Low demand for smartphones, smartwatches as consumer sentiment sours

A decline in electronics sales in the first three months of 2025 (January-March) signals challenging year ahead for the industry. Over the past five years, smartphone sales have dipped three times, and smartwatches two times.

“There is a very, very low organic demand for new smartphones, and the phase when smartwatches suddenly saw consumer interest has also disappeared. Right now, no buyer is asking for any of the inexpensive smartwatches, because they are finding little value in them—even as a freebie in some cases,” said Manish Khatri, a partner at Mumbai-based electronics retailer Mahesh Telecom.

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Market figures, too, mirror this. Data from market researcher IDC India showed that in the first three months of 2025, overall phone sales dropped 6% year-on-year. During the same period, Counterpoint reported a 33% year-on-year drop in smartwatch sales—marking the fifth consecutive quarter of decline for smartwatches.

These stretches of decline are critical, since smartphones and smartwatches are the most-selling consumer gadgets in India. Retailers sell roughly 2-3 million laptops each quarter on average, and around the same volume of smart televisions as well. With 10 million smartwatches and over 30 million smartphones sold each quarter as of 2024, these two segments account for nearly 80% of the overall electronics economy, which sees over 50 million units sold every quarter as of last year.

The slowdown means the overall revenue of India’s electronics economy is poised to get impacted now. So far, the electronics industry had been struggling to regain the scale and volume of gadget sales seen last in 2021—the year when the covid-19 pandemic pushed gadget sales higher due to remote work and online classes. But rising average selling prices were helping retailers so far retain profits by generating equivalent revenue from fewer gadget sales.

Now, retailers fear that if the decline continues, their net income will start getting affected too. “There is a clear impact on our businesses, and with the market being saturated with many multi-brand electronics and appliances retailers, it’s a tough market to do business in,” Khatri said.

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The proprietor of a multi-brand electronics retail chain based in Kolkata concurred, stating that the volume hit in the first three months of this year could be difficult to sustain for those that retail gadgets only. “Luckily for us, sales are offset during this period with high demand for air conditioners and refrigerators. Sustaining businesses only on consumer gadgets could be challenging, and retailers are largely looking to push Apple devices since they have higher margins and seem to be the only ones in major demand,” the retailer said.

The managing director of a pan-India retail chain also agreed, adding that the demand for discounted pricing and financing options on Apple’s iPhones continues to remain strong in India. Both retailers requested anonymity due to non-disclosure agreements with brands.

This points to a decline in consumer sentiment in the overall market. Navkendar Singh, associate vice-president at IDC India, said there is “no organic demand for gadgets in India.”

“There are some quarters where there will be replacement of smartphones, but there’s no new buyer coming in. And there’s only one point until which the smartphone pricing can keep increasing. This means that eventually the slowdown in electronics sales volumes will get to brands and retailers alike,” Singh added.

IDC data for the Indian smartphone market published last month said the average selling price of smartphones rose by ₹1,000 to ₹23,500 during the first three months of the calendar year. Despite this, the net revenue of the smartphone market during the three months dropped 1% to $8.8 billion due to slow sales.

Meanwhile, an average selling price of just ₹1,600 for a smartwatch in India is making it tough for homegrown brands such as Noise and Boat to ramp-up profits.

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Analysts note that this could be the start of a long-term problem for the sector. “For smartphones, the decline was mainly due to inventory adjustments by brands, and due to elongating replacement cycles. Key brands prioritized clearing excess stock to stabilize operations, leading to even worse shipments during this quarter. While the premium market continues to grow, we’ve seen that as premiumization grows, the replacement cycle lengthens,” said Varun Mishra, senior analyst for mobile devices and ecosystem at Counterpoint India.

Mishra added that the low per-device pricing is a key challenge, too. “This means that consumers are not upgrading their devices, and first-time buyers are declining too. The market correction phase could continue till the current quarter too,” he said.