Smartphone market enters historic contraction as optimism plummets

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The global smartphone market has seen its largest ever annual decline in worldwide shipments as sentiment across the private sector nosedives in the face of a global recession triggered by Covid-19.

Quarterly declines in smartphone shipments are a natural ebb and flow of the market, with the average sequential decline over the last three years hovering between -15% and -20%.

However the first quarter of 2020 saw the largest annual (year over year) decline ever, with worldwide shipments down 11.7% year on year, totalling sales of 275.8 million smartphones worldwide.

The insight, published in International Data Corporation’s Worldwide Quarterly Mobile Phone Tracker, reported the greatest issues in China, which was hit as both a consumer market and an essential link in the supply chain.

It saw the largest regional Q1 decline with shipments down 20.3% year over year, compared to the United States and Western Europe, which declined by 16.1% and 18.3% respectively.

Looking at individual smartphone companies, Samsung shipped 58.3 million smartphones in 1Q20 and regained its top position with 21.1% market share despite an 18.9% year-over-year decline. Huawei held the number two position with a 17.8% share of the global smartphone market despite a decline in shipments of 17.1% year over year, while Apple shipped 36.7 million iPhones in 1Q20, which placed the company in third with 13.3% share.

Xiaomi’s market share surpassed 10% for the first time with year-over-year growth of 6.1%. and vivo returned to the top five this quarter with 9.0% market share and 7.0% year-over-year growth.

“What started as primarily a supply-side problem initially limited to China has grown into a global economic crisis with the demand-side impact starting to show by the end of the quarter,” said Nabila Popal, research director with IDC's Worldwide Mobile Device Trackers.

“While the supply chain in China started to recover at end of the quarter, as IDC expected, major economies around the world went into complete lockdown causing consumer demand to flatline. Consumers get increasingly cautious about their spending in such uncertain times and it is hard to think smartphone purchases won't suffer as a result. This drop in demand, combined with the lockdowns and closures of retail shops across the globe, strongly impacted all consumer device markets, including mobile phones. As the uncertainties of the lockdowns and total economic impact linger, vendors are reconsidering their outlook for 2020,” Popal added.

While activity showed an uptick in March, IDC said this was due to “pent up demand” rather than a change in conditions.

“The Chinese market saw better than expected demand in March as the number of new COVID-19 cases began to ease. Nevertheless, the rate of recovery in March is mostly due to pent-up demand and is unlikely to be sustained as the global economic downturn is expected to have an adverse impact on the Chinese economy and consumer sentiment as well and only allow the market to achieve annual growth in the fourth quarter,” said Will Wing, research manager at IDC.

The news comes as the Economist Intelligence Unit released a new market analysis initiative to measure sentiment across the private sector.

The first Global Business Barometer – which questioned 2,759 executives between March 26 and April 6 – found that 72% consider an “escalation of the pandemic” to be the most significant challenge for their business over the next 12 months.

Respondents were also questioned on their outlook for their individual company as well as the national and global economy, with results in negative territory across all the board (graph below).

In short supply: Optimism nowhere to be found


As Capacity reported yesterday, further analysis predicted market revenue for the mobile industry this calendar year is expected to fall short by $51 billion due to the impact of Covid-19.

According to latest figures from global research firm Omdia, global mobile communications services are forecast to reach $749.7 billion this year, down from both the year’s predicted $800.3 billion and the $781.5 billion recorded in 2019.

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