Smartphone industry faces the worst decline of the century due to Coronavirus

The smartphone market has met the fastest year-on-year drop in its shipments during the first quarter of 2020.

According to the latest research by top global industry firms Canalys and Counterpoint research, the decrease faced by the industry is 13%. This has caused the shipments to go below 300 million units. It is the first time since 2014 that the smartphone industry has plummeted this low.

Coronavirus has affected each sphere of life vastly. Some industries have faced more losses than others.

The smartphone industry was booming with growth since the last two quarters but ever since the pandemic took its roots, this industry saw a major decline.  

smartphone
Courtesy: Canalys

China was the first country to get hit by the COVID-19, and hence, the first-quarter decline was 27% in the country.

Similarly, the situation in China also affected the global smartphone market because of its supply of tech components to vendors worldwide.

OEMs were worried about the disruption that will occur in the customer demand due to supply chains affected in China. By March, when most of the world was struck by the coronavirus, the situation overturned.

Now the manufacturing has been redeemed, but sales have succumbed due to lockdown in the whole world.

What do industry experts say?

Tarun Pathak, Associate Director at Counterpoint Research has acclaimed smartphones a “discretionary purchase” amid the ongoing pandemic.

This means that even after the lockdown is lifted, it will take a while before the retail market is returned to normal.

Customers will most probably go for a cheaper device considering the worst economic crisis that underwent in the world.

Moreover, Senior Analyst Ben Stanton at Canalys has also validated the same point, “Smartphones are still a necessity for most people, and device availability in online channels has enabled those who need to replace a broken or lost phone to do so. But many customers who would have bought a new smartphone as a luxury have delayed that purchase.”

Although there are some smartphone companies that have managed to survive this crisis. Samsung, Huawei, and Apple have retained their spot since last year as the top three smartphone vendors worldwide.

smartphone
courtesy: Counterpoint Research

What it means for smaller vendors?

Talking about the top 10 brands, their market share has seen a 3% increase since last year. According to Counterpoint Research, this trend has the capacity to continue.

It’s the smaller brands that are expected to take the biggest impact of this crisis. The reason is that their distribution and sale are mainly through offline means.

The negative impact of coronavirus on the smartphone industry will likely worsen in the second quarter.

Hence, smartphone companies, as well as OEMs, must think of alternate ways to manage their sales. Otherwise, their survival in this tumultuous time may cease to exist.

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