New Delhi: Samsung is set to lose its top billing in the premium-end of the Indian smartphone market to rival Apple as the Note 7 fiasco and the strong showing of iPhone7 are expected to result in a contraction in the company’s market share as buyers disconnect from the brand.
The company, which has been going strong in the premium phone market (Rs 30,000 and above) with an estimated share of 58% in the third quarter (July-September) of this calendar year (2016), may see numbers go down sharply in the October-December 2016 quarter, one of the most critical periods for consumer companies, considering the usual surge in purchases during the festive season.
The share may slip to 35%, lowest for the company in many years as Apple gains the maximum with an expected market share of 57%, as per a preliminary forecast made by agency Counterpoint Research.
The fall for Samsung is also being predicted by other research agencies, as well as key industry players and multi-brand phone sellers, who say there is a “definitive pressure” on Samsung’s premium phone business, especially as the Note 7 was withdrawn over safety concerns.
“The strong response to iPhone7 — sold nearly double the numbers in its first week than those achieved by the S6 — has only made matters worse. Apple has surprised the market with the new device, and there is a tremendous pull for the product among buyers,” a top national distributor, who retails brands for both the companies, told TOI, while requesting anonymity. “However, the Galaxy S7 Edge has been doing well, as Samsung focuses on pushing the brand aggressively after the Note 7 pullout.”
When reached for comments, Manu Sharma, VP for Samsung’s mobile business, said sales have been brisk and there is no truth in forecasts predicting a decline in market share. “We don’t agree at all. In fact, we are doing exceedingly well with record sales in mobile business and the festive season has started on a high for us. We continue to sustain our leadership position across all price points.”
Sharma added, “We are seeing a very good off-take of powerful S7 and S7 Edge devices… The industry analysts research reports are not based on empirical facts. Such projections by any research agency or analyst, therefore, is incorrect.”
However, Neil Shah, director (devices & ecosystems) at Counterpoint Research, said impact on Samsung’s revenues can be substantial. “Samsung was estimated to sell a quarter million Note 7 in India in 2016. We estimate the total impact on its top line would be close to Rs 700 crore,” Shah said.
Faisal Kawoosa, telecom industry analyst at Cyber Media Research (CMR), said the impact could be major and across Samsung’s product line-up. “Though Note 7 is a high-end premium smartphone, the impact would be across all the segments. The issue is faced with the flagship model of the year, that too around the festive season, as a result, customers’ confidence is shaken.”
Kawoosa said confidence is low on brand Samsung. “A perception, right or wrong, gets built within the market that if the issue is with the high-end premium model, there could be issues in other models too.”
Jaipal Singh, market analyst at IDC India, said Samsung’s brand reputation will be impacted. “It will lose out a bit in the stronghold that S7 Edge has created in the premium segment. But mostly, it will impact brand reputation and user’s perception.”