The Indian market for smartphones has been on a constant rise as the voracious
appetite of the country?s 1.3 billion-strong for smartphones has kept growing.
Last year, Indiasurpassed
[https://www.counterpointresearch.com/india-surpassed-usa-become-second-largest-smartphone-market-world-reaching-158-million-shipments-2019/] U.S. to become the second-largest smartphone market in the world to stand only
behind China, in terms of the number of devices shipped. But the unprecedented
COVID-19 pandemic ? as analysts predict ? is expected to have a drastic impact
on smartphone sales in 2020.

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According to a?report?by CounterPoint Research, India?s smartphone market grew a
mere 4% in the first quarter of 2020 that comprises the months of January,
February, and March. This is of concern since the lockdown only began towards
the end of March.

The lockdown restrictions imposed by the government prevented any non-essential
movement which meant offline stores were inaccessible. That and a stop on
e-commerce activities made sure that smartphones weren?t accessible to anyone
who was looking to purchase one. Not just purchase, but the restrictions left
people looking to fix their faulty smartphones in a quandary.

Given how imperative smartphones have come to be for education and business in
these recent times, a lot of people believed that the sale of smartphones along
with some other electronic devices such as laptops should?ve been allowed during
the lockdown.

Not just sales and shipment, but the lockdown also saw manufacturing units
completely shut down in India, and a concerning impact on the supply chain.
Smartphone companies who manufacture in India,
including?Samsung,?Xiaomi?&?Realme?to name a few, saw manufacturing units
completely shut with the onset of the lockdown.

Now while manufacturing has begun for some of these manufacturers, they aren?t
running at optimum capacity yet. In conversation withMashable India, Realme
India CEO Madhav Sheth shared how the lockdown impacted their manufacturing
operations.

?We are facing a huge shortfall compared to the demand that we?re seeing. The
60-day lockdown has ensued supply chain disruption. Even now, when the factories
have opened up, we?re facing a problem with respect to manpower as most of them
have moved to their homes. We only expect our production to normalise by mid to
end-July,? said Madhav.

Smartphones Companies Have Moved Quickly, But What?s Lost Is?.Lost
While there was little that could be done with respect to the sale or
manufacturing of phones during the lockdown period, smartphone companies were
quick in coming up with solutions to adapt to the situation at hand. We saw
smartphone companies adopt O2O models (Online to Offline) that let users place
orders for products from offline retailers located close to their homes.

But the COVID-19 situation isn?t as simple as restoring the supply-demand
equilibrium. While making sure smartphones are still as accessible is imperative
? especially when waiting customers will be looking to finally make their
pending purchases ? there poses another problem for smartphone companies: the
aftermath of the lockdown.

The lockdown has given birth to uncertainties and with no final word on when
things will get back to ?normal? (that is if it ever will), consumer demand is
not expected to spring as quickly. This uncertainty has also led companies
across the country to resort to salary cuts, unpaid leaves, and layoff to make
sure they survive through this difficult phase.

If this impact is wide enough, consumers will be looking to limit discretionary
spending which in turn might have an impact on the smartphone industry.

?Consumer demand will have a larger impact on smartphone sales, as people will
focus on saving and therefore limit discretionary purchases. As entry-level
smartphone consumers will be the worst-hit by the lockdown, the demand for the
entry-level smartphones will decline in the near-term. We believe demand will
shift to the second part of the year. Even if the situation stabilizes by
mid-year, people may hold-off purchasing until the festive season,? says Prachir
Singh, Senior Research Analyst at Counterpoint Research.

As a result, Counterpoint has also recalibrated their estimations of overall
smartphone shipments and now estimate it to decline by 10% in 2020. techARC, a
Gurugram-based market insights firm, also reduced their estimated sales by over
20% due to the impact of the pandemic on supply chain and consumer demand.

If these estimates are to be believed, this will be the first time the Indian
smartphone market will see a decline in terms of the total number of shipments.

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