'LOW COST SMART PHONES CANNIBALISE FEATURE PHONES

Driven by lower-priced models from domestic handset makers, smartphone sales in India has grown over three-fold to touch 12.8 million units in third quarter of 2013 cannibalising the feature phone market, research firm IDC says. According to IDC, the India smartphone market grew by 229 per cent year-on-year to 12.8 million smartphones in third quarter of 2013 compared to 3.8 million units in Q3 of 2012. Smartphone sales grew 28 per cent in Q3 of 2013 compared to April-June 2013 (10.02 million), it added. A smartphone is a mobile device built on a mobile operating system, with more advanced capabilities and connectivity than a feature phone. IDC said 53.9 million feature phones numbers were sold in Q3 of 2013 compared to 55.7 million in Q3 of 2012. The share of feature phones slipped to 81 per cent (from 84 per cent) of the total market in Q3 2013, it added. This is despite feature phone sales growing three per cent quarter-on-quarter in the July-September 2013. "The change agents for this rapid shift of consumer preference towards Smartphones have been the narrowing price gap between feature phones and smartphones," IDC India Research Manager Kiran Kumar said. The smartphone market is expected to maintain these elevated levels of growth in the near future, Kumar added. The overall mobile phone market (feature phones and smartphones) registered 12 per cent year-on-year growth and 7 per cent sequential growth. The share of feature phones slipped to 81 per cent of the total market in Q3 2013, even as the segment grew 3 per cent quarter-on-quarter in the July-September 2013. South Korean firm Samsung led the handset market with 15.3 per cent share, followed by Nokia (14.7 per cent), Micromax (10.1 per cent) and Karbonn (9.1 per cent). Other smaller players accounted for a cumulative share of 50.8 per cent. "The growth in the smartphone market continues to drive the overall growth numbers for the phone market – given that there's still a huge potential for smartphone penetration in India, this trend is expected to continue in the coming quarters," IDC India Senior Market Analyst Manasi Yadav said. In the smartphone segment, Samsung held the leadership spot with 32.9 per cent share, while Micromax secured the second spot with 17.1 per cent market share in Q3 of 2013. Karbonn had 11.2 per cent share, followed by Nokia 5 per cent and Lava at 4.7 per cent. 

SMART PHONES EATING INTO TABLET SALES

As increasing number of consumers are opting for smartphones with large screens, research firm IDC has revised its global tablet shipments downwards by over 6 million units to 221.3 million this year. Earlier, it had projected worldwide tablet shipments to touch 227.4 million units in 2013 from about 143.7 million units last year.
"Worldwide tablet shipments are expected to reach 221.3 million units in 2013, down slightly from a previous forecast of 227.4 million but still 53.5 per cent above 2012 levels," IDC said in a statement. Shipment growth is forecast to slow  to 22.2 per cent year over year in 2014 to a total of 270.5 million units, it added.

"In some markets consumers are already making the choice to buy a large smartphone rather than buying a small tablet, and as a result we've lowered our long-term forecast," IDC Tablet Research Director Tom Mainelli said.
Meanwhile, in mature markets like the US where tablets have been shipping in large volumes since 2010 and are already well established, IDC is less concerned about large phones cannibalising shipments and is more worried about market saturation, he added.
IDC also revised the tablet shipment volumes downwards by over 20 million units for 2017 adding that growth will slow to single-digit rates.
"By 2017, annual market growth will slow to single-digit percentages and shipments will peak at 386.3 million units, down from the previous forecast of 407 million units," it said.
One key factor to watch going forward is the mix of small versus large tablets, IDC added. The market has trended toward small tablets in a big way over the last 24 months, but rise of large phones could well push consumers back toward larger tablets as the difference between a 6-inch smartphone and a 7-inch tablet is not great enough to warrant purchasing both, the research firm added.