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Chinese rivals struggle, as Samsung and Apple increase their share of the smartphone revenue

Revenue from smartphones in India for Samsung and Apple grew 14% and 27%, respectively, on year in calendar 2022 to a combined $14 billion plus, mainly driven by their premium segment portfolio.

The growth by the two global giants offset declines by Chinese handset brands such as Xiaomi and Vivo in an industry which ended last year with flat revenue growth at $38 billion, despite shipments falling 9%, market trackers said.

Market leader Samsung earned over $8 billion in smartphone revenue last year, giving it a 22% market share – up 3 percentage points on year – as it benefitted from a portfolio that covered all price points, but with the premium segment being the main driver, according to data provided by Counterpoint Research.

Brick and mortar stores drove the majority of revenue for the company, which has recently regained the top slot even by volumes.

Cupertino-based Apple’s top line from iPhone sales stood at over $6 billion last year, capturing 18% revenue share – a 4 percentage point jump over 2021, as per Counterpoint.

The iPhone 13 was the highest selling smartphone for the company in 2022, driven by consumers’ appetite for high-end smartphones, and Apple’s strong expansion in large-format retail stores and festive discount sales.

IDC India said Apple’s revenue crossed $8.5 billion in 2022, 75% of which was driven by iPhones, 22% by personal computers and 3% by wearables.

Top Chinese brands Xiaomi, Vivo and Oppo saw their revenues fall to over $5 billion, over $5.5 billion, and above $3 billion, respectively, in 2022, Counterpoint said. Xiaomi’s revenue market share dropped to 14% last year from 18% in 2021, while Vivo’s fell to 15% from 16%, and Oppo’s remained flat at 9%.

As per IDC, Samsung and Apple cover 81% of the premium segment (above Rs 40,000) volumes, which grew 55% last year. The segment under Rs 25,000 – where the Chinese handset brands have a strong presence – declined by 15% in 2022, the market tracker said.

Counterpoint Research estimates overall smartphone revenue to grow 5% in 2023, driven by demand for 5G handsets. The premium segment may grow 30% in volumes to capture 13% of the market (from 10% now), which will drive higher revenue for the industry, it said.

Analysts said this was one of the major reasons for the Chinese handset brands to announce launches in the premium segment.

A quick analysis of the launches indicate smartphone companies are putting efforts in building narratives around their products through collaborations with iconic brands or bringing in high-end components to make smartphones more compelling.

IDC India’s Navkendar Singh said companies are realising that people are upgrading their smartphones less, so the effort is going in giving them a compelling reason to do so, even if that is at a higher price.

As customers go for big-ticket purchases, brick and mortar stores are seeing a rise in profits.

Offline retailers spoke to said while the margins remain more or less the same, they have to sell less of them and earn more, even as footfalls in stores have declined due to lesser launches.

“Profit margins in the smartphone business range from 5-15% depending on the targets given to retailers,” said Manish Khatri, partner at handset retail chain Mahesh Telecom. “If retailers are able to sell pricier high-end handsets, they end up completing the targets faster and earning more incentives.”

Khatri, however, said demand for high-end smartphones are cyclical.

Faisal Kawoosa, founder and chief analyst of technology market research firm Techarc, too, said the premium segment is not expected to grow as much as last year in 2023. “Majority of the potential in the luxury segment has already been consumed in the last one or two years, and users will hold on to their purchases for at least two years,” he said.



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