LG, Sony to Exit from Entry Level Smartphone Market in India; Stiff Competition from Local Players
LG has been serving India for quite some time now with its range of smartphones in every segment. Sony used to develop smartphones on the expensive side, but recently joined the bandwagon to provide similar experience as on the high-end smartphone on cheaper smartphones. LG’s L series did not take off as expected, while Sony’s Xperia series did not impress those looking for budget phones.
In a news that may not be surprising, but saddening, LG and Sony both have decided to leave the entry level smartphone segment and focus more on the other segments where sales are motivating. Both of them have shown decline over the last few months and the market share of LG has dropped to 0.4% while Sony’s is at 1.5%, in 2015. The respective shares in 2014 were 1% and 4%, nothing to write home about. Domestic smartphone size grew by 20% in 2015 and the leaders have kept their positions intact.
Motorola, acquired by Lenovo, had also planned to follow a similar route, despite of different reasons.
Reason for exit?
The entry-level market is one of the most important segments in India, where the sales have been increasing every year. Better phones are being launched every quarter claiming high-end features in low-end prices, which is making this market very hot right now. The market is dominated by Samsung, Micromax, Intex and Lenovo who have a market share of 26%, 16%, 10% and 9% respectively in 2015.
Sony and LG claim that the local players and Chinese handset makers are eating away into their sales, due to high proliferation in the market and competitive pricing. LG and Sony reek of quality, but fail to deliver the same in terms of pricing and we have seen in the past that Sony usually prices its smartphones higher than the usual norm.
What is the plan forward for LG and Sony?
“Sony Mobile has shifted its focus more on premium segment within the product portfolio. The number of models will reduce as compared to last year as we shift focus purely on the premium segment,” was communicated by a spokesperson. Sony does not have many exciting phones in the mid-range segments either, and the only high-end smartphones in its kitty are Z5 and Z5 Dual, which come boast of excellent camera, display quality and sturdiness. Sony needs time to streamline its operations in India before venturing out into niche segments dominated by other similar smartphone makers.
“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,”, said a spokesperson from LG. LG too is restructuring its entry market division and plans to do thorough research before launching a new smartphone in this category. The LG G5 launched at MWC 2016, shows that LG can be one of the best in the premium segment, but the Indian market does not accept low-end smartphones with no outstanding features.
Recent entry of LeEco, Xiaomi and OnePlus have created a stir amongst the citizens of India for offering high-end features in relatively inexpensive smartphones. It is quite possible other players like Samsung face heat in the market, however that is definitely not happening until the end of this decade.