India surpasses U.S. as 2nd largest smartphone market

The Indian smartphone market surpassed the United States for the first time in 2019, becoming the second largest in the world, according to a Counterpoint report.

Indian smartphone shipments reached 158 million units in 2019, a year-on-year increase of 7%. This is mainly due to the continuous integration of flagship functions into mid-range models by Chinese mobile phone manufacturers, and the need for users upgrading from their phones, the report said.

Additionally, the online channels became the preferred selling platforms to introduce these products faster into the market.

Although the rate of growth for the smartphone market was only single digit for the first time on an annual basis, India is underpenetrated relative to many other markets, said Tarun Pathak, Associate Director.

We expect this demand to grow further due to the ongoing transition from feature phones to smartphones and progressive diffusion of key smartphone features to the entry-level price tier as a result of hyper-competition among multiple players, Tarun said.

We further expect brands to have multi-tier strategies involving partnerships in the mobile ecosystem from hardware, software and services, thus creating opportunities within different segments like entertainment, gaming, financial services and more, he said.

Chinese brands’ share hit a record 72% for 2019 compared to 60% a year ago. During 2019 we have seen all major Chinese players expanding their footprint in offline and online channels to gain market share, said Anshika Jain, Research Analyst at Counterpoint Research.

For example, Xiaomi, realme, and OnePlus have increased their offline points of sale, while brands like Vivo have expanded their online reach with Z and U series. 2019 also marked the fifth anniversary in India for some OEMs. Several have seen significant growth from their first full year of operation.

For example, over the past four years, Xiaomi, Vivo, and OnePlus have grown 15x, 24x, and 18x respectively. This highlights that OEMs are mature enough to capture the next wave of growth and further expand their operations in India.