The outlook for the smartphone industry has been grim all year. A recent report from the International Data Corporation (IDC) shows how bad things are. The IDC currently forecasts an 11.9 percent year-over-year decline in smartphone shipments for 2020.
It notes that long-lasting macroeconomic impacts of the COVID-19 pandemic are the main issue. Moreover, the IDC doesn’t expect global smartphone shipments to return to growth until the first quarter of 2021.
Around the world, the COVID-19 pandemic has put tens of millions of people out of work. Inevitably, that has led to a sharp decrease in consumer spending across the board. As people worry about putting food on the table and paying rent, dropping $1,000+ on a new smartphone isn’t a priority.
Accordingly, the IDC projects that smartphone shipments this year will total 1.2 billion units. Though it sounds like a staggering number, that’s nearly a 12 percent decrease compared to 2019.
The pessimistic forecast comes on the heels of the largest year-over-year decline in history during the first quarter of 2020. Notably, the IDC projects a decline of 18.2 percent for the first half of the year. As the pandemic continues to settle down, shipments will rebound. However, it won’t be enough to reverse the damage done in the early months of 2020.
Sangeetika Srivastava, a senior research analyst at IDC, weighed in saying, “What started as a supply-side crisis has evolved into a global demand-side problem. 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.”
Experts note that this year’s downturn will likely affect some technical details of the smartphone market moving forward. For instance, the price-tier landscape is likely to shift as manufacturers seek new ways to get their devices into consumers’ hands.
Looking on the Bright Side
As mentioned, things look grim for the smartphone industry. However, it is fortunate to be in a position of power. Even if consumers don’t rush out to buy a new device right now, they aren’t going to give up their smartphones. Recovery might take some time, but it will happen.
Indeed, some parts of the world are already starting to show signs of that recovery. As supply chain disruptions and lockdowns in China gradually lift, the market is showing signs of improvement. The IDC notes that China’s smartphone sector may only suffer a single-digit decline as a result.
By contrast, areas across Europe and the United States have been hit hard by COVID-19—both in terms of the virus and the economy. Since these regions are still dealing with the virus on a large scale recovery is going to take longer.
Still, the smartphone market has a decade-defining innovation to lean on right now in the form of 5G. As telecom providers continue rolling out their 5G networks, consumers are driven to upgrade to new devices that support the faster protocol.
Srivastava notes, “5G is expected to be a catalyst throughout the forecast period, which will play a vital role in worldwide smartphone market recovery in 2021.”