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Smartphone sales may grow the slowest in 2020

New Delhi: Growth in India’s smartphone sales next year may ease to its slowest pace as people hold on to their devices for longer due to the lack of innovation in new models and higher average prices, industry executives and analysts said. There’s also been a huge pile-up of inventory left with sellers after a surge in shipments for the festive season, which may take up to six quarters to clear, they added.

Growth in the smartphone industry will be about 5% in 2020, Realme India CEO Madhav Sheth told ET. That’s a level reached in 2016. “The lifecycle of the replacement has increased by three months to 14-15 months, which will delay purchases. This means at least 20% of the possible sales will be postponed to 2021,” he said. Even though users will upgrade to affordable smartphones from feature phones in tier 3 and tier 4 areas, their contribution won’t be more than 5% of overall shipments, Sheth said.

Growth of smartphone sales in India is expected to be about 9% in 2019, analysts said. Sales grew 29% in 2015, fell 5% in 2016 owing to demonetisation, then recovered to 14% in 2017 and 2018, as per IDC India. Navkender Singh, research director at IDC India, said there was rapid growth in the smartphone market two years ago because people replaced their phones every 12-16 months. This cycle has now been extended to 20 months and may go up to two years. “People are holding on to their smartphones longer because they are not getting better phones,” he said.

In addition, as the market moves towards costlier smartphones, average spending by consumers on these devices has gone up to Rs 15,000. “It is natural that as my investment on any gadget increases, my hold period of that gadget also increases,” said TechArc’s cofounder Faisal Kawoosa. A senior industry executive said there is concern in the market regarding the huge inventory pile up. “We should expect some challenges even this year (2019), growth will be 8-9%, which will further dip to 5-6% next year, there hasn’t been an organic growth in the market and it is mostly a replacement market,” the executive said.

The innovation in smartphones touted in the market is more about marketing than actual differentiation, experts said. “Feature phone users aren’t getting any innovation and hence the migration is not that high,” he said, adding that the mid-tier segment might not see a significant upgrade in the market.

Source: Economic Times