Indian Smartphone Market to Face Weak Demand Rather Than Supply Due to Coronavirus Pandemic
File photo of a Xiaomi Facory in India.
More than the supply concerns, weakening demand due to the uncertainties brought about by the Novel Coronavirus is set to impact the Indian smartphone market the most, according to a projection by market research firm techARC. During the calendar year 2020, demand is likely to be low particularly during the April-August period.
"There can be no qualitative deterministic measurement of the impact done in this situation. There are so many uncertainties around and the situation is impacting both the supply and the demand side of the market," said Faisal Kawoosa, Founder and Chief Analyst, techARC. "We expect supply chain to resume in June in India. Thus April and May will be the worst affected months in terms of shipments, be it out of China or in India," Kawoosa added. What is more worrying is the weakening demand as consumers are now focusing on spending their money only on essentials like food and medicine.
"Only those requiring a smartphone in case of breakdown will be the primary buyers. The elective upgrades and replacements will be at minimal," said Kawoosa. Supply, including the channels (offline as well as online), should be back to normal in September. This will be fundamentally triggered by ground-up to festive season. But even during the October-December quarter, demand could be lukewarm due to the macro-economic scenario by then as well as fear of the viral infection resurfacing towards the winter."Only if, there would be a vaccination available by then at mass scale, the market could see revival, but not at the normal levels," Kawoosa said, adding that the smartphone industry will have to look at other revenues, especially service-oriented offerings, to offset the gap which will arise due to low sales of smartphones in 2020.
Some brands like Apple, Samsung, Xiaomi, Realme, OPPO, Nokia HMD and Lava have already set up services on top of the active user base. "They need to further look for more paying services to narrow the gap between the potential earnings through the sale of hardware and the actual revenues they can realise in 2020," said the report.