In a market where over 100 phone brands exist and the top ten brands control more than 95 per cent of the market, many phone brands are increasingly finding it the going tough.

Brands such as Comio, Micromax’s Yu, Lenovo’s ZUK, LeEco, Vertu and HTC are some of the phone brands which have either fizzled out from the market or have hit a rough patch in the recent times.

RJio impact

Pankaj Mohindroo, Chairman at the India Cellular & Electronics Association, said that in feature phones, the pressure has been essentially because of RJio giving 4G feature phones at “extremely subsidised rates” and taking up around 5 million of the 12 million monthly market. In smartphones, hyper-competition, the huge e-commerce onslaught and the consequent low pricing have led to the smartphones getting into the feature-oriented competition.

“Products are measured in terms of their features and not by the 360 brand proposition. This has impacted a lot of brands,” he said.

The top five phone brands are Samsung, Xiaomi, Oppo, Vivo and Huawei or Itel, with Samsung and Xiaomi constituting around 55 per cent of the market share.

Upasana Joshi, associate research manager, channel research at IDC India, stated that the market is consolidating with the the top five brands in India now contributing to more than 80 per cent of the market. “The rest 20 is left out and will slowly die down,” she said.

The choice left for them is to set up a manufacturing facility in India or to be part of contract manufacturing.

Setting up a CKD kind of manufacturing for such small vendors would entail a lot of cost, she said.

Other factor

The government’s push to promote local manufacturing by increasing the import duty is a major factor, she identified.

The small brands are left struggling because of the lack of a manufacturing facility, the “humongous currency fluctuations”, increasing cost pressure and the strong presence of e-tailers so much so that consumers prefer to buy online.

Joshi said that this trend started being perceptible in early 2017, when all the local vendors started dying out and China-based vendors started picking up. When Xiaomi, Vivo, Oppo and One Plus entered the Indian market, they got their devices in such a proposition that they were “very aggressive” in pricing, had high-end specifications and managed to create a “loud noise” in the market. “If you take the example of Xiaomi, it has been able to surpass Samsung because of this only,” she said.

“These China-based vendors entered India and sucked a lot of volume from the local vendors,” she said. However, apart from Xiaomi, Vivo, Oppo and One Plus, some other small Chinese brands have been fizzling out due to the high import duties and the focus on Make in India to reduce dependency on Chinese products.

“If you really need to be competitive in this market, you need to do many things-you need to be present at the retail store, you need to keep your portfolio fresh, you need to keep an ecosystem where you can source devices locally, because if you are importing, then your cost is going to be high. And on top of that, you also need to be a brand that is coming with a quality that is competitive compared to the other competitors in the market. That is too much to really ask for,” said Anshul Gupta, research director at Gartner, about this phenomena of small vendors shutting shop.

Joshi said this will continue with currency fluctuations, a soaring dollar and with local manufacturing units being set up here. “It will get difficult for all the vendors, especially the small tail, small volume vendors to actually survive in this fierce battle for market share,” she said.

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