Smartphone prices may drop by 11% this year

Smartphone prices in India may fall by 11 per cent year-on-year in 2015 with demand for 4G devices capturing 6 per cent of the smartphone unit demand, research firm GfK said yesterday.

Besides, India would be the largest contributor to smartphone sales growth globally, it added. In the second quarter of 2015, global smartphone sales in value terms was up 7 per cent year-on-year, while in volume terms, it grew 5 per cent year-on-year, GfK said in a statement. "4G unit share was 58 per cent globally in the second quarter of 2015, up from 26 per cent in the second quarter of 2014. This represents a unit growth of 129 per cent year-on-year, with China leading the global 4G ramp up," it added. GfK forecasts that 4G smartphone penetration would continue to grow at the expense of 3G, which is currently at 38 per cent of smartphone volume. "India is expected to be the largest contributor of absolute smartphone unit growth globally this year," GfK Director (Trends and Forecasting) Kevin Walsh said.

The main reason behind this is the currently low smartphone penetration in the market together with a significant intensification of the competition among the smartphone vendors, which will drive ASP erosion allowing more affordable devices in the market, he added. GfK noted that there are significant regional differences in 4G take up: price polarization in North America, saturation in Western European markets, local brands tackling global players in India and China, and intense price competition in emerging markets. In terms of geographies, North America saw volume sales grow 10 percent year-on-year, while Western Europe and China were up 9 per cent and 49 per cent year-on-year in the second quarter of 2015.

"India, in particular, has seen strong unit growth of 40 per cent year-on-year, with local brands accounting for three of the top five smartphone vendor spots in the quarter," GfK said. A number of Chinese smartphone brands have entered the Indian market this year, intensifying the already fierce competition between international and local vendors, it added. "The resulting price war is forcing average selling price (ASPs) down in a market where more than 80 per cent of sales are in the low-end," it said. In the second quarter of 2015, smartphone ASP in India declined 12 per cent year-on-year.