Summary

In the Smartphones market, 1,366.14 million units shipped in 2020 and it is expected to reach 1,556.67 million units by 2026, registering a CAGR of 1.69% during the forecast period (2021-2026). Factors such as increasing disposable income, development of telecom infrastructure, the emergence of budget-centric smartphones, and an increasing number of product launches are contributing to the growth of the smartphone market in Asian countries.

Key Highlights
The smartphone industry has been steadily developing and growing, both, in terms of market size and models. Globally, by 2021, 40% of the world’s population is predicted to own a smartphone. According to Ericsson, the number of smartphone subscriptions worldwide surpasses six billion and is expected to further grow by several hundred million in the next few years. China, India, and United States are the countries with highest number of smartphone users. It is expected that by year 2026, the number of smartphone subscriptions would increase to 7516 million.
The Covid-19 pandemic has severely disrupted the balance between supply and demand in smartphones market. Since, China is the global manufacturing center for most of these devices and components, and with nationwide lockdown the smartphone manufacturing sector has been adversely hit by delayed shipments and weakened development of next-generation products. Also, the country has witnessed being choked off from suppliers, workers, and logistics networks. Moreover, consumer's demand for smartphones, especially of premium segment has witnessed a decline due to the tendency of customers to cut down luxury spending and focus on essentials due to the pandemic.
According to the Consumer Technology Sales and Forecast study, which was conducted by the Consumer Technology Association (CTA), the revenue generated by smartphones was valued at USD 77.5 billion in 2019, respectively. Due to the pandemic, CTA projected revenue to reach USD 71 billion a decline of 6% year-over-year. However, CTA projects the smartphone industry to bounce back in 2021, generating over USD 78 billion in shipments.
Xiaomi, which overtook Samsung to take a dominating spot in Indian smartphone shipments in the recent past, claims to now have seven manufacturing facilities in the country. Xiaomi India claims that 99% of the phones that it sells in the country are locally built. The company has also begun exporting devices to Bangladesh and Nepal, albeit in limited quantities.
The improvement in consumer outlook, sustained learning, and working from home, along with pent-up demand from 2020, is boosting sales of smartphones in 2021. In addition, consumers started spending on discretionary items as the pandemic situation improved in many parts of the world and markets opened. However, the global chip shortage may affect the smartphone industry as the demand and supply equilibrium will not meet and could increase the average selling price of smartphones globally.


Key Market Trends

Android Operating System is Expected to Grow Significantly


The shipments of android smartphones have outpaced shipments of iOS smartphones. For instance, according to industry sources, in Q1 of 2021, the most sold smartphones were Samsung, approximately accounting for 77 million smartphones globally, compared to the sales of iPhone globally that approximately accounted for 57 million. This indicates that Android smartphones are the most preferred and customer-friendly compared to iOS smartphones.
Furthermore, many application developers prefer Android OS to develop gaming/entertainment applications, social media applications, utility mobile applications, lifestyle applications, among others, as it requires the developers to have knowledge of languages, such as C++, Kotlin, Java, among others. Moreover, Google also offers various development tools, such as Android Jetpack, Firebase, and AndroidSDK, to assist developers in building a user-intuitive interface.
Moreover, the platform allows users to download applications for free of cost, however, the applications are designed to offer in-app purchases, course in-app subscriptions that have generated more revenue in Google Play Stores compared to Apple Stores. For instance, the revenue generated by coin master in April 2021 approximately accounted for USD 61.02 million through Google Play Stores, according to Air now PLC. This was followed by GarenaFree Fire- World series and PUBG Mobile-Karakin that generated a revenue of USD 38.56 million and 37.76 million in April 2021.
The increasing demand for high-speed data connectivity for integrated IoT (Internet of Things) applications, such as energy management and smart home products, is anticipated to propel the adoption of 5G smartphones. For instance, in January 2021, OPPO India announced that it aims to launch more than six 5G-enabled devices in India this year, as 5G-ready and Internet of Things (IoT) product categories become important for smartphone players in the country.​


Asia Pacific region (excluding China) is Expected to Hold a Significant Market Share


The demand for smartphones at entry-level price point is expected to be driven by the increasing demand from the developing countries in the region, such as India and Indonesia, where smartphones are increasingly penetrating into the rural areas as local governments are pushing for digital and mobile economy. For instance, the Digital India program is a flagship program of the Government of India primarily aimed at transforming the country into a digitally empowered society.
Moreover, India has also launched PLI Scheme which offered 6-4% incentive for five years on incremental sales of manufactured handsets over 2019–2020. High-end multinational cell phone makers, or those producing handsets worth over USD 200, had to sell goods worth INR 400 million in 2020-21 to claim the incentives. Such initiatives by the government are expected to boost the smartphone market in the country.
The Asia-Pacific region is one of the significant markets for smartphones, primarily owing to the highly developing telecom sector and large customer base. Further, the region is increasingly investing in the mobile network. Countries, such as India, Japan, Australia, Singapore, and South Korea, are increasingly investing to the development of the domestic telecom market, which is also expected to drive the market in the region.
By the end of March 2020, Xiaomi and Lenovo-Motorola shut their handset factories across various parts of India, as per the government’s lockdown directives to contain spread of the coronavirus. Samsung, which moved a significant production facility to Vietnam in recent years, is currently facing production delays. Vietnam’s Ministry of Industry of Trade also underlined the fact of delayed production of Samsung’s latest smartphone models. Vietnam’s significant reliance on China for materials and equipment has made the country vulnerable during such an outbreak. This impacted the Samsung's latest smartphone models sales across the region.


Competitive Landscape

The smartphone market is a highly competitive market, dominated by established players such as Samsung, Huawei, Apple, and Xiaomi, among others. Most of these players keep launching new models with small technology changes such as battery power, camera configuration, and/processor. Some of the recent developments in the market are:


July 2021 - Vivo Communication Technology Co. Ltd, expanded its 5G portfolio in India with the launch of powerful vivo Y72. Priced at INR 20,990, Y72 delivers superior smartphone experience through its robust features while sporting a clearly differentiated design in its category. The smartphone offers 8GB+4GB expandable RAM which prevents the phone from choking while multi-tasking.
July 2021 - Samsung India launched new smartphone Galaxy A22 5G. It offers 11 bands’ support for 5G experience and two year OS upgrades. It has 6.6” FHD+ display with 90Hz refresh rate, versatile 48MP triple camera, 5000mAh battery and host of other innovative features.
April 2021 - Guangdong Oppo Mobile Telecommunications Corp., Ltd, launched a new sleek smartphone under its renowned F series - the new OPPO F19, in India. The OPPO F19 is minimalist sleek device under the F19 series that comes with a 33W Flash Charge to charge the massive 5000mAh yet maintaining a light weight and a sleek design.


Additional Benefits:

The market estimate (ME) sheet in Excel format
3 months of analyst support

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