NEW DELHI, May 26, 2022, India Today. Samsung is one of the leading smartphone brands in India and it is equally popular in the feature phones market. But the South Korean giant may be planning to exit the low-value feature phone market — which sees the maximum shipments in India — by the year-end. The last batch of the devices will be manufactured by Samsung’s contract partner Dixon this December, post which the company is believed to focus on launching smartphones mostly above Rs 15,000, India Today reported.
According to a report by Economic Times, Samsung is one of the two major multinational companies contributing to the Indian government’s production-linked incentive (PLI) scheme. This scheme allows manufacturers to seek sops from the government for local manufacturing but the condition is that the phones should be worth over Rs 15,000 factory price. With global inflation and shortage of components, the prices of smartphones have increased over the past few months, if not in recent years, and that could be the reason why Samsung is mulling focusing on the sub-Rs 20,000 or higher market.
Dixon, Samsung’s manufacturing partner, could stop making low-cost phones. However, it is not clear if the production of just feature phones will stop by the end of this year or if entry-level smartphones will also be gradually discontinued from manufacturing lines. “Samsung has spoken to channel partners and said they will exit the feature phone business in the next few months or by this year’s end,” a source was quoted by ET as saying.
Samsung’s plan to exit the feature phone market may be driven by the fact that the past few months have been nothing but abysmal for sales. In the first quarter of 2022, the feature phone market saw a year-over-year decline of 39 per cent, induced by factors such as the supply crisis, high inventory levels, and low interest among customers because of retail inflation, per Counterpoint Research. Samsung, which once led the feature phone market as well as the smartphone market, plummeted in rank to number 3 with a market share of just 12 per cent at the end of March — much behind the leader Itel, which secured a 21 per cent share, and Lava, which stood at 20 per cent, Counterpoint’s data revealed.
At the end of March, Samsung’s feature phone business contributed only 1 per cent of the total value, while the feature phone shipments were 20 per cent of the total volume, according to Counterpoint. With sales and shipments tanking, Samsung’s decision to quit the market for good could be good news for the likes of Itel, HMD Global’s Nokia, and Lava, which are bullish about the feature phone market in India.
Leaving the low-value phone market will allow Samsung to focus on its mid-range and high-range offerings in India. Samsung is among the top brands for 5G phones across price ranges and the company is hoping to regain the top position that it once lost to Xiaomi.