Finally, ‘premium’ gets a premium in the smartphone market

The trend is unmistakable. The belly of the premium smartphone market is shrinking, while the high-end tail stretches upward. Look at the numbers. The market share of the entry-level premium segment—devices priced between $200 and $400 (roughly Rs 17,925 to Rs 35,850)—has slid from the mid-30s to just 26% over the past few quarters, according to the latest data released by the International Data Corporation’s (IDC) worldwide quarterly mobile phone tracker.

The share, interestingly, has been dropping consistently. So, people aren't buying the expensive phones anymore? Are consumers balking at the cost of high-end phones?

Well, that doesn’t seem to be the case. Smartphone sales actually hit a five-year high in the festive third quarter (July-September) of 2025, growing 4.3% year-over-year (YoY) to 48 million units. The growth was driven by strong demand for premium smartphones, supported by new launches and previous-generation models, points out IDC in its report.

Okay, then why is entry-level premium falling? Logically, a slide at the entry-level premium would drag the rest of the premium chain down. Right? Wrong. The reverse is happening. Even as the entry-level premium falters, the mid-premium ($400 and $600), premium ($600-$800), and super-premium ($800 plus) categories are hitting new highs.

‘FEEDER ISLAND’ & ENTRY-PREMIUM USERS

Baffled? Here’s the real story. Consumers are finally realising that ‘premium’ only feels premium when it’s genuinely aspirational. And this shift has been accelerated by the rise of a massive ‘feeder premium’ base—users who were lured into the so-called premium category by brands offering Rs 20,000-plus phones and calling them ‘entry premium.’

Here's the backdrop. In 2023, reckons technology analyst Faisal Kawoosa, predominant smartphone purchases in India happened in sub-Rs 20,000 segment. “A predominant percent of smartphone sales would land within this range,” he says.

For someone dreaming of an iPhone—still arguably the ultimate status symbol— this meant paying at least four times their usual ‘premium’ device cost. Remember all kinds of outrageous kidney-selling memes? The price gap was so wide that many settled for an entry-level premium instead of chasing the iPhone. This segment ballooned, thanks to brands like OnePlus, Vivo, and Oppo. “They created an island full of potential iPhone buyers,” Kawoosa explains. These users had already taken the hardest step—doubling their spend to enter entry-premium. All they needed was one decisive push. By 2023, nearly 20% of smartphones sold in India were priced above Rs 25,000. As the Rs 25,000–Rs 50,000 segment grew year after year, the feeder base for iPhones kept expanding. All it needed was one big shove to break free from the feeder island.

‘APPLE’ A DAY & SAMSUNG’S PREMIUM FOLD

Fast forward to 2025. Most of the entry-premium users don’t need to spend double of their present range to own an iPhone. They might at best need to spend somewhere between 20-25% more to flaunt their handset. Thanks to attractive pricing, deep discounting, flexible payment options, trade-in and upgrade programmes, and promotional offers such as cashbacks and bank deals, the residents of the feeder island are more inclined to buy a blue-blooded premium rather than ‘entry-premium.’ At the same time, now one doesn’t need to enter the feeder island. One can directly hop from a mass-budget smartphone-- devices priced at $200—to mid-premium, premium and super-premium buckets. This explains the shrinking of ‘entry-premium’ market in India.

Okay, but is the iPhone the only brand to benefit most from a migration from the feeder island? No, Samsung too has been rising the tailwinds. Samsung, reckons Kawoosa, established its reputation in the luxe segment through 'S' series of smartphones.  Also, with the Z series of foldables, it created a tangible and noticeable niche in the segment. No wonder, in the mid-premium segment, which grew 10.7% YoY in the third quarter of this year, Samsung climbed to the top position. The Galaxy S24 contributed nearly one-quarter of total shipments in this range, driven by steep discounting on etailer platforms, underlines IDC in its quarterly report.

The picture, though, changes in the premium segment: the $600-$800 slab. Apple’s iPhone 16, iPhone 15, and iPhone 17 collectively made up over 70% of shipments in this category, according to IDC. The American and the Korean brand, however, share the spoils in the super-premium ($800 plus) category. While Apple regained leadership from Samsung, key models driving the segment included iPhone 16, Galaxy S24 Ultra, Galaxy Z Fold7, iPhone 16 Pro, and Galaxy S25 Ultra.

The premium game has now entered into a fascinating phase. The latest quarter--Q3 of 2025—might have just witnessed a big-bang exodus from the feeder island, boosting Apple’s prospects in India. Apple recorded its highest-ever quarterly shipments, reaching 5 million units and grabbing fourth position in pecking order for the first time. The brand, IDC explained in its comprehensive analysis, achieved a strong 25.6% YoY growth, driven by sustained demand across new and existing models. While iPhone 16 remained the most-shipped smartphone during the quarter, contributing 5% of total market shipments, the newly launched iPhone 17 series and iPhone Air made a record-breaking debut, accounting for 16% of Apple’s Q3 shipments. “It’s the strongest launch-quarter performance for any iPhone since 2021,” the note added.

SO, WHAT DOES IT MEAN FOR ‘PREMIUM’ PLAY

Marketing and branding analysts reckon that premium play in India is set to gather steam. But what might play spoiler is a slip in consumer demand and sentiments. A rise in smartphone ASP (average selling price) coupled with a fall in the discretionary spend might prevent users from either upgrading to the premium segment or moving out of the feeder island. “There are too many nuts and bolts in the premium play. But at the end of the day, what drives the market is consumer spending, which is determined by a complex set of issues such as buyers’ optimism, disposable income, and a feel-good factor. “Apple and Samsung have benefited most from the ‘Feeder Island’ phenomenon,” says Ashita Aggarwal, professor of marketing at SP Jain Institute of Management & Research. A slew of challenger brands such as Vivo, Oppo, and Realme played the premium game by rolling out aspirational products. But they failed in matching the ‘status’ play and the ‘flaunt’ value that iPhone, and ‘S’ and ‘Fold’ series of Samsung enjoy.

But for the rise of the premium play, one must give credit to 'Feeder Island.' Remember Vistara? The airline’s ‘premium economy’ seats were filled by the flyers who upgraded from ‘economy.’ “And premium economy users were the first ones to upgrade to business class,” she says. Can the ‘premium’ wave continue to hold its momentum? Well, the answer lies in how the markets pans out over the next few two quarters.