It’s official. Indians are not buying smartphones the way they used to. But, this drop in phone sales is coming with a twist in the tale — a happy ending that is leaving most smartphone manufacturers happy.
The slowdown in phone sales for roughly two years now seems to be a set trend in the country — sales dropped 7% last month, according to global research firm Counterpoint.
The writing on the wall is clear: Worries over financial stability, an uncertain economic outlook and household plans to hold on to their increasingly costly smartphone devices for longer periods, are driving the trend.
On the business side, the low sales over the past more than a year has meant companies and vendors are stuck with huge stock of unsold inventory. Since the last Diwali-festive season returned less than expected sales, many were left with huge stocks, leading to many brands astutely focusing on trying to sell off pending units instead of increasing manufacturing.
“Consumer sentiment remains cautious, especially in the budget segment,” said Prachir Singh, Counterpoint’s senior research analyst. “Key brands, dealing with high inventory levels, prioritised clearing excess stock to stabilise operations and set a stronger foundation for the remainder of the year.”
But it’s not like companies are facing a cash crunch, and here’s where it gets interesting. While volumes are not going up, the sale of the more expensive premium smartphones have been on the up and up.
Explains Singh, “Despite this…consumer demand for ultra-premium products remained strong. As a result, the ultra-premium segment (phones costing more than ₹45,000) saw 15% year-on-year growth, while the average selling price (has) increased (by) 11% post-Covid, highlighting a shift toward premium devices. This continued premiumisation trend was further supported by growing affordability and expanding financing options, which made high-end devices accessible to a broader consumer base.”
This has meant that while the numbers are down, phone makers, especially ones with premium models in their portfolio, are ending up with more revenue. Especially successful has been Apple, which after being a niche player in the Indian market since its iPhones were too pricey for the supposedly cost-conscious Indian market, has now rocketed to the top five, recording 29% growth (even as the overall market declined) in the first few months of the year, while Samsung too performed well, riding on the back of its AI features.
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While the Indian market sees growth only in the premium side and is forecast to have cautious single-digit growth only this year, the scene abroad has surprisingly reversed, after almost three years of flatlining. According to Canalys Research, smartphone sales are picking up in many markets, which it attributed to ‘macroeconomic stabilisation in emerging market economics.’ The recent surge is also attributed to the impact of tariff threats from the US, with many companies shipping higher volumes to beat the supposed tariff deadlines.
