Just Like Cars & Parle-G, Will Indians Stop Buying Smartphones?

The Indian economy is slowing down and spending has dried up. But will that affect smartphone purchases?

A salesman checks a customer’s iPhone at a mobile phone store in New Delhi. 

(Photo: Reuters)

With the economic slowdown starting to show its impact, several industries in India are feeling the strain. This brings us to the key question, will Indian consumers put off buying smartphones, therefore hitting the market altogether?

It’s interesting to see differing opinions, but with the festive period closing in, most brands are optimistic of continuing the trend of growth in the mobile phone market.

Xiaomi, the leading brand in the country, has been vocal about how the market is unlikely to slow down anytime soon. In fact, Xiaomi expects the industry to grow further in the coming months before end of 2019.

Other brands in the segment like Vivo, Samsung and Oppo could also throw their hats in the ring with new product announcements.

We have seen the smartphone market growing at over 8 to 9 percent in the first half of the year and based on these figures, we expect same growth, even more, in the upcoming festive season.

Raghu Reddy, Head - Categories and Online Sales, Xiaomi India, to IANS

Prabhu Ram, Head Analyst with Cybermedia Research (CMR) also concurs with Raghu, again pointing out that the upcoming festive season could be the stimulating factor for demand.

On the back of new buyers, as well as those seeking upgrades, essentially the new breed of aspirational Indians, CMR anticipates the smartphone market to be immune from potentially any economic slowdown, and in fact, grow. 

Prabhu Ram, Head-Industry Intelligence Group (IIG), CMR

While people curb their spending, what are the reasons that will make sure the smartphone industry doesn’t bear the brunt of slowdown?

People cannot live without smartphones. If an existing phone stops working, one would buy a new one. We believe it would be the last sector to get impacted.

Raghu Reddy, Head - Categories and Online Sales, Xiaomi India, to IANS

Prabhu believes the entry level (sub Rs 7,000) as well as the value-for-money (Rs 7,000 to Rs 25,000) segment will take charge of the sector’s growth. Apple will also be expecting better interest for its upcoming iPhone series, which could also help the sector retain its outlook.

However, the number of units sold among iPhones has dropped, but it hasn’t impacted Apple’s revenue as prices have gone up.

The assessments made by these industry representatives does paint a rosy picture for businesses and its shareholders. Having said that, there are people like Faisal Kawoosa from techARC who isn’t sure if the growth is sustainable.

Asked if he thinks India’s smartphone sector will continue to grow, he says:

I would disagree with that view. It’s bound to impact smartphones as well. Smartphone is at the end like any other consumer electronic product and will be hurt if consumer sentiments go negative, which happens in every slowdown. There is no reason why that won’t happen.

Faisal Kawoosa, Founder and Chief Analyst at techARC

Even after being aware of the impact that the festive season has on the sector, Faisal would rather wait and watch how the next few quarters pan out, giving them a clearer picture of the market.

We shall have to see the market behaviour in Q3 and Q4, which are festive driven. My understanding is there will be a hit and it will not reach the expected point.

Faisal Kawoosa, Founder and Chief Analyst at techARC

After hearing from both the sides, it would be early to make judgements based on previous quarters, especially when research analysts have seen growth happening at a decent pace. We’d rather wait for the post festive season reports to ascertain where the industry stands.