Analysts continue negative outlook for Smartphone shipments for rest of 2020
Huawei Shenzhen Headquarters. Photo Credit: Calvin Wong
New figures from both IDC and Gartner continue to see marked declines in Smartphone demand. IDC estimates that in the first half of 2020, the decline in smartphone shipment was 18.2%, and factoring in a light recovery in the 2nd half, the YoY decline is forecasted to be 11.9% for the full year. Their estimates echo those released by Gartner, who reported that smartphone sales have plummeted by 20.2% in the first quarter, which is an estimated drop of some 75 million handsets.
As expected, the steep declines are attributed to Covid-19, which impacted both the supply and demand for the handsets. It was only as recently as late January, Gartner predicted a 3% growth in the smartphone market, with 1.57 billion units shipped in 2020, which has now been revised to 1.2 billion units. The outbreak hit brands across the board, however amongst the top 5 handset makers, Xiaomi had better than expected performance due to its e-commerce driven model and popularity of the low to mid tier Redmi devices. Xiaomi’s online success hasn’t gone unnoticed, Apple recently launched an online promotion with Tmall for the annual 6.18 shopping festival. For the very first time, Apple worked with Li Jiaqi (Austin Li), one of the most prominent live streamers in China, to promote its products with up to 20% discount. This promotion was reported to have generated US 70.1 million sales within the first five hours of the promotion going live.
Geographically speaking, European and American markets will take longer to recover, as the virus has taken a hard hit to the economy. Consumers there will continue to eschew discretionary spending and spending in consumer electronics will only focus on facilitating the continued working from home arrangements. The work from home upgrades to productivity trend is reinforced by the latest Omdia Mobile PC Market Tracker, the forecast for 2020 has been revised from a -9.3% growth earlier in the year to 0.4% decline YoY. Aside from European and NA, China for the most part, has recovered quicker and may only be one of the few bright spots for handsets this year, led by gaming and 5G deployments. ChinaJoy, the annual gaming conference in China scheduled for end of July in Shanghai, will see heavy presence by smartphone makers, to promote ‘designed for gaming’ attributes to appeal to the Gen Z gamers in China.
In light of the downbeat forecast, it will be crucial for telcos and smartphone makers to drive coherent messaging to drum up interest for handset upgrades. The need for high bandwidth and low latency, both strong attributes of 5G, is perfectly suited for the post Covid-19 recovery, as consumers spend more screen time either for entertainment or productivity. With premium flagships priced well into the high hundreds or the low thousands in USD, mid-tier phones with 5G capability will be the sweet spot for consumers. On the other hand, manufacturers had been riding strongly on AI and photographic attributes last year, should consider changing tact to focus on performance and value for money as travel and social sharing makes a slow recovery to pre Covid-19 levels.