Due of limited demand, smartphone manufacturers launch new models slowly.

Smartphone brands have slowed their pace of launching new models, with 20% fewer in the first two months of 2023 compared with 2022, and that too, mostly in the mid and higher-end price segments. Experts said launch of models in 2023 is expected to fall 5-10% on year, indicating continued pressure on demand, especially at the lower end.

The first two months of 2023 saw 28 major smartphone models introduced in the market, as compared to 36 in 2022, as per ET’s analysis. Out of them, 18 models are priced above Rs 20,000, while six were launched in the Rs 10,000-20,000 price segment.

The sub-Rs 10,000 segment – historically the highest volume segment – only saw four new models, half of what was launched in 2022, due to high forex rates putting pressure on production costs and general low demand in that segment. This, even as the premium segment continues to show growth.

The lower number of launches is expected to lead to a 7-10% fall in shipments for the January-March quarter from a year earlier, said Prachir Singh, senior analyst at market tracker Counterpoint Research.

“While the budget segment’s contribution to the total market is expected to decline further in Q1 2023, the premium segment is expected to grow. But the target audience for premium smartphones is much lower in India. This will result in lower shipment volumes, but higher revenues for brands,” Singh said.

Counterpoint expects launches of new models to go down 5-10% in 2023 with most brands pivoting to a leaner portfolio with clear propositions in each price segment. The commercial rollout of 5G networks is also driving demand for handsets supporting the next gen technology that are being sold at a premium compared to 4G handsets, or in higher price segments.

“With 5G, you don’t want a substandard experience overall, like a VGA camera or a 13-megapixel camera is not going to cut it from a user’s perspective,” Xiaomi India President Muralikrishnan B told ET, indicating that consumers are ready to pay for more premium hardware when it comes to 5G handsets.

Counterpoint Research expects cumulative 5G smartphone shipments to cross the 100-million mark in Q2 2023 and exceed 4G smartphone shipments by the end of 2023.