Premium devices to dial up growth in India's smartphone market in 2024

Indian smartphone sales, traditionally dominated by the entry and mid-range segments, are set to change as high-end and super-premium devices capture consumer attention.

The premium category is expected to grow by more than 20 per cent in calendar year (CY) 2024 compared to the previous year.

While the overall smartphone market is expected to witness modest single-digit growth in CY 2024, most of this growth is expected to come from premium devices and 5G upgrades.

“While we expect some growth in the Rs 10,000-20,000 and Rs 20,000-30,000 segments, the majority of growth will come from the premium category.

"We expect more than 20 per cent growth in this segment in CY 2024,” said Shilpi Jain, senior research analyst at Counterpoint.

After flat growth in CY 2023, India’s smartphone shipments picked up in the January-March quarter (Q1) of CY 2024. In Q1 of CY 2024, while the market grew 8 per cent year-on-year (Y-o-Y) in terms of volume, it grew a substantial 18 per cent in terms of value, according to data from Counterpoint, a market research firm.

“During the quarter, India’s smartphone market reached its highest ever Q1 value.

"The growth was driven by the strengthening trend of premiumisation, with consumers upgrading to higher-value smartphones across price tiers,” said Jain.

Launches during the quarter, such as the Samsung Galaxy S24 and OnePlus 12 series, allowed the premium segment (above Rs 30,000) to reach a record 20 per cent volume share and 51 per cent value share of the overall smartphone market in Q1 of CY 2024.

Jain added that this premiumisation was not limited to consumer demand.

“There is brand push as well. Brands are prioritising profits over higher volumes and aiming for higher average selling prices (ASP),” she said.

The ultra-premium category (above $800, or roughly above Rs 65,000) recorded the highest growth at 44 per cent, with its share increasing from 7 per cent in Q1 of CY 2023 to 9 per cent a year later, according to data from the International Data Corporation (IDC).

Factors driving this premiumisation trend include affordable financing schemes, better value for trade-ins, and bundled offers, along with the demand for top-tier features such as artificial intelligence, gaming, and imaging enhancements.

Upasana Joshi, senior research manager for client devices at IDC India, said that several launches across multiple price segments occurred during the quarter, coupled with increased promotional activities, particularly around premium offerings.

“Brands continued their focus on microfinancing schemes to drive affordability.

"Online retailers organised several sales events and offered discounts on models nearing their end-of-life, resulting in increased demand and lean inventory,” Joshi said.

Apple and Samsung dominated the premium category market share during the quarter and are expected to maintain their lead going forward.

The Apple iPhone 14/15/14 Plus/15 Plus together accounted for as much as 64 per cent of shipments in Q1 of CY 2024, followed by the Samsung Galaxy S24/S24 Ultra/S23/S24+ with a 25 per cent share.

Overall, Apple led the segment with a 69 per cent share, followed by Samsung at 31 per cent, according to IDC data.

Driven by increased demand for high-end devices, Apple — with an ASP of $953 — had a record first-quarter shipment, growing by 19 per cent Y-o-Y.

Price discounts, special deals on etailer platforms, and attractive financing options led to consistent growth for Apple beyond the festival season, with the iPhone 14/15 making up 56 per cent of shipments for the Cupertino-based firm, IDC analysts said.

Nevertheless, device prices across categories are expected to rise this year.

“Vendors are aggressively pricing their products to capitalise on the premiumisation trend fuelled by wider channel access and easy financing options.

"Price hikes are expected to continue as operational pressures rise due to higher component costs, despite import duty reductions on a few parts.

"Brands are also prioritising channel incentives and retail investments, driving costs up further,” said Sanyam Chaurasia, senior analyst at Canalys, a global technology market analyst firm.