How OnePlus has become the king of India’s premium smartphone market above Apple, Samsung

OnePlus might be a one-flagship a time brand, but it has still managed to carve a niche for itself in the Indian smartphone market. In fact, the startup from China is leading the premium segment (phone priced more than Rs 30,000) in India in the second quarter of 2018 ahead of Samsung and Apple, according to data shared by research firm Counterpoint. Meanwhile, Apple has struggled in the quarter with its market share down to 14 per cent in the premium segment due to decline in shipments for its iPhone 8 and X series.

Overall, OnePlus 6 was the best-selling model in the premium segment followed by Samsung Galaxy S9 Plus and OnePlus 5T with the company clearing off inventory ahead of the launch of its new model. It should be noted that 5T is no longer sold in India.

OnePlus 6 success in India
According to Counterpoint’s data, OnePlus grew 19 per cent annually and 10 per cent sequentially during Q2 2018. This is especially significant considering OnePlus has just one new flagship in India so far for 2018, the OnePlus 6. Also, this is the first time that the Chinese start-up has passed South-Korean giant Samsung to lead the premium segment for a quarter.

“India remains an important market for OnePlus, contributing to almost a third of its global revenue. Furthermore, with every flagship, the OnePlus user base has been growing in India and this has now started translating into record sales for every new flagship it launches,” wrote Tarun Pathak, Associate Director at Counterpoint research in an email

With OnePlus expanding its offline offerings in cities looking beyond its traditional online domain, it has managed to grow shipments while both Apple and Samsung saw a decline.

Pathak said the premium smartphone segment grew by 21 per cent yearly in 2017, and is expected to grow by 20 per cent in 2018 too, which is still faster than the overall smartphone market. “The premium segment has been consistently over 1 million per quarter over the past seven quarters,” he wrote.

In comparison, India’s overall smartphone market grew by 18 per cent in this quarter, with feature phones outpacing it with 21 per cent growth. Offers like cashback, EMI, data bundling by companies like Airtel, Vodafone and Reliance Jio, along with extra discounts on exchanging an older phone have helped drive up the demand for this segment. According to Counterpoint the overall premium smartphone segment grew 19 per cent YoY during the second quarter.

Samsung and Apple stall
Samsung, which is the number two player in the premium category, has managed to grab over a third of the total premium smartphone market. The Galaxy S9 series and offers around the flagship have helped the company in the second quarter, when no new flagship was launched as such.

However, Samsung’s shipments declined 25 per cent yearly in this category, due to a decline in shipments of S9 as compared to S8 last year. Overall though, Galaxy S9+ and iPhone 8 series drove the volumes for Samsung and Apple respectively in the quarter, according to data shared by Counterpoint.

For Apple, it was a rough quarter, According to Counterpoint’s data, demand for iPhone 8 and iPhone X begin to taper off due to seasonality and challenges in terms of pricing post duty increase.

“Apple has a mere 2 per cent share of smartphone shipments in India market. The remaining 98 per cent has been becoming deeply entrenched in the Android ecosystem. Apple iPhones have become costlier in the last couple of years as bulk of the leading smartphone vendors are manufacturing their smartphones in India to comply to local “Make In India” regulations which has now higher import duties (around 20 per cent) if you just import and don’t manufacture your phones in India,” explained Pathak on why Apple is now struggling in the premium segment.

The other reason is also that “demand is being skewed towards sub-Rs 40,000 devices” in the premium segment. This is more so with players like OnePlus offering top-end specifications, a good performance and camera at much lower prices compared to Apple’s top-end iPhones.

According to Counterpoint, the new trend “is wooing aspiring rich and young consumers away from more expensive offerings from likes of Samsung and Apple”.

For Apple, though another problem is that it is only assembling one model iPhone 6S in India, which adds to pricing given increasing import duties. Players like Samsung and Xiaomi have gone aggressive on this ‘Make in India’ programme. Samsung on its part announced the largest mobile phone factory in India last month with a capacity of 120 million phones.

“Apple is assembling just one model iPhone 6S (earlier it was iPhone SE) with partner Wistron in India and not the iPhone 7,8 or X series which further distances Apple from the overall opportunity. This shows India is still not the priority market and Apple is still reluctant to completely align vs competition such as Samsung, Xiaomi which have set up their own or partner manufacturing plants respectively to keep the price competitive,” explains Pathak.

Overall, though India’s premium market is still very one-sided. The top three brands Samsung, OnePlus and Apple contributed to 88 per cent of the overall premium market, though this is lower than the 95 per cent a quarter ago. Newer players like HMD Global’s Nokia, Huawei, Vivo, Oppo, etc are entering the market, though the top three dominate.