The demand for handsets and appliances has slumped due to high retail inflation but wearables and hearables seem to be booming with high growth in shipments and demand tailwinds from the pandemic, the company executives and analysts said.
Smartwatches grew at a record 173 percent year-on-year in the first quarter of 2022, while the wireless earbuds category surged by 66 percent year-on-year during the same period, according to Counterpoint Research. This was driven by low average selling prices, which analysts say are not pinching the pockets of consumers as much as smartphones.
Smartwatch's average selling price (ASP) fell from Rs 8,500 in 2020 to Rs 5,400 in 2021 and is expected to fall even further as players are focusing on the 2,000- 3,000 segment this year, Anshika Jain, senior research analyst, Counterpoint Research stated.
Analysts are also noticing a change in consumer preferences. A large base of smart band users is now gradually shifting towards smartwatches, as the ASP for smart bands has gone up to 2,000 while that of smartwatches has gone down.
The ASPs are being driven down due to increased competition and an increase in local manufacturing. New brands like Fire-bolt, Dizo, Boult Audio, and the likes have pushed the prices downwards while capturing market share. Brands have also started making wearables and hearables locally with the government set to impose import duties on these products from 2023, according to market trackers.
ASPs of wireless earbuds saw an on-year decline of 19 percent in Q1 2022, thanks to local manufacturing, which stood at 14 percent of total output till March. Market leader Boat is expected to make half of its total portfolio locally in the coming period, while Noise and Realme are expected to release locally-made products by the end of 2022, according to a Counterpoint report.
Smartwatch market leader Noise has already started manufacturing locally. Cofounder Amit Khatri said the company now makes 10-20 percent of its total output locally and plans to ramp this up to 50-55 percent by the end of Q3.
The demand for wearables and hearables remain unaffected by inflation also because consumers tend to treat these products as fashion lifestyle products.