Indian Mobile Phone Sales Drop For First Time In 20 Years

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NEW DELHI – Mobile sales dropped 14.5% in Q1 (January to March) 2015, on a quarter-to-quarter basis, compared to Q4 (October to December) 2014; from 62 million handsets in Q4 2014 to 53 million handsets in Q1 2015, according to a recent press release from CyberMedia Research, a consultancy.

The decline in smartphone sales from quarter-to-quarter was 7.14%. Cheaper “feature” phones performed worse, with an 18.3% sales decline over the same period.

India became the fastest-growing market for smartphones in Asia-Pacific in 2014, and is supposed to overtake US as the second-largest smartphone market globally, with 204 million smartphone users by 2016, according to a study by eMarketer, a research firm.

So, do these data indicate that India’s mobile-phone growth is topping out?

Experts believe cyclical glitches account for the downturn in mobile-phone sales: unexciting phones, tax issues, increased competition and even extended Chinese new-year festivities.

“With major announcements of new handsets and entry of some new brands happening in a big way in Q4 2014, there wasn’t really something very exciting in the market for customers that could push up sales in Q1 2015,” said Faisal Kawoosa, Lead Analyst, Telecom Research at CyberMedia. “At the same time, a change in duty structure and the longer continuation of Chinese new year festivities which generally conclude by mid-February each year, affected the supply chain and inventories.”

In an attempt to push local manufacturing, the government, in a budget announcement, increased the excise duty on mobile handsets to 12.5% from 6%, pushing the cost of handsets by around 4%.

Experts said there were two more reasons: First, sales have fluctuated for vendors, with one vendor dominant in one quarter and another in the next. Second, as Kawoosa put it, “a maniacal focus” on online flash sales.