FOCUS: Smartphone sales in Russia outperform tablets in Q1, Android leads

By Yekaterina Yezhova

MOSCOW, Apr 13 (PRIME) -- The Russian market of handsets and tablets shrank in natural terms in January–March after a shopping spree at the end of 2014 when the ruble plummeted making the imported gadgets sold at old prices cheaper than in Europe. Retailers pointed to a growing share of Android devices and a weakening demand for tablets, which are replaced less frequently than smartphones.

“In natural terms, the Russian market of cellular phones and smartphones fell 12% on the year in January–March. For the same period smartphone market lost 2%, and tablet market lost 21% in natural terms. In monetary terms, sales of all mobile devices – smartphones, cellular phones and tables – rose 5%, while sales of smartphones grew by 10%, tablets fell by 32%,” Viktor Lukanin, executive vice president of Euroset, told Russian Connection.

Hi-Tech Mail.Ru, an expert project of Internet giant Mail.Ru Group, estimated that demand for mobile devices fell some 15% on the year in January–March and plummeted about 40% on the quarter, which was provoked by record December sales.

“Most of companies then sold out all their stocks of large electronic appliances, and top-of-the-range smartphones and tablets were in high demand as well. Demand for ordinary phones did not jump and their prices changed little. Having renovated most of categories of electronics, including telephones and tablets, buyers have jammed on the brakes,” Hi-Tech Mail.Ru’s Editor-in-Chief Anton Spiridonov said.

If conditionally take sales of smartphones, cellular phones and tables as 100%, then shares are following, as provided by Euroset:

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	Share in natural terms, %		Share in monetary terms,%
	Q4, 2014	Q1, 2015	Q4, 2014	Q1, 2015
Cellular phones (without OS)	33	28	9	7
Smartphones	50	57	65	75
Tablets	17	15	26	18

Focus on middle class devices

As soon as consumers adapted to new prices, they revised their priorities in favor of cheaper devices, but not at the expense of quality. Manufacturers caught the trend and concentrated on the middle class of gadgets.

“In the last two years, consumer appetite has switched to budget models of new brands with a quality of products being equal to leading brands. On the smartphone market they are Fly, Lenovo, and on the tablet market - Lenovo and Prestigio. On the market of smartphones, Fly occupied the second rank by the number of sales in January–March after Samsung, with the market share of 10%. On the tablet market – Lenovo is on the third place after Samsung and Apple, with the market share of 12%,” Lukanin from Euroset said.

Analysts said that Apple’s share is falling gradually. Apple Online Store was one of the first to raise prices in Russia at the end of 2014 following ruble devaluation. The price of new iPhone 6 models went up by 35%.

Due to the fact that the newest brands are operated on the Android devices, therefore share of iOS devices are decreased in the following terms, according to Euroset:

Òàáëèöà áåç íàçâàíèÿ

	Market share in natural terms, %		Market share in monetary terms,%
	Q4, 2014	Q1, 2015	Q4, 2014	Q1, 2015
Android smartphones	82	85	60	66
iOS smartphones	13	8	36	29
Android tablets	90	93	73	78
iOS tablets	8	5	23	19

“As of the end of last year, a fall in an average price of tablets to an average price of smartphones did not offset a decrease in demand for tablets. In January–March, when an average price of smartphones amounted to 9,700 rubles, it was still higher than an average price of tablets of 8,800 rubles, sales of tablets declined,” Lukanin said.

“Smartphones are replaced faster than tablets. Producers give much more attention and resources to warm up consumer rush ahead of unveiling top-of-the-range models of smartphones.”

Samsung continued to be a leader in January–March with a 22% share in smartphone and 21% in tablet sales.

Operators’ branded devices

Experts said that operators reduce activities in the segment of subsidized devices. Lukanin from Euroset said that this way does not justify expectations. “Sales of operators’ smartphones have a lower margin and cannibalize models of other brands with a different level of profitability. Thus, a simultaneous coexistence of two models on sale is hard,” he said.

When operators sell their branded devices accompanied with a contract of services, they earn more from services than from the gadget, because the sales margin is lower than the margin of services.

“Package offers play the role of a contract. In Russia a classic contract, like in Europe and the U.S., does not exist, that is why the operator offers to pre-pay services under an expensive package for several months in advance. These offers develop in this particular segment. They would be less interesting in other segments, though there are one-time promotion actions tied to the sale of expensive or bad-selling devices, including a full year of free Internet,” Spiridonov from Hi-Tech Mail.Ru said.

(51.0678 rubles – U.S. $1)

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