Holiday season to boost smartphone sales — IDC
KUALA LUMPUR: Following a stronger than expected third quarter (3Q20), the global smartphone market is expected to return to growth during the holiday quarter this year, according to the International Data Corporation (IDC).
In its Worldwide Quarterly Mobile Phone Tracker report, it noted that smartphone shipments are forecast to grow 2.4 per cent year over year in 4Q20, followed by 4.4 per cent year-over-year growth in 2021.
It also pointed out that the market rebound would be fueled by an impressively quick supply chain recovery as well as significant incentives from both OEMs and channels on new 5G products. IDC expected the global market to grow each year through 2024 with a five-year compound annual growth rate (CAGR) of 1.3 per cent.
“Despite concerns around weakness in 5G demand, smartphone volumes exceeded the forecast in 3Q20 and supplyside momentum headed into the holiday quarter and 2021 remains strong,” said IDC’s Worldwide Mobile Device Trackers programme vice president Ryan Reith.
“We’ve come to the conclusion that despite on-going lockdowns and economic concerns, consumers in many markets around the world have shi ed their normal spending from things like travel, dining out, and general leisure to things like consumer electronics. Smartphones happen to be a benefactor of this transition.”
Looking at the regional markets, IDC said, the recovery in China has been slower than anticipated largely due to weaker than expected demand for 5G.
All the major brands in China have shi ed the majority of their smartphone portfolios over to 5G leaving consumers with fewer options than prior years.
As a result, IDC expected average selling prices (ASPs) in China to grow 11.4 per cent year over year in 2020.
“Rising ASPs mixed with weaker than expected demand will create some market challenges and shipments in the region are forecast to be down 11.4 per cent in 2020.
“The other developed markets, including North America, Western Europe, and Japan, are all expected to see year-over-year growth in the holiday quarter driven by strong seasonal promotions and lucrative shopping days like Cyber Monday,” it said.
From a technology standpoint, 5G is the driving force for the industry right now. IDC expected 5G smartphone shipments to reach close to 10 per cent of global volume in 2020 and grow to 29 per cent in 2024.
“Despite concerns about the lack of demand for 5G, it is apparent that the wheels are in motion to transition the mobile industry to the latest network technology. A key factor to accomplish this will be ge ing the cost of 5G hardware close to or on par with 4G phones,” it said.
This is something the industry is focusing on and IDC expected worldwide 5G ASPs to drop 25 per cent year over year in 2020 to US$611 and then to US$453 in 2024.
“Competitive pricing will play an integral role in shaping 5G development. The COVID-19 crisis has influenced consumer behavior by tilting it toward more budget-friendly devices and narrowing the spend for essentials only. Aggressive promotions and more affordable 5G devices from major smartphone vendors are expected to partially offset the impact in the near term,” said IDC’s Worldwide Mobile Device Trackers senior analyst Sangeetika Srivastava.