Unimaginable as it may sound in today’s mobile era, the global smartphone market actually declined in the first three months of this year. Forget the dip due to lockdowns and all the pent-up demand leading to a spurt as economies opened up afterward, the present trend is worrying as it indicates lack of confidence amongst ordinary customers in the financial system.
Worse, experts believe that the smartphone market will continue struggling in the coming months. At least, until the festive season hits toward the fag end of the year.
According to research from global telecom consultancy Counterpoint, just 28 crore smartphones were sold globally in the January-to-March first quarter of 2023 — a decline of 14% compared to previous year and 7% quarter-on-quarter.
While the January-to-March period is not a peak sale period coming as it does right after the peak festive season sales of November and December, the contraction this time is due to reasons beyond this seasonal dip.
“Smartphone shipments declined further in Q1 2023 following the weakest holiday-season quarter since 2013, as the slower-than-expected recovery in China was marred by alarming bank failures on both sides of the Atlantic further weakening consumer confidence in the face of unrelenting market volatility,” said Counterpoint’s senior analyst Harmeet Singh Walia.
“The smartphone market was also hit by some major brands supplying fewer new devices to a market struggling with high inventories at a time when consumers are choosing to renew less often, but with more durable smartphones when they do buy,” he added.
While shipments plummeted, income and revenue of the big brands were not that affected. While new model launches like the flagship Galaxy S23 helped Samsung shore up its bottomline. Apple and Samsung also remained the most profitable brands, together capturing 96% of global smartphone operating profits.
The iPhone maker, particularly, has been on a roll. Counterpoint’s research director Jeff Fieldhack explained why. “Stickiness of its ecosystem prevents customers from choosing a cheaper smartphone even in times of economic difficulty. It is the preferred brand for Gen Z consumers in the West (while also) filling the void left by Huawei in China’s premium market. So, Apple is able to weather economic and other fluctuations better than its rivals while enjoying unflinching loyalty,” he said, adding, “This also meant Apple was able to meet the demand for the iPhone 14 series which spilt over (from the October-to-December festive period) when it had problems at its Zhengzhou (China) factory, rather than that share dissipating or transferring to rivals.”
But overall, the dark clouds of recession-fears as well as global economic uncertainty could play spoilsport with the market of this one ‘can’t-do-without’ gadget of our times.
“The persistent issues affecting the smartphone market are unlikely to abate anytime soon,” warned Counterpoint research director Tarun Pathak. “OPEC countries cutting oil production may lead to higher inflation rates, causing a reduction in consumers’ spending power. So even if the decline in smartphone shipments stabilises, significant recovery is unlikely before the year-end holiday quarter.”
