The current Covid wave has hit the smartphone players in India and the market is likely to see a decline of nearly 12 million units -- from 182 million to 170 million -- for the year, a new report forecast on Thursday.
India's smartphone market will definitely witness a significant dip of more than 30 per cent in the ongoing second quarter (April-June period) and the festive season and pent-up demand are expected to drive the market in Q3 and Q4, according to Counterpoint Research.
Consumers will prefer online channels for buying smartphones due to Covid-19 fears. India's smartphone shipments grew 23 per cent (on-year) in Q1 to reach over 38 million units.
"The current COVID-19 wave will have an impact on the coming quarters, with Q2 2021 being impacted the most. We have cut our Q2 2021 forecast by more than 30 per cent compared to the previous forecast," the report showed.
"The uncertainty will prevail in the market till June or July before we see demand coming back strongly during the festive season in late Q3 and early Q4," it added.
The demand for smartphones has already been impacted in April (and now May) due to a surge in COVID cases and restrictions/lockdown in various states.
"We believe that the shipments will witness a dip of 35-40 per cent of the BAU (business-as-usual), which corresponds to 7-8 million shipments in April. With the COVID rate, still not declining, it is not likely that the market would return to a business as-usual state before Q3 2021," said Counterpoint Research.
"We have reduced our smartphone forecast for Q2 2021 to 26 million units from 39 million units, our previous forecast". Overall, the Indian smartphone market is estimated to grow by 12 per cent (YoY) to reach 170 million units in 2021.
"The online segment grew in 2020 despite the overall market registering negative growth. Online channels will be leveraging the festive season sales to drive the market. Device affordability will be a major factor in driving up the volumes," the report said.
The year will also see the adoption of 5G devices in India. "In 2021, the market for 5G devices will grow by over 8 times to reach 31 million units in 2021 which will make up 18 per cent of the overall market," the report added.
The price of entry-level 5G devices has come down by 40 per cent in the last six months and the cheapest phone with 5G now cost almost Rs 15,000. "We expect this price to go below Rs 15000 by Q3 2021," the report said.