Smartphone market may remain flat in 2020 amid coronavirus outbreak

The country’s solid smartphone market is headed for its worst hitch, the virus epidemic. Even though most manufacturers are still assessing the overall impact on their businesses, initial projections suggest that the market could grow at its lowest rate ever recorded in 2020.

IDC India estimates that smartphone sales are expected to remain stable. Other industry analysts and market research firms expect the growth rate to remain below 5% – also lower than its worst previous performance.

Sales of smartphones in India have always maintained a double-digit growth rate. In 2012, for example, the market grew by 120%, with the launch of 3G services in all major cities. Despite a decline in the growth rate in recent years and an overall slowdown, sales have increased by 10% in 2019. To date, the worst spectacle has been in 2016, when demonetization maintained growth at 6%.

In 2020, however, the lack of component supplies hit the manufacturing plans of all major suppliers since February. The foreclosure added to the woes, with the market now halted.

According to Navkendar Singh, research director at IDC, sales in the first half of 2020 will be hit hard.

Research agency CyberMedia (CMR) has revised its market forecast for 2020. It has said that smartphone production is expected to drop 38 to 40% from January to June. During this period, 46% of overall smartphone sales generally take place.

“We expect a significant drop of around 20% year-over-year (YoY) in shipments in the first quarter of 2020. There will be a full-blown impact in the second quarter, with a sharp drop of around 28% year-over-year” said Prabhu Ram, chief (industry intelligence group), CMR. With consumer sentiment affected by the dismal economic outlook, CMR believes consumer spending will remain subdued for most of the year.

Most of the major handset manufacturers, Business Standard, said they had not yet estimated the final impact. While some anticipate a recovery after July, others are still unable to redesign their plans.

Between March and June, almost 35% of all new launches take place. This is the period when plans for the next festive season are defined. However, industry players have stated that they are waiting for the foreclosure to end before they can assess any losses. The pandemic will force manufacturers to reflect and realign their market strategies. Supply chain disruptions will now drive brands to seriously intensify their localization strategies in India, said CMR.

Market analysts like IDC and CMR estimate some growth in the second half. “If the situation starts to normalize from late May, then we can expect a surge during the holiday season – early September,” said Singh. Normally, 37 to 40% of total sales take place during the holiday season.

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