Entry level smartphone segment declines by 36% in the first half of 2024

As the wave of premiumisation in the handset space continues to persist, the affordable category for smartphones declined yet again in the first half of the 2024 calendar year. According to a report by IDC research, the entry-level segment for smartphones (sub $100) in India experienced a strong decline of 36 per cent year-on-year to a total of 14 per cent overall market share in India. During the same period last year, the sub $100 smartphone category had a 22 per cent market share. 

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Experts believe that the decline in market share for entry-level phones is a result of OEMs introducing fewer models in the category. 

According to the IDC report, smartphone shipments to India grew by 7.2 per cent year-on-year to 69 million units in the first half of 2024. However, growth in shipments is primarily driven by the mass budget ($100 to $200) and largely by the mass premium ($200-$400) category.

The entry-level segment, on the other hand, witnessed a strong year-on-year decline of 36 per cent to a 14 per cent overall market share, down from 22 per cent. This comes even with players like JioPhone and Transsion were supposed to liven up competitiveness in the category. Currently, according to the IDC report, Xiaomi continues to dominate the market in the entry-level space followed by Poco and Realme. 

These numbers are largely in line with the broader trends that have been observed since the pandemic-induced chip shortage. As the purchasing capacity of those in the economic fringes remains weak, and the overall chipset supply for entry-level phones remains poor, smartphone companies are launching fewer models in the entry-level category preferring to vie for a share of the premium smartphone market which saw a major boost as middle-class Indians and above have begun to buy more expensive handsets. 

Faisal Kawoosa, Chief Analyst at Tech Arc explained, “The decline in the entry-level smartphone segment is largely supply-based. The pandemic-induced chip shortage induced the global chip market to largely prioritize 5G chipsets (which are more expensive) over chipsets for the entry-level category of smartphones. OEMs also dedicated their focus to this segment especially as the premium or the mass premium segment gives them much better margins over entry-level phones.” 

Kawoosa believes that the entry-level smartphone segment is expected to recover in 2025. “The premium segment in India has reached saturation,” Kawoosa explained, “which means OEMs will have to shift their focus on the entry-level segment as it has the headroom to grow,” he said.

Indeed, according to the IDC data, “The premium segment (US$600<US$800) held a 2 per cent share and declined by 37 per cent in unit terms in the first half of 2024.”

In July, Qualcomm introduced its first 5G chipset in the sub-$99 category, signalling the likely shift in focus for the smartphone industry overall.