In the first quarter of 2020, smartphone shipments dropped sequentially by 11.2%, the largest year-over-year decline ever. For the full year, shipments are expected to plunge by 11.9%, according to research firm IDC’s latest report.
The firm projects a decline of 18.2% in the first half of the year, indicating that shipments will recover in the second half of the year. However, researchers don’t expect to see year-over-year growth until the first quarter of next year. Considering that the comparison to a historic drop should be easy, that target does not pose much of a gamble.
The COVID-19 pandemic has caused global demand to drop due to lockdowns and rising unemployment. Consumers are spending on essential goods, and while smartphones may be essential, a person’s current smartphone is likely to be viewed as “good enough for now.”
Sangeetika Srivastava, a senior research analyst at IDC, commented, “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.”
IDC noted that China’s domestic market should experience only a single-digit percentage decline in 2020, while European sales will drop by double digits. Without naming vendors, the firm said it expects top-sellers “to maintain their market shares driven by rotating strategies such as higher flagship launches and forming stronger ecommerce footprints.”
Program Vice President Ryan Reith said, “The surge in consumer spending around devices that are less mobile than smartphones (PCs, monitors, video game consoles, etc.) will undoubtedly take a share of the consumer wallet that would have been put towards smartphone upgrades and 5G. We believe this will result in even more aggressively priced 5G smartphones than expected prior to the pandemic.”
If that prediction plays out, it could be good or bad news for Apple Inc. (NASDAQ: AAPL). The world’s largest company by market cap is expected to introduce its first 5G smartphone later this year. That phone likely would have carried a premium price in normal times, but these times are anything but normal.
In 2019, smartphone shipments totaled around 1.38 billion. IDC’s May forecast calls for 2020 shipments of about 1.2 billion units. Compared to the firm’s February forecast, total shipments through 2024 are expected to be slightly lower with small year-over-year increases throughout the forecast period.
On Wednesday, ADP reported that April payrolls fell by 2.76 million, a far cry from the revised total of 19.6 million jobs lost in April.
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