Contents

1. India Mobile Handset Market 2017 ...................................................................................................... 1

Introduction .............................................................................................................................................. 1
Outlook ..................................................................................................................................................... 2
Market Standings ...................................................................................................................................... 3
The Leader............................................................................................................................................. 3
The Chinese LOVE Affair........................................................................................................................ 3
The Indian MILK .................................................................................................................................... 4
4Ps ............................................................................................................................................................. 6
2. CXO View ............................................................................................................................................... 7
3. CMR Telecoms Research Group .......................................................................................................... 15
Team ....................................................................................................................................................... 16
4. About CMR .......................................................................................................................................... 17
1. India Mobile Handset Market 2017

Introduction
Year 2016 ended with a stress for the industry. A stress, for long term good, where each and every
handset player is more than willing to bear it for nation building. However, the initial months (3 to 4) of
2017, keeps them busy in rejuvenating the market to re-rail the things. The other challenge for them,
which again they are willingly ready welcoming, is the implementation of GST. As per the inputs
available so far, GST is going to push the prices of handsets in the range of 15 – 25% which will squeeze
the demand to some extent. However, the timing of the implementation of GST will be crucial with
Finance Minister first keeping the window of April to September open, while the recent indications are
of around July.

For the mobile industry September and October are generally the best months in terms of shipment as
well as sales. So it would be in the interest of the industry if GST is implemented before July so that
price restructuring, if any, is ironed and absorbed by the peak season.

We had said that year 2016 was the year of ‘Transformation’ for the Indian mobile handset industry.
Transformation of business models, transformation of products, channels as well as outreach. This is
where we saw the industry busy in for the whole year. However, this transformation did not happen to
the extent as expected in case of Featurephone to Smartphone uptake.

In 2017, we expect this transformation to continue with emphasis on ‘Expansion’. Based on our analysis
and interactions with the CXO’s of leading brands in India across Feature as well as Smartphones,
representing Tier I Global, Indian as well as Chinese handset makers, all their energies are going to be
around expansion. Hence, 2017 would be the year of ‘Expansion’ for the Indian mobile handset
industry.

We see Expansion happening on two fronts:-

i) New Market
ii) Widening of Existing Base

1|CMR’s India Mobile Handset Market 4Ps Report - 2017

The new market development will explore new market segments by way of new technologies, new price
ranges as well as new geographies (Tier II & III). It is expected to see lot many activities from all major
handset developers on this side to achieve their individual as well as industry targets.

However, the critical one would be to better the existing things by widening the scope of whatever has
been initiated in past couple of years, especially in 2016.

Outlook
CMR estimated the volume size of the India Mobile Handsets to be close to 265 million for the calendar
year 2016. As per the preliminary findings for the year, the shipments clocked 262 million units of which
Smartphones accounted for 113 million (43%) and the remaining 149 million were Featurephones.
Despite ‘turbulence’ in sentiments towards the end of year, the shipments did not see a proportionate
hit as there was very little window for handset makers to realign the shipments through the value chain.
However, the demonetization did result in inventory build-up in the range of 25 – 35% for various
brands in different categories of mobile handsets.

As a result of this, CMR expects contraction in the shipments for 1Q CY 2017. At the same time the
handset makers will try to catalyse the sales by offering discounts and schemes immediately after the
Union Budget 2017 is announced, which in all probabilities is going to be favouring the handset industry
to aid rejuvenation.

CMR reads the situation arisen out of demonetisation as a temporary situation and the market is poised
to bounce back due to the inherent strengths that India mobile handset market enjoys. To couple with
it, as the telecom services scape realigns only to strengthen, CMR expects compelling 4G services being
offered only to further entice the subscribers spurring the growth. Further, the Digitisation as well as
Digitalisation is only going to propel the Smartphone adoption.

The market is estimated to ship 270 million mobile phones in 2017, out of which 130 million (48%) will
be Smartphones. Though the crossover may still not happen in 2017, in terms of Smartphone shipment
proportion exceeding Featurephones, they will finish very close to each other during the year.

2|CMR’s India Mobile Handset Market 4Ps Report - 2017

Market Standings
The Leader
Samsung continues to remain the leader and its immediate next ‘floating’ competitor is still half the size
in market share by volume. In 2017, Samsung will still continue to dominate the space in the overall as
well as Smartphone market segment. However, as we see most of the action taking place this year in
sub ₹ 10,000 – the Affordable Smartphone segment, Samsung will have to consider further
strengthening this low value high volume segment by offering a wide range of platform. Our suggestion
for Samsung would be considering launching an entire range of series of Smartphones for the Affordable
segment to cater to the expected surge in demand for the entry level Smartphones as India leap jumps
on the Digital pathway, while they ‘resurface’ in the premium categories through the flagship ‘S’ and the
newly launched ‘C’ series.

The Chinese LOVE Affair

Chinese brands have not only brought laurels in the Smartphone segment over the past couple of years,
they have also helped the Indian Smartphone market to remain abuzz and alive in 2016. Barring Lava
from the domestic stack of brands, none of the Smartphone brands was seen spending heavy and
consistently on advertising creating a ‘vacuum’ in the visibility and branding space. It was all filled
through the spending of Chinese brands, at times out of proportion in the views of many.

Among the Chinese brands – Lenovo, Oppo, Vivo and Xiaomi (LOVE brands) have carved out a strong
position in the Indian market. Collectively they shipped 75% of the Smartphones from Chinese brands.
Other brands like Honor (Huawei) started off late in full swing, while OnePlus is a niche brand, limiting
their addressable market, hence the market shares.

These LOVE brands have really connected very well with the youth of the country, Be it from the
perspective of what youth expect out of their Smartphones, or how best to connect with them through
Digital as well as Traditional media and promotional activities, Chinese brands have weaved the whole
piece were very that reaped the benefits for them in a short span of less than 2 years.

However 2017 will be difficult for them from two fronts. One is about them being able to keep the
momentum of magnitude of spend going to remain visible and impact worthy as before. The second
and even important one is to strengthen in the Affordable (< ₹ 10,000) Smartphone segment. Chinese,

3|CMR’s India Mobile Handset Market 4Ps Report - 2017

especially these LOVE brands have been popular among second time Smartphone users. These brands
hit the ‘Value for Money’ segment which propelled Indian mobile users, especially the youth to upgrade
/ replace in this segment of ₹ 10,000 – 20,000. This is from where we saw big success for Chinese
brands, primarily these LOVE brands.

In 2016, Smartphones were driven by replacement / upgrade and in 2017, the thrust would be about
widening the base and bringing in more and more mobile users to a Smartphone. The entire ecosystem
starting off from Government to various players will be aggressive about having more new users on
Smartphones resulting in a lot of activity in sub ₹ 10,000 segment of Smartphones. Among the LOVE
brands, Lenovo and Xiaomi are the two having decent presence in Affordable Smartphone segment.
This situation will open up a new set of challenge to these LOVE brands in general and Oppo and Vivo in
particular where the focus has been more on above ₹ 10,000 Smartphones of ‘Value for Money’,
‘Premium’, and ‘Supremium’ segments.

The Indian MILK

Mothers always complain of teens not having Milk. Exactly that is happening in the Smartphone space
in India. The Indian brands of Micromax, Intex, Lava and Karbonn, which cumulatively shipped 69% of
the entire domestic brand shipments, have seen challenging situations in 2016, for not being able to
connect to the youth very well. Youth preferred value for money by having more and the latest at less,
which was not catered by the Indian brands’ portfolio. Over it, the platforms where youth are actively
and intensively present for Smartphone decisions were not engagingly pursued by these brands as
against their Chinese counterparts. This affected their visibility considerably taking them down the zone
of consideration of any Smartphone buyer.

2017, sees a turn of tide for these MILK brands, for first they having realised the wrongs of a couple of
years as well as market dynamics again favouring new Smartphone market development rather than the
replacement and upgrade phenomena. It is not that the opportunity will not be there for upgrade /
replacement at all. However, the greater opportunity definitely lies in the new Smartphone market
development in 2017.

We expect some shake-up with these MILK brands in 2017. First, there will be a definite No 2 for the
Indian mobile handset industry in 2017 ending the ‘floating’ challenger phenomena of 2016. One
among these MILK brands will definitely grow exponentially while at least one more brand would see

4|CMR’s India Mobile Handset Market 4Ps Report - 2017

steep fall in stature. The remaining two brands will be average performers with fluctuating market
standings through 2017.

Collectively, the biggest challenge for Indian brands in general and MILK brands in particular will be to
connect with youth while building strong position among the new Smartphone users.

5|CMR’s India Mobile Handset Market 4Ps Report - 2017

4Ps
Below is the CMR perspective within the framework of 4Ps for 2017 highlighting the major trends to take place during the year.
Product
 Battery will be among the
anchoring specs for the year 2017
where almost all the major handset
makers will focus. There will be
innovations on the front of adding
more capacities to the battery as
well as rapid charging technologies
expanding through the ‘Value for
Money’ as well as the high end of
‘Affordable’ Smartphone segments.
 Imaging is another area where a lot
of innovation and improvements
are expected through 2017. The
innovations in the camera are to
support improved Selfie
experiences, support of IRIS
scanning and enabling AR/VR in the
premium segments.
 RAM is another area where we are
going to experience continuing
progression up the ladder.
 Other interesting areas of
improvisation include 4K resolution
in premium segment, introduction
of wireless FM radio, support of
NFC in low end Smartphones,
fingerprint sensor inclusion in
Affordable segment and beginning
of sensitisation towards security by
actually seeing some security layers
deployed on Smartphones.
6|CMR’s India Mobile Handset Market 4Ps Report - 2017
Price
 In terms of opportunity, 2017 will
see a comeback of sub ₹ 10,000
(Affordable) Smartphone
segment to cater to the rising
need of Digitalisation in India at
individual levels.
 The other exciting segment
where all players see a role is the
‘Value for Money’ segment of ₹
10,000 – 20,000. This is primarily
to keep supporting the upgrade /
replacement opportunity and
also excite the market by adding
and bettering existing
specifications aiming the youth
population.
 Due to expected continued trend
of rising cost of inputs, especially
displays, and the change in tax
structure after GST
implementation, there is going to
be an increase in the selling price
of phones across all segments.
As per the present understanding
of the implications of the GST,
the prices could go 15 – 25%
upward through 2017.
Promotion
 The Indian brands in particular
will see a comeback in the
spending levels for promotional
activities. These will be primarily
through new age mediums of
digital marketing. However these
will be integrated and
complimentary promotional
strategies interweaving the
traditional with the new age
mediums.
 The traditional mediums will be
leveraged for reaching out to the
under-served markets of Tier II
and III cities and towns where
handset makers will focus on
expanding the Smartphone base
from the already existing
Featurephone users.
 Within Smartphones we shall see
a strong uptake of technology
driven promotions that will be
much localised and experience
based in nature.
Place
 Barring a few niche brands, there
is going to be an equal focus on
offline as well as online channels
of selling.
 Metros and Tier I cities will be
primarily served through online
mode while companies will
expand to the Tier II and III
markets by establishing and
strengthening physically.
 There will be launch of online
exclusive models and series from
several brands. However, the
‘Online Only’ trend will see
erosion towards ‘Online First’ and
the brands will dilute the online
exclusivity status by either
delayed offline launches or with
setting up of experience stores.
2. CXO View
“The domestic demand for mobile handsets in India is expected to
witness a robust growth in 2017, especially from the 2nd Quarter,
almost like a ‘V’ shape recovery.

The year 2017 is going to be a crucial year as far as continuation

with the manufacturing momentum witnessed in the mobile
handsets and components’ sector is concerned. Further based on
institution of the Phased Manufacturing Program (PMP) roadmap,
whereby 5 more components of mobile handsets viz. die cut parts,
mic and receivers (speaker), mechanics (metal and plastic
mechanics), key pad and USB cable will be brought under the ambit
of the differential duty regime to help widen and deepen the
components manufacturing eco-system.”

Pankaj Mohindroo, Chairman – FTTF and National President – Indian Cellular Association (ICA)

Handset Maker CXOs Ordered Alphabetically by Company Name

“The emphasis on design and camera was visible in 2016

and is likely to be reflected in the products that will be
launched in the coming year as well. In addition to design
engineering, we anticipate advance functionality of AR
and VR, which can recognize and map physical spaces,
track objects as well as project virtual effects in a real-
world setting and much more. Also, with an increasing
number of users embracing a digital life and even
accepting digital currency, online and hardware security
will remain a trending topic. It would be fair to expect
manufacturers to include more features that help the
netizens experience the digital world in a safe and secure
manner.”

Peter Chang, Region Head – South Asia & Country Manager, ASUS India

7|CMR’s India Mobile Handset Market 4Ps Report - 2017

 “As the Smartphone market continues grow in
size and diversity, channel strategy will play a
key role in any brand’s success in India. It is
important to have an omni-channel strategy
with the right mix of online and offline so that
products can reach the right target market.

We really see 2016 as ‘the year of the app’ and

the services increasingly available to people in
India to enhance lives and work. Though with
this ‘app explosion’ and rapid Smartphone
adoption, we have also seen new challenges
like mobile malware.”

Narendra Nayak, Managing Director, Blackberry India

“I am confident that the negative impact of

demonetization at the end of 2016 calendar year will be
overcome and significant new growth will be seen in the
Indian economy in 2017.”

Suneet Singh Tuli, Founder and CEO, Datawind

8|CMR’s India Mobile Handset Market 4Ps Report - 2017

With an increasing adoption of IOT Smartphones will
lead the way for augmented and virtual reality
technologies as consumers increasingly make use of
social media, apps and online for a more customized
experience.

We feel that the Mid range and Premium segment

will continue to rule in 2017 as well for value and not
affordability will be key aspects in customer decision-
making.

Faisal Siddiqui, President, South-Asia, HTC

“Popularity and penetration of 4G would fuel

the Data consumption as well as Smartphone
uses. Consumer can experience more upgraded
feature in budget Smartphone. Popularity of
Digital Payment and mobile wallet service will
certainly added momentum in this Smartphone
growth story, and earlier implementation of
GST would help the handset industry in
macroeconomic level.”

Mohammad Gyasuddin, Managing Director, Hi-tech Cellphone Pvt. Ltd.

9|CMR’s India Mobile Handset Market 4Ps Report - 2017

“Digital revolution in India has further led to a
paradigm shift from 3G to 4G, and to tap this
trend various mobile players are offering
innovative and affordable devices bundled with
offers and cost-effective VAS services. By focusing
on mobile handset manufacturing, customization
and joint ventures, we’re going to see companies
strengthen their presence in the mobile market in
the years to come. We are confident that this will
bring efficiency not just for Intex, but all mobile
players to enhance brand value to consumers, be
it from their products, price or services, both at
online and offline platforms.”

Nidhi Markanday, Director & Business Head, Intex

“2017 will be a breakthrough year for the Indian mobile

phone segment, indicating greater technological innovation
and consumer adoption. We at itel believe that budget
Smartphones with 4G/LTE and digital technology will break
free from its urban and tier-1 strongholds and empower
aspiring consumers in semi-urban and rural geography.

If 2016 was the year that the ‘Digital India’ vision gained
major momentum, 2017 will build upon that start and drive
large-scale migration onto the digital platform to set the
foundation of a truly empowered, digitally-driven India.”

Sudhir Kumar, CEO, itel Mobile, India

10 | C M R ’ s I n d i a M o b i l e H a n d s e t M a r k e t 4 P s R e p o r t - 2 0 1 7
“2017, we believe will be a year of growth for the
mobile handset industry with newer technologies
being available at affordable price points. The
technologies such as 4G are expected to lead to
deeper penetration of mobile handsets across the
country. The focus will be on enhancing
consumer experience with quality products which
cater to the needs of consumers across
demographic be it camera, speakers, fingerprint
sensors, or battery life.”

Gaurav Nigam, Head-Product, Lava International Ltd.

“We will continue with our challenger brand

approach and stay focused on creating experiences
for customers by offering products that address the
real need of the target audience rather than getting
into the specifications race.

Indian Smartphone market is very dynamic in nature

and the key is to come up with innovative products,
future technology at a good price point and brand’s
success will depend a lot on the amalgamation of
these factors. Going forward, our strategy is to
maintain our online leadership and be among the
top three players in the offline space.”

Sudhin Mathur, Executive Director, Lenovo Mobile Business Group, India

11 | C M R ’ s I n d i a M o b i l e H a n d s e t M a r k e t 4 P s R e p o r t - 2 0 1 7
“As Technology is bringing the future closer and
simplifying what is complicated, the innovations in
the handset space will be directly proportional to
what convenience the customers demand. The focus
in 2017 should to be on providing solutions to the
consumers using their phones as a life hack.”

Shubhajit Sen, Chief Market Officer, Micromax Informatics

“2016 has been nothing short of a war-front

between Smartphone players. Consistent,
deep spends from Chinese brands have
reaped huge dividends. While several home-
bred brands are under significant pressure to
sustain sales numbers, 2017 will be no
different – it will be more important than ever
to discover those niches that will offer a
distinct advantage over others – else, survival
will be at stake if one tries to be ‘everything
to everyone’.”

Ankush Chatterjee, Vice President, Marketing & Alliances, Obi World Phones

12 | C M R ’ s I n d i a M o b i l e H a n d s e t M a r k e t 4 P s R e p o r t - 2 0 1 7
“OnePlus is a global technology brand with a focus on
premium Smartphones. Our focus this year is to set new
benchmarks with our latest flagship and strengthen our
local business through local production and superior
customer experience.”

Vikas Agarwal, General Manager, India, OnePlus

“2016 has been a phenomenal year for OPPO Mobiles,

and we have received an overwhelming response from the
Indian market for our products.

Keeping in sync with this growth, we will continue to

provide the best camera phones, especially best selfie-
taking experience in 2017 for the youthful consumers. In
2017, we will further strengthen our focus on youth
through entertainment and sports marketing. In 2017 we
expect the industry to grow further which means
consumers will experience new technologies and
innovations.”

Will Yang, Brand Director, OPPO India

13 | C M R ’ s I n d i a M o b i l e H a n d s e t M a r k e t 4 P s R e p o r t - 2 0 1 7
 “The Overall expectation from 2017 is to
innovate and engage our users. The idea is to
build a differentiator for our brand for
consumers and bring them the best of
software and hardware amalgamation in our
phones.”

Shubhodip Pal, COO YU Televentures

“When the country is moving towards digital lifestyle and

super fast connectivity with the adoption of 4G enabled
devices, we, at Zen mobile also want to play an important role
in this transformation by offering a portfolio of affordable 4G
devices under ZENERATION 4G and become a prominent
player in this category.”

Sanjay Kalirona, CEO Zen Mobile

14 | C M R ’ s I n d i a M o b i l e H a n d s e t M a r k e t 4 P s R e p o r t - 2 0 1 7
3. Contributing Companies

15 | C M R ’ s I n d i a M o b i l e H a n d s e t M a r k e t 4 P s R e p o r t - 2 0 1 7
4. CMR Telecoms Research Group
CMR’s Telecoms Research Practice has been offering market intelligence and consulting support to its clientele across the
ecosystem – be it vendors, operators, VAS providers, Chipset companies and the government.
With its flagship intelligence report on the India Mobile Handsets market, CMR offers insightful research services for devices
across India, Bangladesh, Sri Lanka, Indonesia and Vietnam.
Pioneering the monthly reporting of market trends, CMR has been ably assisting our clientele with the fast changing trends,
expectations and emerging needs.
Some of the off-the-shelf offerings of CMR Telecoms Research Practice include:
 Mobilytiks
 India Monthly Mobile Handsets Market Review
 India Quarterly Tablet PC Market Review
 India Monthly DataCard Market Review
 India Quarterly LTE/4G Device Market Review
 Sri Lanka Quarterly Mobile Handsets Market Review
 Bangladesh Quarterly Mobile Handsets Market Review
 Indonesia Quarterly Mobile Handsets Market Review
 Vietnam Quarterly Mobile Handsets Market Review
Besides, the team conducts consulting and ad-hoc research projects and some of the flagship engagements include:
 India Mobile Data Services Consumption Study for Top 3 Telecoms infrastructure providers
 India Telecom Equipments and Services Annual Study for 2013 and 2014 for Voice and Data
 Consulting Services for India Mobile Handsets market entry for an IT trading brand

Team

Faisal Narinder
Krishna Anand Priya Hemang
Kawoosa Kumar Tanvi Amit Menka
Mukherjee Shipra Sinha Singh Mudgil
Principal Lead Sharma Sharma Kumari
Analyst Analyst Research Research
Analyst Analyst Analyst Analyst Analyst
Associate Associate

16 | C M R ’ s I n d i a M o b i l e H a n d s e t M a r k e t 4 P s R e p o r t - 2 0 1 7
5. About CMR
CMR offers industry intelligence, consulting and marketing services, including but not limited to market tracking, market sizing,
stakeholder satisfaction, analytics and opportunity assessment studies. Its bouquet of consulting services includes incubation
advisory, go-to-market services, market mapping and scenario assessment services.
The services offered by CMR encompass industry verticals of Information Technology, Telecommunications, Electronics,
Semiconductors, Life Sciences, and other emerging and overlapping technologies shaping our lives in offices as well as at
homes. CMR is servicing domestic as well as international clientele in India and few global destinations. The clientele serviced
represents SMBs, Large Enterprises, Associations and Government.
CMR’s core value proposition encompasses a rich portfolio of syndicated reports and custom research capabilities across
multiple industries, markets and geographies. CMR’s forthcoming studies include stakeholder satisfaction surveys, mega
spender assessments and market mapping studies for these domains.
A part of CyberMedia, South Asia’s largest specialty media and media services group, CyberMedia Research (CMR) has been a
front runner in market research, consulting and advisory services since 1986. CMR is an institutional member of Market
Research Society of India (MRSI).
For more details, please visit http://www.cybermediaresearch.co.in or http://www.cmrindia.com.

17 | C M R ’ s I n d i a M o b i l e H a n d s e t M a r k e t 4 P s R e p o r t - 2 0 1 7