Global Smartphone Market Sinks To New Low
While Xiaomi (7% YOY), and Realme (157% YOY) were the only major brands to achieve growth, Apple remained resilient even during the Covid-19 as iphone shipments declined only 5% YOY Q1 2020, says a report.
Hit hard by coronavirus outbreak, the global smartphone market witnessed its fastest ever decline, down 13% YOY in Q1 2020, according to a recent report by Counterpoint Research. This is the first time since Q1 2014 that the smartphone market has fallen below 300mn units in a quarter. The Covid-19 pandemic has disrupted the signs of any recovery that the market started showing in Q4 2019.
The first quarter decline was mainly driven by a 27% YOY shipment decline in China, the initial epicenter of the pandemic. Some of the decline was offset by sales shifting to online channels. Overall, the market share of China in the global smartphone market in Q1 2020 reduced to 22% from 26% a year ago. The disruption in China also impacted the supply side of handsets and components for some OEMS, which in turn, affected global shipments. In the long run, this could lead to OEMS diversifying their supply chain across regions. This could be a silver lining for countries like India and Vietnam.
By the end of the quarter, as Covid-19 started to spread to other regions, and lockdowns of varying severity were imposed, the pendulum of disruption started to swing from supply to demand.
Talking about the impact of Covid-19 on smartphone demand, Tarun Pathak, Associate Director at Counterpoint Research, noted, “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. Lockdowns in most parts of the world will be lifted in a staggered way, which will mean it could take time before the retail activity completely resumes. Even after the lockdown ends, there will likely be changes in consumer spending patterns.”
“Online channels are likely to be preferred and there will likely be shifts in the price band distribution with some consumers opting for a cheaper device, which could lead to a decrease in overall ASPS. OEMS will have to embrace a more omnichannel strategy. Retailers will also have to find ways to reach their consumers digitally. This could increase the adoption of O2O (online to offline) channels and hyper-local delivery services in smartphones. However, users staying at home are engaging on their smartphone more than ever. This provides opportunities for services like mobile gaming and OTT