FOCUS: Rising sales of smartphones in Russia to boost demand for wearables

By Yekaterina Yezhova

MOSCOW, Feb 6 (PRIME) -- Smartphones’ progress in eating out the market share from feature phones and tablets advanced in 2016 with sales soaring 22–27% in money and 2–5% in units, Russia’s leading retailers said. LTE devices were the bestsellers, and Chinese brands were snapping at Apple and Samsung’s heels. Smartphones’ omnipresence can give momentum to connected wearables in 2017.

Multi-channel retailer Svyaznoy calculated that nationwide smartphone sales soared 27% in 2016 to 330 billion rubles. In natural terms, sales rose 5% to 27 million devices.

“The growth in smartphone sales results from several factors. A smartphone today is the ‘first’ screen and the most familiar means of communication for a growing number of people, competing with desktops, laptops and tablets. The device is used to look through emails, chat via social networks and messengers, make calls and text,” Svyaznoy’s spokesman Sergei Tikhonov told PRIME.

“A wide range of credit products has also contributed to the trend, including instalment programs offered at stores of big retailers.”

The share of smartphones in total sales of mobile phones in units ascended to 71% in 2016 from 67% in 2015, as Tikhonov said. 

According to electronics seller M.Video, the smartphone market added 22% in money and 2% in units, while the company’s own sales rocketed 65% and 33% respectively thanks to competitive prices and credit offers, as the retailer’s PR Director Valeria Andreeva said.

 Tikhonov said sales of smartphones with a price tag of more than 30,000 rubles rose some 50%, and sales of devices costing 20,000–30,000 rubles jumped 80%, which added to an average price of a smartphone 20% in 2016 to 12,200 rubles.

“In general, sales of smartphones for 10,000–40,000 rubles increased 25% in natural terms over the year, the strongest dynamics,” Andreeva said.

A more pronounced growth in money than in units is due to a rising demand for more expensive gadgets, including the whole iPhone range. The release of the flagship iPhone 7 and 7 Plus in October 2016 triggered the brand’s popularity.

“In 2016, Apple’s smartphones continued bringing retailers the biggest revenue as compared to other brands. The iPhone is among leaders by popularity on the local market along with Samsung’s smartphones,” Svyaznoy’s spokesman said.

The iPhone 5s with 16 GB of memory was the bestseller over the year, according to M.Video.

Both chains pointed to a strengthening grip of Chinese brands, like Lenovo, ZTE, Xiaomi and Meizu.

A source familiar with statistics said the leading brands divided the market in monetary terms as follows:

In natural terms, the names had the following market slices, according to the source:

Andreeva at M.Video said LTE smartphones constituted one more market driver last year. “They’ve taken over 3G gadgets for the first time and held 53% in units. In M.Video, the share of LTE smartphones amounted to 77% in 2016. The LTE smartphone share expanded thanks to a wider range in all price categories. As a result, an average price of an LTE device fell 15%,” she said.

The market of feature phones shrank 18% in money and 13% in units, according to Svyaznoy, and by 21% and 16% respectively, as M.Video said.

Tablet sales dropped 25% both in money and in units to 41 billion rubles, or 4.65 million devices. “An average price of a tablet went up 4% in 2016 to 9,000 rubles as cheaper gadgets enjoyed most demand over the year,” Tikhonov said.

Sales of tablets dropped 25–28% both in money and in units, “because users prefer smartphones with larger screens, known as phablets, or ultrathin laptops,” Andreeva at M.Video said.

Outlook for 2017

Researcher GfK said earlier in January it expects audience of the mobile Internet to keep growing in 2017 along with the expansion of smartphones, whose sales in units could rise 5% in 2017.

Svyaznoy believes that smartphones will stay the key device for communication in 2017 and continue influencing sales of other categories of personal electronics. “We think ‘smart’ accessories will be in demand, as their sales are rising thanks to a high popularity of smartphones. Tablets and photo cameras will keep on losing ground,” Tikhonov said.

Andreeva at M.Video said smartphone dominance this year may entail further demand for connected devices, like headphones, fitness trackers and smartwatches.

(59.3137 rubles – U.S. $1)

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