India witnesses drastic fall in mobile phone sales

New Delhi: In a rather appalling revelation, it has been identified that there has been a slow down of the mobile phone sales and the volatile Indian market is once again under questioning as to why this occurred.

Indian mobile-phone market has seen a rising trend for over two decades now. The rise was such that companies from over the world came and sold a bulk of phones and even smart phones in the country. People not just in tire 1, but 2 and 3 cities also demanded a phone with a camera and other features.

But Quarter 1 of 2015 has seen mobile phones sales dropped 14.5% in the first quarter (Q1, January-March) 2015, on a quarter-to-quarter basis, compared to Q4 (October-December) 2014 — from 62 million handsets in Q4 2014 to 53 million handsets in Q1 2015, according to a report of CyberMedia Research, a consultancy.

The decline in smartphone sales from quarter-to-quarter was 7.14%. The cheaper “feature” phones performed even 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.

Experts believe the reason behind the slowdown to be the cyclical glitches that 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 lead analyst, Telecom Research at CyberMedia, Faisal Kawoosa when asked about the slow down.

“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 had increased the excise duty on mobile handsets to 12.5% from 6%, pushing the cost of handsets by around 4%.

The sales have been deeply affected also because sales have fluctuated for vendors, with one vendor dominant in one quarter and another in the next and on online flash sales might also be the reason.

It’s also believed that established brands have diverted their focus from their existing legacy. The differentiating strength of the leading brands in the market lies in their distribution network, built and invested in over the years across India, should be leveraged to increase sales.

The year 2014 saw the entry of many new players in the mobile market, especially Chinese firms. With an 18.5% market share, Samsung continues to occupy the top spot, followed by India’s Micromax with 12.1% and Microsoft with 9.6%.

Within the smartphone segment, Samsung has an even bigger lead, a market share of 27.9%, followed by Micromax with 16.2% and Intex, an Indian brand, with 9.2%.

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