With the launch of OnePlus 9RT in India today, it has been made clear that India is no longer center stage for OEMs. While there could be many reasons behind the company not bringing its smartphone to the country first, it also raises another question as to why brands like OnePlus and Samsung are launching last year’s device in India in 2022.
OnePlus 9RT was launched in the company’s home country of China in October 2021. Samsung was supposed to launch its Galaxy S21 FE in October, but the launch got delayed this year, when it was supposed to launch the Galaxy S22 series. Same is the case with many smartphone makers.
While we don’t have a concrete answer as to why smartphone brands are doing this, there are a few things we can give credit for.
lack of chip
The first thing we can see is the ongoing chip shortage, which is affecting everything from automobiles to video game consoles to smartphones. Semiconductor supply shortfalls have been caused by a number of reasons, including factory closures due to the ongoing pandemic, rising demand for consumer electronics, and more.
Smartphones were the most protected from shortages, due to OEMs stockpiling critical components. However, now the storage wells are drying up and like other industries, smartphone makers will now have to wait for chip shipments to arrive to assemble their devices. Because of that, the chips reach the most important devices of the year and then other mid-year refreshes and other flagship products.
Focus on entry-level and mid-range products
While India is the second most populous country, it is also full of money conscious minds. Due to which the sales of high-end smartphones in the country are much lower than entry-level and mid-range devices. Smartphone brands focus on pushing devices up to Rs 35,000 very aggressively and rest marketing budgets above that price point.
Also the R&D going into flagship and top-tier products is quite expensive, thus reducing profit margins. Not so with mid-range and entry-level smartphones. This makes it a priority to transfer the entire list of high-end devices or they will have to damage the device after a certain amount of time. So taking a look at the markets and segmenting them is a smart move that most OEMs do.
Other markets give better returns
Developed markets like the US have more spending power when it comes to population. Furthermore, the number of good options in the low- and mid-budget categories is extremely limited. Because of which most people prefer to buy high-end devices.
Some people even get inside a tech ecosystem with laptops, tablets, smartphones, earphones, etc., which makes it very difficult to exit. This is the reason why they keep updating the flagship products of the same brand.
Also, countries like Europe pay more for a device than the company earns from selling the devices in the Indian market.
India does not have favorable laws
The Government of India is continuously increasing duties and taxes for importing goods. This has put a lot of pressure on smartphone makers importing and selling devices in the country. Due to increased taxes and duties, the BOM cost of the product increases and in order to run the business, the company has to either eat in profit or increase the price of the goods. Because of this, companies are carefully importing only those products that they know will be able to sell perfectly and will not have an inventory backlog.
Also trade restrictions and delayed issuance of shipments create major problems for brands who want to keep inventory running. And it is not possible for all brands to set up factories in India to manufacture locally, as they may not sell as much product that makes sense for them to start manufacturing in the country.
India saves for inventory movement
Many companies are using India as a country to eliminate their unsold inventory elsewhere. While this is a good thing for Indians who get the products a little cheaper, which leads to India getting the products late in the product life cycle.
Many have even left the Indian market
Many brands like Sony, Alcatel, Nubia, Panasonic, Black Shark and others have completely left the Indian market due to immense pressure from Chinese smartphone brands. This has become a very tough market to compete in and players are better off either packing up or bringing in delayed devices when they can afford to sell them at cheaper prices.
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