NEW DELHI: India’s smartphone market is expected to witness a 12% decline in sales (by volumes) this festive season, even as the overall market value is projected to grow 5%, reflecting a shift towards pricier devices and longer replacement cycles, according to Counterpoint Research.Rising memory costs have pushed up smartphone prices, prompting consumers to defer purchases or increasingly rely on financing and trade-in offers to upgrade their devices. The festive season, which typically accounts for a significant share of annual smartphone sales, is expected to be driven more by replacement demand than first-time buyers.“The key challenge this festive season will be the size of the active consumer pool,” said Tarun Pathak, research director at Counterpoint Research. Higher smartphone prices, he said, are likely to keep many consumers on the sidelines, with discretionary upgrades being deferred and purchases increasingly driven by replacement needs.The trend is also reflected in device trade-ins, which are emerging as an important driver of premium smartphone purchases.“This festive season is shaping up as an upgrade season more than a first-purchase season. Fewer people are buying a phone for the first time, but the ones who are buying are moving up,” said Sreevathsa Prabhakar, founder and CEO of Servify.Servify, which handles over 3 lakh device trade-ins annually, said trade-in volumes in Oct and Nov are typically around 50% higher than in regular months.Prabhakar said upgrades in the Rs 60,000-1 lakh smartphone segment are being driven largely by financing and trade-ins. Demand for above Rs 1 lakh, including foldable smartphones, is largely coming from existing premium users upgrading their devices every 12-24 months.Trade-in demand is also expanding beyond metros into Tier 2 and Tier 3 cities, suggesting that premiumisation is spreading to smaller markets.The shift towards expensive smartphones is simultaneously boosting demand for device protection. Servify said premium smartphones have 30-40% higher protection attach rates than mid-range devices, with protection increasingly bundled with financing and upgrade plans.With rising component costs limiting manufacturers’ ability to offer deep discounts, attractive exchange values, easy financing and assured buyback programmes are expected to play a crucial role in driving festive sales.
