Coronavirus impact: Global smartphone market dips 13%

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Coronavirus impact: Global smartphone market dips 13%
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Key Highlights:

  • Shipments fell beneath 300 million items in Q1 2020 – first time since Q1 2014
  • 5G smartphone cargo share elevated to eight per cent

The outbreak of COVID-19 has had a robust bearing on the worldwide smartphone market because it registered its quickest decline ever. In Q1 2020, the smartphone market declined by 13 per cent year-on-year in comparison with the identical quarter final yr. The most recent analysis from Counterpoint’s Market Monitor service studies that for the primary time since Q1 2014, the smartphone market has fallen beneath 300 million items in 1 / 4. COVID-19 pandemic has disrupted any indicators of restoration that the market had began exhibiting since This fall 2019.

Total, the market share of China within the world smartphone market, in Q1 2020 decreased to 22 per cent from 26 per cent a yr in the past.  The primary-quarter decline was primarily pushed by 27 per cent YoY cargo decline in China. A number of the decline was offset by gross sales shifting to on-line channels. It additionally impacted the availability of handsets and elements for some OEMs, impacting world shipments. This has led to OEMs rethink their dependence on China and increasing its provide chain throughout completely different areas and international locations. Counterpoint believes this might be a silver lining for international locations like India and Vietnam.

Nonetheless, the affect goes to be worst within the second quarter of the yr, particularly on OEMS as quite a bit will rely on the markets, channels, and worth bands they function in.

On the demand facet, the restoration in a sure market might take for much longer. Regardless that China is recovering from the pandemic, different international locations proceed to be in lockdown. Going ahead, manufacturers with a bigger share in China, like Huawei, might be in a greater place than manufacturers like Samsung, for which just about all its main markets stay underneath lockdown. On the availability facet, in Q1 2020, OEMs with elements and factories within the worst-hit areas of China have been uncovered probably the most. Within the second quarter, the pattern might be reversed, as China’s manufacturing recovers, however many different manufacturing centres are closed. On the gross sales entrance, manufacturers with greater on-line presence are prone to stay extra immune than offline ones. Some offline demand is shifting on-line. The report additionally means that the entry-level section is prone to get hit probably the most, particularly within the rising economies, pushed by the affect on the individuals’s earnings within the unorganised labour sector and better offline buy tendency. The mid-segment will proceed to drive volumes. Whereas the premium section is least prone to be instantly affected by the financial meltdown. Because the shoppers would modify to the brand new regular, the gross sales within the section are prone to rebound.

Tarun Pathak, Affiliate Director at Counterpoint Analysis famous, “From the buyer standpoint, except changing a damaged cellphone, smartphones are principally a discretionary buy. Shoppers, underneath these unsure instances, are prone to withhold making many important discretionary purchases. This implies the alternative cycles are prone to develop into longer. Lockdowns in most components of the world might be lifted in a staggered manner, which is able to imply it might take time earlier than the retail exercise fully resumes. Even after the lockdown ends, there’ll possible be modifications in client spending patterns. On-line channels are prone to be most popular and there’ll possible be shifts within the worth band distribution with some shoppers choosing a less expensive machine, which might result in a lower in general ASPs.”

On the OEMs entrance, they should embrace a extra omnichannel technique. Retailers will even have to seek out methods to succeed in their shoppers digitally. This might enhance the adoption of O2O channels and hyper-local supply companies in smartphones. Nonetheless, customers staying house are participating on their smartphone greater than ever. This gives alternatives for companies like cellular gaming and OTT companies.

Based on the report, the mixed market share of the highest 10 manufacturers has elevated to 83 per cent, from 80 per cent in Q1 2019. Smaller manufacturers with greater offline distribution are prone to be affected as a result of pandemic. Whereas the market share of main OEMs declined in the course of the quarter, Xioami (7 per cent YoY) and Realme (157 per cent YoY) registered development primarily as a result of the lockdown was applied in India within the final week of March. Apple remained resilient even in the course of the COVID-19 as iPhone shipments declined solely 5 per cent YoY in the course of the quarter. The iPhone revenues have been down 7 per cent YoY for a similar interval. The affect on some European and Asian international locations was gentle.

COVID-19 has additionally impacted the tempo of 5G rollouts in some international locations with auctions being postponed in markets like Spain and India. Nonetheless, led by Huawei, the expansion of 5G in China stays as anticipated. Because the state of affairs returns to regular, the 5G gross sales might be additional pushed by OEMs together with Samsung, Oppo, Vivo, Xiaomi and Realme launching units within the sub $300 worth band. “That is prone to be complemented by SoC gamers launching cheaper 5G-capable chipsets. The share of 5G smartphones elevated to eight per cent in Q1 2020, in comparison with 1 per cent in This fall 2019. 5G is probably going to assist fee of restoration in the course of the second half of 2020,” says Varun Mishra, Analysis Analyst at Counterpoint Analysis.

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