With the launch of the OnePlus 9RT in India today, it has been made clear that India is no more the centre stage for the OEM. While there could be many reasons behind the company not bringing its smartphones first to the country, it also raises another question, as to why brands like OnePlus and Samsung are launching last year’s devices in India in 2022.
OnePlus 9RT was launched in the company’s home country of China back in October 2021. Samsung was supposed to launch its Galaxy S21 FE back in October, but delayed the launch to this year, when it is supposed to launch the Galaxy S22 series. Similar is the case with many smartphone manufacturers.
While we do not have a concrete answer as to why smartphone brands are doing this, there are a few things that we can attribute this to.
The first thing that we can look at is the ongoing chip shortage, which is impacting everything from automobiles to video game consoles to smartphones. The semiconductor supply shortage has happened due to a number of reasons, which include factory closures due to the ongoing pandemic, heightened demand for consumer electronics and more.
Smartphones were the most shielded from the shortage, due to OEMs stockpiling critical components. However, now the storage wells are drying up and just like other industries, smartphone manufacturers now also have to wait for chip shipments to arrive to assemble their devices. Due to this, the chips get routed to the most important devices of the year then trickle down to other mid-year refreshes and other key products.
Focus on entry-level and mid-range products
While India is the second-most populous country, it also is filled with money-conscious minds. Due to which the sale of high-end smartphones in the country is much lower compared to entry-level and mid-range devices. Smartphone brands focus on pushing devices up to Rs 35,000 very aggressively and let the marketing budget for above that price point take a rest.
Plus the R&D that goes into flagship and top-tier products is pretty expensive, thus profit margins get slimmer. That is not the case with mid-range and entry-level smartphones. Due to this moving the complete inventory of high-end devices becomes a priority or they would have to move the device at a loss after a certain amount of time. So taking a look and dividing markets into segments is a smart move that most OEMs make.
Other markets offer better returns
Developed markets like the US have a higher spending power when it comes to the populous. Moreover, the number of good options in the low and mid-budget ranges are extremely limited. Due to which most people prefer purchasing high-end devices.
Some people even get inside of a tech ecosystem with a laptop, tablet, smartphone, earphones and more, due to which getting out is pretty difficult. This is why they keep updating the flagship products from the same brand.
Moreover, countries like Europe pay more for a device than what the company would have earned from selling the devices in the Indian market.
India does not have favourable laws
The Indian government has been constantly increasing duties and taxes for importing goods. This has caused a lot of pressure on smartphone manufacturers who import and sell devices in the country. Due to the increased taxes and duties, the BOM cost of the product increases and to float the business, the company either has to eat into the profit or increase the price of the goods. Due to this, the companies are carefully only importing the products that they know they will be able to completely sell off and will not have an inventory backlog.
Plus the trade bans and the delayed shipment releases cause major problems for brands looking to keep inventory flowing. And it is not possible for all brands to set up factories in India to manufacture locally, as they might not sell as much product for it to make sense to them to start manufacturing in the country.
India is left for inventory movement
Many companies are using India as a country just to finish off their unsold inventory elsewhere. While this is a good thing for Indians who get products for a bit cheaper, that makes India get the products late in the product life cycle.
Many have even left the Indian market
Many brands like Sony, Alcatel, Nubia, Panasonic, Black Shark and more have given up and left the Indian market altogether, due to the immense pressure from Chinese smartphone brands. It has become a very difficult market to compete in and players are finding it better to either pack up or bring delayed devices when they can afford to sell them at cheaper prices.