FOCUS: Demand for costly high-tech phones drives market in money terms

By Yekaterina Yezhova

MOSCOW, Dec 10 (PRIME) -- Smartphone sales growth in Russia has accelerated in money to 20% in 2018 from 15% in 2017, but slowed down to 2% in units from 4% as customers buy fewer but more expensive and larger multi-functional gadgets, mainly of the ubiquitous Apple, Huawei/Honor, and Samsung. The trend will stay in force in 2019, leading local retailers said.

“The spike in monetary terms is explained by the fact that in 2018 demand has moved to more multi-functional and expensive gadgets. Smartphone manufacturers produce more and more models with double and triple cameras, the NFC function for contactless payments, face recognition, and other options,” Director for strategic planning and analysis at Svyaznoy-Euroset Sergei Belozyorov told PRIME.

Preliminary figures of Svyaznoy-Euroset show that smartphone sales increased 20% in 2018 to 466 billion rubles and 2% to 29.4 million units.

In January–November, sales spiked 20% on the year to 395 billion rubles and insignificantly in natural terms to 25.3 million devices, Svyaznoy-Euroset said.

M.Video-Eldorado sees the market to gain 18–20% in 2018 to about 460 billion rubles and 2% to 29–30 million units, PR Director Valeria Andreyeva said, adding that sales went up 15% to 375 billion rubles in 2017, and 4% to 28 million devices.

“Among the key trends on the smartphone market in 2018 are a rise in the sales of medium and upper-price segments, an increase in the sales of phones with wider screens and a bigger memory,” Belozyorov at Svyaznoy-Euroset said.

The retailers agreed that demand for more technological handsets raised the average price 20% in 2018 to 15,300–15,400 rubles.

Devices for less than 10,000 rubles accounted for 47% of sales in units in 2018; with a price tag of 10,000–15,000 rubles for 21%; 15,000–30,000 rubles for 21%; and over 30,000 rubles for 12%, Belozyorov said.

“Demand moves toward the middle and upper-price segments, according to the figures for January–September, and the trend would most likely pertain by the end of 2018. Sales of smartphones for 10,000–20,000 rubles and over 40,000 rubles jumped 36% on the year in units in January–September,” Andreyeva at M.Video-Eldorado said.

“Customers more often want a functionally useful smartphone, which can be exploited for photos and payments, and such gadgets usually cost from 15,000 rubles. They have all popular features: edgeless displays, support of contactless payments, fast charging. Interest-free loans, including those provided online, are one more driver of migration to upper-price segments.”

Another main trend of 2018 is a significant growth of interest to devices with wider screens. “The share of smartphones with a display of more than 5.6 inches in diagonal stood at 26% in 2018 against 2% a year earlier. We think the figure will only grow,” Belozyorov at Svyaznoy-Euroset said.

In terms of operating systems, sales have remained flat: Android has 65% in money and iOS the remaining 35%.

In money, the most popular model was the iPhone X with 65 GB. In units, the bestsellers were the iPhone SE with 32 GB, Honor 9 lite with 32 GB, and Samsung Galaxy J1, according to Svyaznoy-Euroset.

The top brands portfolio did not change in 2018: Apple, Huawei/Honor, and Samsung have very strong positions, accounting in total for 80% of the market in money and some 60% in units, Andreyeva at M.Video-Eldorado told PRIME.

“Xiaomi and BQ-mobile follow. Smartphones by Nokia, ASUS, Fly, and Vertex are also popular. We saw a solid rise of Chinese manufacturers and noticeable efforts of Russian brands (BQ-mobile and Vertex) to strengthen positions in 2018,” she said.

“In 2019, Huawei/Honor has all the opportunities to keep leadership thanks to a proactive development of the both brands and a rise in clients’ confidence in the manufacturer. We could see interesting changes beyond the top three, besides, new players could emerge, which gives hope for further progress of the market.”

M.Video-Eldorado expects growth dynamics in money to slow down in 2019 and stay flat in units.

Belozyorov at Svyaznoy-Euroset said the smartphone market will keep on growing in the next few years, mainly in monetary terms.

(66.9227 rubles – U.S. $1)

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