Mobile

IDC: Smartphone Market To Decline 12 Pct Due To Pandemic

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The latest casualty of COVID-19: smartphone shipments. 

By year’s end, the number of units shipped globally is expected to plummet by nearly 12 percent to 1.2 billion units, down from 1.4 billion in 2019, according to a press release form the International Data Corp. (IDC), a Massachusetts market research company.

The prediction follows the largest year-over-year decline in history in the first quarter of 2020.

“What started as a supply-side crisis has evolved into a global demand-side problem,” said Sangeetika Srivastava, IDC’s senior research analyst, in a statement. “Nationwide lockdowns and rising unemployment have reduced consumer confidence and reprioritized spending towards essential goods, directly impacting the uptake of smartphones in the short term.”

As a result, smartphone shipments are now expected to shrink by 18.2 percent in the first half of the year as the impact of the coronavirus pandemic continues to cool consumer spending, IDC found. Global smartphone shipments are not expected to return to growth until the first quarter of next year, researchers said.

China was among the first to shutter its factories in February as the pandemic gripped the county.

But there are signs of improvement. IDC reported lockdowns and supply chain disruptions have begun to ease.

Today, with most of its factories reopened, IDC said China’s domestic market will only see a single digit decline in 2020. 

But Europe has been hit hard by COVID-19, especially in Italy and Spain, which will cause a double digit decline in the region this year. 

Still, IDC expects top smartphone manufacturers will maintain their market shares, driven by several strategies including high profile launches and crafting stronger eCommerce footprints. 

“China’s recovery has been impressive to say the least, especially given the initial impact of COVID-19 on the country,” said Ryan Reith, program vice president with IDC’s Worldwide Mobile Device Trackers, in a statement. “There’s no question that challenges lie ahead for the smartphone industry and we believe the economic downturn is going to cause some fluctuation in the vendor and price-tier landscape.”

The surge in consumer spending around laptops, monitors, video game consoles will take its toll on shopper’s wallets that would have been put towards smartphone upgrades, he added.

“We believe this will result in even more aggressively priced 5G smartphones than expected prior to the pandemic,” Reith said.  “This could result in some share wins for the vendors that position their portfolios to capitalize on this change.”

The continuing implementation of 5G globally, the fifth generation technology standard for cellular networks, is a positive sign, IDC said.

“On the brighter side, 5G is expected to be a catalyst throughout the forecast period, which will play a vital role in worldwide smartphone market recovery in 2021,” Srivastava said.

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The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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