Samsung just lost the No. 1 smartphone sales title in India for the first time, but that shift is just the start of what is expected to be a continuing sales tussle in the region for some time.
That’s the view of Chris Jones, an analyst with research firm Canalys, which released a report on Feb. 3 that showed Micromax passing Samsung in smartphone sales in India for the fourth quarter of 2014, which is the first time that Micromax has led Samsung in the Indian market.
Micromax captured 22 percent of smartphone sales in India for the fourth quarter, ahead of Samsung’s 20 percent, according to Canalys’ figures.
“We have seen it coming, if you look at the momentum of the two companies in the Indian market then this was in the cards,” Jones told eWEEK in a Feb. 4 telephone interview. “[Micromax] almost made it [into the lead] in Q3.”
The lead swap is interesting because India is the world’s third-largest market for smartphones, behind China and the United States and because Samsung is continuing to try to battle out of a slump caused by cheap smartphones from China and the release of the new and improved iPhone 6 models from Apple. Samsung has been losing market share and revenue to its rivals and is already in the midst of plans to pare back its model line and cut production costs to better compete, according to earlier eWEEK reports.
In its research report, Canalys said that Micromax’s “incredible performance is partly due to Micromax’s continuing appeal to mobile phone users upgrading to smart phones. Its flagship line of products has also very effectively targeted the $150 to $200 segment, with products such as the Canvas Nitro and Canvas Hue.”
Micromax is the largest mobile vendor in India, and is the 10th largest mobile phone maker in the world, according to the company. Micromax said it sells more than 3 million mobile devices every month through 130,000 retail outlets in India.
Some 23 percent of smartphone shipments in India in the fourth quarter were devices priced under $100, while 41 percent were of devices in the $100 to $200 bracket, showing that Indian consumers are looking to spend less to get smartphones that suit their needs, according to Canalys research.
Jones said that Micromax is able to compete well with Samsung on price as well as features because it and its other Indian competitors “are sourcing their devices particularly from OEMs in China,” where prices are cheaper. “They are shopping around and sourcing the best deals at different price points. They know the market well. They see where Samsung has priced its products and then do what they can to do it cheaper.”
Samsung has been having trouble competing with Chinese and other lower-priced competitors because, “in many cases, Samsung is selling global phones” that are built for a wide range of markets, which then sell for higher prices due to their higher-end features, said Jones. “Then they discount the previous models but they end up having too many devices on the shelves.”
While this has been frustrating for Samsung and helped fuel its global sales and earnings slump, it doesn’t mean that Samsung won’t bounce back, said Jones.
“Samsung hasn’t given up at all,” he said. “[Sales figures have] been very close the last few quarters. It’s still very close. They are aware of the situation and they know what they need to do. They need an efficient supply chain, and to execute on every product launch in every market. This is a complicated place to be in. It takes Samsung and other vendors a bit longer to get things out in so many markets.”
For Samsung, Micromax and their other competitors in the Indian market, there are still a lot of smartphones to be sold, said Jones. “India is still under-penetrated, so more growth is to come there and Samsung can still compete well.”
Less than 50 percent of the phones being used by consumers in India today are smartphones, so the potential market is there, he said. To be successful there, “Samsung can’t take its eye off the ball,” said Jones. “It’s got to focus on the growth markets. It can’t afford to keep on losing the leadership in key strategic markets, but it can’t change overnight. It’s a big organization.”
One of the issues Samsung has been facing is that consumers like change, so after two or three years, they want to try a different phone, said Jones. “It needs to have relevant products for those markets. Other vendors are learning what made Samsung successful” and are mirroring its strategies, he said.
“It’s very fluid and we could see the leadership change again in 2015, once or twice,” said Jones. “It’s a huge opportunity for growth for many vendors in India.”
Samsung is already rumored to be working on a new curved version of its flagship Galaxy smartphone, according to a recent eWEEK report. The new device is scheduled to be unveiled at a special March 1 event a day before the opening of the Mobile World Congress event in Barcelona, Spain.
Samsung Loses No. 1 Sales Spot in India to Micromax
A successful launch for the next Galaxy will be important for Samsung, which continues to try to battle out of a slump caused by cheap smartphones from China and the release of the new and improved iPhone 6 models from Apple. Samsung has been losing market share and revenue to its rivals and is already in the midst of plans to pare back its model line and cut production costs to better compete, according to earlier eWEEK reports.
Samsung has been getting hit hard since the release of the new iPhone 6 models, according to a recent consumer mobile phone market analysis report from the Chicago-based Consumer Intelligence Research Partners (CIRP) analyst firm. Apple captured about 50 percent of the fourth-quarter 2014 smartphone sales in the United States, which helped the company handily beat its closest competitor, Samsung, by a 2-to-1 margin, the report stated. Samsung captured 26 percent of the market, followed by 11 percent for LG, 4 percent for Motorola and 2 percent for HTC, according to CIRP’s figures. Nokia had 2 percent of the sales, while Amazon had 1 percent.
Recent data from Counterpoint Research showed that Apple iPhone sales hit a major high point in November 2014, when the company marked 20 million global iPhone sales in one month for the first time. Apple’s good news has been bad news for Samsung on a global basis.
Samsung’s 2014 fourth-quarter earnings were better than its third-quarter figures, but full-year profit and sales were down significantly from 2013. For the fourth quarter ended Dec. 31, 2014, Samsung posted revenue of $48 billion, up 11 percent from $43.2 billion in the third quarter. Net profit for the fourth quarter was $4.8 billion, up 26.3 percent from the $3.8 billion in the third quarter.
The $48 billion in fourth-quarter revenue, however, was down 12 percent from $54 billion in the same quarter one year ago. Full-year 2014 revenue dropped 10.6 percent to $188 billion from $208 billion the year before. The company posted a fourth-quarter net profit of $4.8 billion, down 37.5 percent from $6.6 billion one year ago. Full-year 2014 net profit was $21.28 billion, down 30 percent from $27.7 billion the year before.
In contrast, key rival Apple announced record-breaking first-quarter 2015 earnings on Jan. 27, with $74.6 billion in revenue and $18 billion in net profits, fueled largely by sales of the latest iPhone 6 and iPhone 6 Plus smartphones, which were released last September. The $74.6 billion in quarterly revenue was a 30 percent increase from $57.6 billion in the same quarter one year ago; in that interval, net profit rose 37 percent to $18 billion from $13.1 billion.
Apple’s iPhone revenue in the quarter totaled $51.2 billion, up from $32.5 billion for the same quarter one year ago. During the period, Apple sold 74.5 million iPhones worldwide—an increase of 46 percent from the 51 million iPhones Apple sold in the same quarter a year ago.