Japan's Sony and Korean electronics giant LG have decided to scale down
their presence in the large-volume entry smartphone market in India.
Facing tough competition from Chinese and local vendors, their market
share in the smartphone category has slipped to record lows - LG at 0.4%
and Sony at 1.5%.
Samsung's grip in the category, with its large set of offerings, has also added to the woes of LG and Samsung, which are reviewing their product line-up. Top industry sources told TOI that LG and Sony have decided to focus on niche mid-tier and premium segments of the smartphone market where competition is not steep.
The domestic smartphone market grew by 20% in 2015 and accounted for sales of nearly 100 million units. While leaders Samsung and Micromax maintained their positions, Sony and LG could not find any traction and their share came down by half. According to data collated by IDC and CyberMedia Research, LG's share in 2014 was nearly 1%, while Sony was between 3.5% and 4%.
When contacted, a spokesperson for Sony India admitted that the company is withdrawing from the low-end segment. "Sony Mobile has shifted its focus more on premium segment within the product portfolio."
The company has also reduced its offerings. "...the number of models will reduce as compared to last year as we shift focus purely on the premium segment," the spokesperson said, listing out the 'Z5' and 'Z5 Dual' devices as key phones.
However, Sony does not plan to exit the category. "Sony remains dedicated to the Indian market and will focus on building a stable business foundation going forward by streamlining our operations and seeking increased efficiencies... We have no plans to exit the mobile phone business."
LG too said it is "restructuring and reorganizing" the mobile division, but added that the company has "no reason" to make an exit. "There has been no downsizing, there has been restructuring and reorganizing that are part and parcel of all large organizations, aimed at improving operational efficiencies," a company spokesperson said.
What makes matters worse for them is the top-end is dominated by Apple, with Samsung being the only other player to make a presence. In the mid-tier segment, there is steep competition as Chinese companies such as Xiaomi, Lenovo, Motorola (part of Lenovo), Huawei, Gionee and Oppo increase their offerings. Also aggressive in the category are Indian companies led by Micromax, Lava, Karbonn and Intex.
LG said it will continue to launch new products. "We have our smartphone portfolio starting from a price point of Rs 8,000 and we shall continue to bring new devices in this price segment. This is in alignment with our smartphone strategy for India and all our future smartphones that are in the pipeline are all aligned to this strategy."However, the company replied with "no comments" to a question on the reasons for its falling market share and its inability to crack the market. "We are committed to the Indian market and are in fact looking at further strengthening our product portfolio here.... we are happy with the way our strategy for India is paying dividends."
Faisal Kawoosa, lead analyst at CyberMedia Research for telecom, said to have good volumes, the companies need to be present in low and mid segments in the price bracket of Rs 6,000-8,000, which contributed 22% to smartphone sales in 2015.
Kawoosa
said Sony misread the market. "Sony was earlier having phones in the
lower price bands, but later it moved to higher price bands. There was a
mismatch at how the market was moving, and how they looked at it."
LG, he added, had more focus on categories other than smartphones. "So while Samsung built a strong mobile handset product portfolio, LG perhaps gave all its energies in focusing at other electronics segments."
Samsung's grip in the category, with its large set of offerings, has also added to the woes of LG and Samsung, which are reviewing their product line-up. Top industry sources told TOI that LG and Sony have decided to focus on niche mid-tier and premium segments of the smartphone market where competition is not steep.
The domestic smartphone market grew by 20% in 2015 and accounted for sales of nearly 100 million units. While leaders Samsung and Micromax maintained their positions, Sony and LG could not find any traction and their share came down by half. According to data collated by IDC and CyberMedia Research, LG's share in 2014 was nearly 1%, while Sony was between 3.5% and 4%.
When contacted, a spokesperson for Sony India admitted that the company is withdrawing from the low-end segment. "Sony Mobile has shifted its focus more on premium segment within the product portfolio."
The company has also reduced its offerings. "...the number of models will reduce as compared to last year as we shift focus purely on the premium segment," the spokesperson said, listing out the 'Z5' and 'Z5 Dual' devices as key phones.
However, Sony does not plan to exit the category. "Sony remains dedicated to the Indian market and will focus on building a stable business foundation going forward by streamlining our operations and seeking increased efficiencies... We have no plans to exit the mobile phone business."
LG too said it is "restructuring and reorganizing" the mobile division, but added that the company has "no reason" to make an exit. "There has been no downsizing, there has been restructuring and reorganizing that are part and parcel of all large organizations, aimed at improving operational efficiencies," a company spokesperson said.
What makes matters worse for them is the top-end is dominated by Apple, with Samsung being the only other player to make a presence. In the mid-tier segment, there is steep competition as Chinese companies such as Xiaomi, Lenovo, Motorola (part of Lenovo), Huawei, Gionee and Oppo increase their offerings. Also aggressive in the category are Indian companies led by Micromax, Lava, Karbonn and Intex.
LG said it will continue to launch new products. "We have our smartphone portfolio starting from a price point of Rs 8,000 and we shall continue to bring new devices in this price segment. This is in alignment with our smartphone strategy for India and all our future smartphones that are in the pipeline are all aligned to this strategy."However, the company replied with "no comments" to a question on the reasons for its falling market share and its inability to crack the market. "We are committed to the Indian market and are in fact looking at further strengthening our product portfolio here.... we are happy with the way our strategy for India is paying dividends."
Faisal Kawoosa, lead analyst at CyberMedia Research for telecom, said to have good volumes, the companies need to be present in low and mid segments in the price bracket of Rs 6,000-8,000, which contributed 22% to smartphone sales in 2015.
LG, he added, had more focus on categories other than smartphones. "So while Samsung built a strong mobile handset product portfolio, LG perhaps gave all its energies in focusing at other electronics segments."
Comments
Post a Comment