Indonesia midrange smartphone segment expands even as overall market remains flat YoY, IDC reports


Aug 15, 2017

JAKARTA, 16th August 2017 – According to the latest International Data Corporation’s (IDC) Quarterly Mobile Phone Tracker, smartphone shipments in Indonesia reached 7.9 million units in 2017Q2, a slight 1% year-over-year (YoY) growth and a 9% growth quarter-over-quarter (QoQ). The festive season of Ramadhan contributed to the rebound from 2017Q1, with the usual festive discounts and promotional offerings.

The top-5 smartphone brands in 2017Q2 were; (1) Samsung, (2) OPPO, (3) Advan, (4) Asus, and (5) Xiaomi. Mid-range smartphones, particularly in the US$200<US$400 price segment accounted for 28% of the market share, showing significant growth from 13% a year ago. This reflects the change in consumers’ demand to upgrade to handsets with better specs for better entertainment & media, productivity, and gaming experiences.

“Over the past year, various vendors have been focused on meeting the terms of the Local Content (TKDN) regulation and now that it has been settled, they can channel their efforts to compete on features and value," said Risky Febrian, Associate Market Analyst, IDC Indonesia.

“The top smartphone players have taken the game to another level by offering products with better features such as higher camera resolution, fingerprint readers, higher storage and memory capacity at affordable prices. All these followed by the expansion of their after-sales service network, has made the survival of smaller players even more difficult," adds Risky.

The rise of mid-range smartphones was also driven by micro-financing companies such as Homecredit, Aeon Credit, Kredivo and Akulaku which have been gaining popularity among locals. These companies allow end users who do not own credit cards to pay via installments over a specific period which, is less financially taxing as opposed to the usual one-off payment methods, making the purchase of mid-range to high-end devices more financially viable.

The shipment growth of mid-range smartphones was mainly propelled by global and Chinese brands. They are seen as attractive offerings by micro-financing companies to offer quality products while still being able to manage their profitability. The local vendors in the meantime have been streamlining their product portfolio to focus on key models and upgrading them to be 4G enabled. Most of these vendors now have a leaner portfolio and 4G shipments account for more than half of total smartphone shipments from these local vendors.

Apart from usual marketing activities, vendors such as Samsung, OPPO and Xiaomi launched special incentives during Ramadhan season, collaborating with banks and micro-financing companies to offer cashback schemes and installment plans with zero percent interest rate.

“The transition away from ultra-low-end smartphones is a welcoming trend for Indonesia especially in terms of digital competitiveness. This gradual progression to more advanced devices is crucial as it will eventually open up new doors and growth opportunities for both local and foreign investments to the application of various new technologies and digital trends such as Augmented/Virtual Reality (AR/VR), Artificial Intelligence (AI), e-commerce and so on so forth,” adds Jensen Ooi, Senior Analyst & ASEAN Devices Research Lead.

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