Smartphone market to grow 7-8% in 2024 on 5G devices, premium pricing: Analysts – Moneycontrol

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The Indian smartphone market is likely to log in 7-8 percent growth in the 2024 calendar year as more people look to buy pricier 5G and AI handsets, Counterpoint and CyberMedia Research said in separate reports.

Counterpoint expects India’s smartphone market growth will be driven by strong premiumisation, 5G adoption and post-Covid upgrades.

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In Q1 2024 (January-March), the smartphone market grew 8- 10 percent year-on-year in volume terms, driven by healthy inventory levels and 5G, both Counterpoint and CyberMedia Research said in their reports.

CyberMedia Research (CMR) said that India’s smartphone market grew 10 percent year-on-year, driven by 5G growth in the country. Counterpoint estimated that the smartphone shipments grew 8 percent in volume and 18 percent in value on-year.

Singapore-based Canalys Research last month said that the market saw a 15 percent year-on-year growth to reach 35.3 million units because of lower base of Q1 2023, which faced inflationary pressures, weak demand, and stockpile issues.

“During the quarter, India’s smartphone market reached its highest ever Q1 value. The growth was driven by the strengthening trend of premiumisation, with consumers upgrading to higher-value smartphones across price tiers,” Counterpoint senior research analyst Shilpi Jain said in the report.

CMR analyst Menka Kumari suggested that the first quarter saw a notable uptick in 5G adoption, accompanied by a persistent trend towards premiumisation.

“5G continues to diffuse to more affordable price tiers, especially in the Rs 10,000 to Rs 15,000 price band. The onset of AI phones further fuelled the premiumisation wave,” she said.

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Analysts expect smartphone brands to hike the prices of their devices on the back of rising component costs. Brands, they said, are also investing in expanding offline retail presence, which is driving costs.

“Price hikes are expected to continue as operational pressures rise due to higher component costs, despite import duty reductions on a few parts. Brands are also prioritising channel incentives and retail investments, driving the costs further up,” Canalys senior analyst Sanyam Chaurasia said in a report published on April 18.

Chaurasia said that the brands will look to justify their incremental pricing beyond the 5G capabilities in 2024, mainly through design language, user experience and other integrated smartphone AIoT offerings.

“While in 2024 growth catalysts seem to be limited to just 5G device upgrades and premiumisation, vendors must focus on long-term strategies for share sustainability. Amid the government’s push for localisation, smartphone vendors must further focus on restructuring local distribution, leveraging local manufacturing partners and appointing Indian leadership,” Chaurasia said.

“The smartphone market in 2024 and beyond is poised for fierce competition in the value-for-money 5G segment. Brands that capitalize on these trends – affordable 5G, powerful on-device AI, and seamless cross-device experiences – will be well-positioned to win in this growing but hypercompetitive market,” said Bhaskar Negi, analyst-industry intelligence group at CyberMedia Research (CMR).

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