Mumbai: Cheap handsets and the proliferation of fourth generation, or 4G, services have helped India overtake the US to become the world’s second-largest smartphone market, trailing only China, according to a new report by analyst firm Canalys.

After a wobble in the second quarter of 2017, India’s smartphone market recovered quickly with shipments growing 23% year-on-year in the third quarter to reach just over 40 million units, Canalys analysts said on Thursday.

“Doubts about India’s market potential are clearly dispelled by this result," said Canalys research analyst Ishan Dutt. “There are close to 100 mobile device brands sold in India, with more vendors arriving every quarter. In addition, India has one of the most complex channel landscapes, but with low barriers to entry. Growth will continue. Low smartphone penetration and the explosion of LTE (long term evolution, or 4G) are the main drivers."

Despite posting excellent results, the market continues to concentrate, with the top five vendors (Samsung Electronics, Xiaomi Inc., Vivo Electronics Corp., Oppo Electronics Corp. and Lenovo Mobile Communication Technology Ltd) now accounting for 75% of total shipments in India. Samsung and Xiaomi accounted for almost half of the total market as the top five vendors continued to post strong growth in Q3 2017. Samsung shipped 9.4 million smartphones, almost 30% more than in Q3 last year.

Second-placed Xiaomi increased shipments by over 290% to 9.2 million units.

“Xiaomi’s growth is a clear example of how a successful online brand can effectively enter the offline market while maintaining low overheads," said Canalys analyst Rushabh Doshi. “But Xiaomi focuses on the low end. It struggles in the mid-range (devices priced between Rs15,000 and Rs20,000), where Samsung, Oppo and Vivo are particularly strong. Nevertheless, we predict Xiaomi’s continued go-to-market innovations will allow it to overtake Samsung within a couple of quarters."

Apple Inc. began local production in India earlier this year, and its iPhone shipments more than doubled to 900,000 units in Q3 2017 compared with the year-ago period, impressive in a market that is skewed toward low-end smartphones.

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