The economy as a whole is in turmoil right now thanks to the coronavirus pandemic, and that’s hitting smartphones sales hard. A report from Canalys this week reveals that the industry as a whole saw its biggest decline ever this past quarter.
Cutting right to the chase, smartphone shipments fell by 272 million units in Q1 of 2020, down 13% from Q4 2019. That’s not only the biggest drop we’ve ever seen in the smartphone market as a whole, but also the lowest level since 2013. Yikes.
Obviously, the impact varies from company to company. Samsung, for example, kept its top spot in the industry but saw smartphone sales drop 17% to 60 million units due to the coronavirus. Huawei saw a similar year-over-year drop, but part of that is due to the ongoing US Entity List situation. Even Apple saw a considerable dip with a drop of 8%.
Some brands, though, did manage to positively grow. Xiaomi saw a 9% jump from Q1 2019 shipping just over 30 million units while Vivo saw a 3% jump with a little over 24 million phones shipped. As a whole, though, the smartphone market saw just 272.5 million devices shipped in Q1 of 2020 compared to 313.9 million in Q2 of 2020.
Clearly, people just aren’t spending their money on new smartphones in these uncertain times.
Canalys Senior Analyst Ben Stanton noted that, early on in 2020, the smartphone market was in good health entering the new year. Around February, though, as the coronavirus spread continued to get worse, demand has dropped. This is the complete opposite of the issue earlier on in the year where, due to the virus’ spread in China, manufacturing was having trouble keeping up with demand. Stanton goes on:
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.
He also goes on to explain that these Q1 numbers may not even be the worst of it. Going forward, many companies expect Q2 to be the worst of the worst. He explains:
It will test the mettle of the industry, and some companies, especially offline retailers, will fail without government support. As lockdowns around the world start to lift, the full economic damage will become visible. Smartphone companies must adapt their strategies to mitigate the impact, as cashflow will be critical in the coming months. But if they cut back too much on product spend, marketing spend and new strategic initiatives, they risk losing agility, and will lose ground to rivals once demand bounces back. It is vital to strike a balance.
More on Coronavirus:
- Google previews Android exposure notification API to let health agencies build contact tracing apps
- Sundar Pichai: Google employees won’t return to office until at least June 1
- Report: Google cutting marketing budgets by 50% for second half of 2020
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