Mobile phones have changed the way we live, and over the past 20 years the world has learned to not only one of these devices on hand at any given time, but to also run more of our lives through these small handheld devices. They’ve clearly been the technological achievement of this century and it’s no doubt that they have dominated the industry since.
Despite their popularity, the smartphone market is set to suffer its fastest ever first-quarter year-on-year decline, according to new data from analyst firms, as a result of the Covid-19 pandemic and reduced demand. Counterpoint Research and Canalys both put the overall drop in global shipments at 13 percent, with China dropping between 18 and 27 percent, marking the first time shipments have come under 300 million since 2014. This decline is enough to put the industry under potential strain, despite its massive size, if the pandemic affects it for the next quarter, which could mean some interesting changes to competition in the market especially for some of the smaller players in the industry.
According to Canalys, it’s not just the impact the virus has had on manufacturing from China, but also how demand is rapidly declining with retail outlets worldwide affected and disposable incomes for many tightening, making the purchase of a new smartphone far more of a luxury than it used to be. Interestingly though, despite this, Xiaomi somehow shipped more devices than last year.
Demand for new devices has been crushed. In February, when the coronavirus was centred on China, vendors were mainly concerned about how to build enough smartphones to meet global demand. But in March, the situation flipped on its head. From the consumer standpoint, unless replacing a broken phone, smartphones are mostly a discretionary purchase. Consumers, under these uncertain times, are likely to withhold making many significant discretionary purchases. This means the replacement cycles are likely to become longer.”
Most smartphone companies expect Q2 to represent the peak of the coronavirus’ impact. will test the mettle of the industry, and some companies, especially offline retailers, will fail without government support.
While it’s unlikely the market will recover any time soon, hopefully these companies and governments can find some way of keeping the market going, otherwise we could land up with a smartphone market dominated almost exclusively by the big brands.
Last Updated: May 4, 2020