Smartphone Industry Is Optimistic About Post Covid-19 Scenario: techINSIGHT

In a qualitative assessment done by techARC with leading OEMs representing over 65% of the market share by sales, the industry is acting very maturely tackling the Covid-19 situation. There is a sentiment of helping the society first while business takes a back seat. The industry does feel that mobile handset selling should be allowed treating it as an essential category product because many people would be still left unconnected for a device despite being within connectivity. However, every major OEM supports governments wisdom in deciding what to allow and what not.

The major insights coming from these qualitative assessments done with main OEMs including Xiaomi, Vivo, Realme and OPPO are:-

  • The present focus is all on engagement with stakeholders including employees, partners and customers.
  • Employee and partner employee welfare is paramount and every step is being taken for their safety and wellbeing.
  • The companies are upbeat about the future and are utilising this period in ‘sharpening the axe’. There are special training sessions being held where the focus is to cross-skill employees widening their horizons and outlook about the business, industry and society as a whole.
  • OEMs are committed to ‘Make in India’ and even if volumes reduce will not consider centralising the production out of China or anywhere else.
  • The good thing is that the industry is not demanding anything from the government at the moment. Rather, they are cognizant of the fact that they need to support government in endeavours of fighting with Covid-19. Though, they would want some decisions like increase of GST from April 1 to be reconsidered.
  • The OEMs have built and are continuously revising the Business Continuity Plans (BCP) for manufacturing and retail functions.
  • There is no plan to cancel the launches of Smartphones and other product categories scheduled for 2020. However, the launch calendar is being revised pushing most of the launches May onwards.
  • There is also no plan under consideration of revisiting or realigning the focus in terms of segments being pursued by different OEMs. They do not feel any major shift in demand pattern or cannibalisation of one segment for another.

Smartphone Industry Is Optimistic About Post Covid-19 Scenario: techINSIGHT 1

techARC Conclusions:

Basis these interactions and inputs from other industry stakeholders, techARC concludes the following:-

  • Manufacturing will resume first and will come to its optimal level over a period of 8-12 weeks from the time of resumption. Initially the factories may start with 30-40% of the capacities.
  • There will be contraction in the market in 2020; however major OEMs might be able to sail through. Smartphone market could de-grow 8-10% for calendar year 2020.
  • Tier II and other smaller Smartphone players will feel more stressed as their cash flow and other financial health deteriorates faster due to Covid-19 lockdown.
  • The mid (Rs 10,001-25,000) and premium (Rs 25,001-50,000) range will have stable demand compared to other segments of Entry, Basic and Luxe which will see some change in demand for various factors. Entry and Basic potential buyers will have issues due to unstable incomes / job outlook and some segment of users which go for Luxe category phones like iPhones on EMIs, etc., will reduce their budget to meet other contingencies.

The Covid-19 pandemic will impact Smartphone market as well like most of the other industries / verticals. However, in the long term the significance of Smartphones is only going to increase as they continue to become the hub of all activities for consumers. While markets will evolve on their own in next couple of years to increase the Smartphone penetration, the Government shall have to play an enabling role in achieving a billion Smartphone users. As per techARC’s estimates there are 250-300 million potential Smartphone users if the cost of the device is brought in the range range of Rs 2,500 – 3,500. This cannot happen though without government’s support through driving a focused programme encouraging major OEMs to make Smartphones for the Entry level, where we are seeing them divesting from due to obvious reasons of not being able to give the desired experience at such aggressive price points.

Leave a Reply

Your email address will not be published. Required fields are marked *

Pin It on Pinterest

Share This