Why did Indian mobile phone sales drop for the first time in 20 years?

According to a report by CyberMedia Research, Indian mobile phone sales have dropped for the first time in 20 years! On a quarter-to-quarter basis, mobile sales dropped 14.5 per cent in the first quarter (Q1, January-March) 2015, when compared to the last quarter (Q4, October-December) 2014.

CyberMedia Research Report

As per reports, there was a 7.14 per cent  decline in Smartphone sales. Cheaper “feature” cell phones performed worse, with an 18.3 per cent sales decline over the same period. According to a study by eMarketer, India became the fastest-growing market for Smartphones in Asia-Pacific region in 2014 and is supposed to overtake the US as the second-largest smartphone market globally, with an estimated 204 million smartphone users by 2016.

eMarketer stats

With a view to push local manufacturing, the government announced an increase in  the excise duty on mobile handsets to 12.5 per cent from 6 per cent in the current budget, hence pushing the cost of handsets up by around 4 per cent. Experts believe cyclical glitches account for the downturn in mobile-phone sales was due to unexciting phones, tax issues and increased competition.

Experts said there were two more reasons:

  • First, sales have fluctuated for vendors, where one vendor dominant in one quarter and another in the next.
  • Second, as Faisal Kawoosa, lead analyst, Telecom Research at CyberMedia pointed out, there has been “a maniacal focus” on online flash sales.

As per survey reports, Samsung is the king of the smarthphone segment with a market share of  27.9 per cent, followed by Micromax with 16.2 per cent and Intex, an Indian brand, with 9.2 per cent.

Mobile Phone Sales Report

From a consumer perspective, established brands such as Micromax and Samsung should focus on their existing legacy. The differentiating strength of these brands lies in their distribution network which was built and has been invested in over the years. If they can leverage this as they have successfully done in the past with support of innovating pricing strategies and value added services, they will without a doubt be able to reverse declining sales.

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