While the smartphone and the automotive industry continues to face a chip shortage, sales are continuing to reach new heights. According to a new report by Counterpoint, smartphone sales in India are expected to reach the $7.6 billion (approximately Rs 56,858 crore) mark. According to the report, high consumer demand in the mid and premium segments is expected to drive sales numbers.
Apart from the sales numbers, the report also claims to see an increase in the average selling price (ASP) of smartphones in the festive season. The ASP of smartphones is expected to grow 14 percent, thus reaching its highest of $230 (approximately Rs 17,200).
The festive season has been driving smartphone sales in India and the “trend has been accelerated this year by the high pent-up demand backed by aggressive promotions in the mid and premium segments. We estimate that almost USD 7.6 billion worth of smartphones will be sold during the ongoing festive season,” said Counterpoint senior analyst Prachir Singh.
While the numbers sales numbers might be the highest-ever, the fact that the smartphone industry is facing component shortages is bad for consumers. Due to the shortages, OEMs are being forced to increase prices of their devices, which will impact the market in the long term.
What is causing the higher number of sales?
While the ongoing festive season is one reason for the increased amount of sales, Counterpoint believes that the numbers are being driven by positive consumer sentiment. Many consumers have decided to spend their accumulated savings, which have been made during the work from home phase.
Apart from the positive consumer sentiment, during the ongoing festive season, we are getting to see massive discounts on devices like the iPhones and Galaxies to name a few. Additionally, higher trade-ins and aggressive EMIs are an encouragement for people to buy these devices.
What will the consequences be?
Considering that the storage wells of OEMs for smartphone components are drying up, they are having to increase the prices of their devices. All-time high sales will just accelerate the process, making smartphones in every category get more expensive. The hardest hit will be the mass market and budget segments, which rely on affordable pricing.
Will something good come out of this?
Currently, the relatively higher sales of premium segment smartphones according to Counterpoint has helped offset the losses in the mass market, which were caused due to the price hikes. However, in the long term, with the prices continuing to rise, the smartphone market might see a dip, with people using their current devices for longer. While this might not be a good news for OEMs, it will help in reducing e-waste, which has become a major environmental issue these days, with even smartphone brands taking note and not shipping devices with a charging brick.
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