our strongest ever product line-up backed by a strong performance of the OnePlus 9 series. We continue to play a pivotal role in the success of the premium smartphone segment in India,” a company spokesperson said.

IDC’s Singh said that OnePlus has witnessed a surge with OP9Pro shipments through with middling consumer demand in the past quarters.

The entry and strong performance of brands like Vivo, Xiaomi, and Oppo have increased competition in the overall premium smartphone segment (over Rs 30,000) which grew 122% on-year in the second quarter, capturing 7% of the overall market, according to Counterpoint.

The research firm expects the segment to grow 54% on year in 2021, or a 7% share in the overall market.

Apple, OnePlus, Vivo, Xiaomi, and Samsung are expected to drive the premium smartphone market,” said Counterpoint’s Singh.

A spokesperson for Xiaomi India said the company had a 14% share of the overall premium market in the second quarter. As we continue to grow in the market, we (will) work towards making Xiaomi a premium aspirational brand in India.”

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