GST will not impact smartphone boom in India

India's historic tax reform is unlikely to impact the scale of smartphone demand in India, a latest German analysis reveals. The new Goods and Services Tax (GST) will have no impact on the smartphone demand in India, according to latest telecom research by a German research firm. GfK found that smartphone demand in India remained resilient in 2017, having levelled out slightly to 14 per cent year-on-year. “GfK expects the recently announced Goods and Services Tax (GST) will have no impact on smartphone demand in the country. GfK forecasts overall smartphone demand in the region will total 234 million units in 2017, an increase of 11 per cent year-on-year,” the research said. Global smartphone demand totalled 347 million units in 2017, up 4 per cent year-on-year. This makes it the strongest second quarter on record, the research found. Arndt Polifke, global director of telecom research at GfK, said: “The record demand for smartphones in the second quarter this year shows that, despite saturation in some markets, the desire to own a smartphone is a worldwide phenomenon. How that manifests itself differs widely by region. “Manufacturers are maximising all their creativity to ensure their latest devices are irresistible - and to increase ASP as a result. Elsewhere, macroeconomic factors and consumer confidence are having an impact, but operators and retailers are employing localised tactics to ensure the smartphone remains the connected device of choice.” Emerging Asia led the smartphone demand growth with a 13 per cent year-on-year increase, followed by Central and Eastern Europe at 11 per cent, and Latin America at 10 per cent. Market value grew nine per cent year-on-year, due to rising average sales price (ASP). Yotaro Noguchi, product lead in GfK's trends and forecasting division, said: “Consumers are willing to pay more for their smartphone as they seek a better user experience. Despite the market reaching high penetration levels, GfK forecasts smartphone demand will continue to see year-on-year growth even in 2018, as innovation from smartphone vendors keeps replacement cycles from lengthening.” GfK said the report is based on final point of sales data for April and May, and June estimates based on weekly data up until June 24, 2017. Emerging Asia: Anticipating the strongest regional growth in 2017 Smartphone demand in the region totalled 56.7 million units, up 13 per cent year-on-year. Bangladesh and Malaysia powered most of this growth. In Bangladesh, smartphone demand grew by a strong 40 per cent year-on-year. Malaysia is maintaining a steady recovery from its 2015 slump, and here demand in 2Q17 grew by 31 per cent year-on-year.

Western Europe: Demand drops Smartphone demand totalled 28.7 million units in 2Q17, down 3 per cent year-on-year. This is the third consecutive quarter of decline, caused by saturation in the largest markets, Germany, Great Britain and France. In these markets year-on-year demand fell -4 per cent, -5 per cent and -7 per cent respectively. However, GfK expects major device launches in 4Q to help moderate full-year declines to -0.4 per cent. Central and Eastern Europe: Growing The region continues its recovery, with smartphone demand reaching 18.7 million units in 2Q17, up 11 per cent year-on-year. As the political situation stablises and consumer confidence recovers in Russia and the Ukraine, both markets have posted impressive year-on-year growth. In Russia, demand was up 11 per cent year-on-year in 2Q17, and in the Ukraine it was up 22 per cent. GfK raised its forecast for smartphone demand in the region slightly to 85.2 million in 2017, a rise of nine per cent year-on-year. North America: Return to growth Here, the market grew six per cent year-on-year to 47.4 million units in 2Q, following falls in demand in the recent quarter. GfK forecasts smartphone demand in the region to total 203 million units in 2017, a rise of two per cent year-on-year. Latin America: Demand grows despite economic uncertainty Smartphone demand in the region rose 10 per cent year-on-year to 27 million units in 2017. This recovery is driven mainly by pent-up demand for smartphones in Brazil. Despite the uncertain political and economic environment, demand for smartphones in the country increased 15 per cent year-on-year in the second quarter. GfK maintains its optimistic outlook for Latin America in 2017, forecasting smartphone demand to increase by approximately seven per cent year-on-year. Middle East and Africa: Macroeconomic weakness Smartphone demand totalled 42.2 million units, up just one per cent year-on-year. The slowdown in growth is largely due to macroeconomic weakness in the region and device saturation in the Middle East. Egypt in particular is experiencing very high inflation. Demand here declined four per cent year-on-year in 2Q, while GfK forecasts a fall of 10 per cent in 2017. However, this is a large and diverse region and GfK forecasts its overall smartphone demand to grow five per cent year-on-year in 2017. Growth will come primarily from those Sub-Saharan and South African countries where smartphone penetration is still relatively low. China: Plateau In China, smartphone demand plateaued in 2Q17 at 110.1 million units, showing no change year-on-year. This moderation of growth in demand for smartphones was caused primarily by saturation in the market. However, as we're seeing in other regions, higher-priced new products are pushing up market value. GfK forecasts smartphone demand in China to total 461 million units in 2017, an increase of two per cent year-on-year. The growth in value terms (USD) is expected to be considerably higher, at 11 per cent year-on-year. Developed Asia Overall smartphone demand totalled 16.1 million units in 2Q17, down three per cent year-on-year. Declining demand in South Korea, which saw impressive growth last year, offset the increased demand in both Japan (up 12 per cent year-on-year) and Australia (up nine per cent year-on-year). GfK expects the region to experience a slight improvement in demand in the second half of 2017, finishing the full year down one per cent. That will equate to 73.1 million units.