The Reasons for the Decline in Smartphone Shipments
The global smartphone market has recently seen a sharp decline in shipments due to numerous factors. However, aside from the obvious technical limitations of current devices and the challenges posed by new technologies, other factors could be affecting sales. In this article, we’ll discuss some major causes for decreased smartphone shipments worldwide.
Firstly, competition between vendors has b~~een increasing as more manufacturers enter the market and seek to differentiate their devices from their rivals. This intense competition is partly responsible for putting pressure on prices and reducing profit margins for smartphone makers. Consequently, vendors have difficulty sustaining profitable business models, driving down shipments.
On top of this, innovation has been slowing down as consumers become increasingly familiar with mobile technology and have fewer incentives to upgrade or buy new devices. This lack of innovation is another factor leading to decreased smartphone demand, causing a slump in global shipments.
Furthermore, the maturing smartphone market has been pushing users away from the mid-tier segment towards either higher-end or low-end devices, which put pressure on unit prices and reduced overall turnover value for vendors. Additionally, mature markets have also made it difficult for companies to expand into emerging markets, which typically provide higher growth opportunities than existing markets.
All these factors contribute in different ways to decreasing global shipments of smartphones; however, none paint an accurate picture when taken independently – they must all be considered together to understand why shipment numbers are falling across many regions simultaneously.
Factors Contributing to the Decline in Smartphone Shipments
The global smartphone shipments have recently decreased sharply, with a record low not seen since 2013. This significant plunge is due to a variety of contributing factors.
In this article, we will discuss why this significant decrease in smartphone shipments has occurred, and the potential implications of this shift.
Slowing market growth
The declining rate of smartphone shipments is largely due to the slowing growth of the global smartphone market. After years of strong growth, the global smartphone market has slowed in recent years as global demand for new smartphones has tapered off. This can be attributed to several factors, including:
1. Saturated markets – With so many existing mobile devices on the market, global markets are reaching their peak capacity causing customers to hold off on upgrading their current device for longer than before.
2. Increased competition – The growing competitive landscape has caused more pressure for companies regarding pricing, features and services, and customer satisfaction levels. This makes keeping up with demand more difficult and often represents significant challenges for innovation and development teams within companies trying to keep up with market trends when launching new products or services.
3. Price decreases – The drop in prices for mobile phones due to increased competition has in turn caused customers to delay their purchases as they wait for further price reductions or newer models with higher specs before purchasing a device — this leads to fewer overall sales during certain periods resulting in a decline in shipments especially during holiday seasons when customers expect aggressive discounts and promotions from retailers or carriers.
4. Longer upgrade cycles – Consumer replacement cycles are getting longer as most device owners keep their current devices longer before upgrading. This impacts shipment numbers while further depressing market demand resulting in year-on-year declines in phone shipments globally over time.
The global smartphone market is experiencing a considerable decline in smartphone shipments due to various factors. One such factor is increasing competition from Chinese companies, providing customers with budget-friendly devices that perform similarly to high-end phones. This competition has led to a decrease in cell phone prices, making it difficult for companies to make profits.
Additionally, the introduction of 5G networks has also impacted the overall sales of smartphones. With better internet speeds and increased data usage, customers prefer devices offering more features and higher performance. This has led to decreased demand for low-end phones, which most brands had focused on previously. Furthermore, premium phone makers are facing stiff competition from more affordable 5G devices that provide features such as triple cameras and better screens at much lower prices than before.
Moreover, customers have become less brand-loyal and more prone to switching between device makers quickly if they don’t find particular features in their current models. This makes it difficult for phone manufacturers to hold onto their customer base and generate consistent income from regular purchases or upgrades. Additionally, Apple recently announced the launch of its very own 5G network called the Apple Network thereby creating an unprecedented level of disruption in the industry by providing a cost advantage over its competitors pricing structures for users to stay within its apps ecosystem longer reducing opportunities for other handset makers globally in all markets across diverse demographic groups.
Changing consumer preferences
Changing consumer preferences have contributed significantly to the decline in global smartphone shipments. The focus has shifted from obtaining the latest and greatest device for Style, form factor, and features, to usability, reliability, battery life and camera capabilities. Consumers are gravitating towards more useful devices that can meet their everyday needs such as making calls, sending messages, updating social media profiles, checking emails etc.
The number of unit sales is further declining due to organizations beginning to offer work-from-home solutions where workers can be connected anywhere with the needed computing power of a laptop or desktop while accessing necessary services via their smartphones.
In addition to diminishing returns in incremental technical improvements relative to cost, consumers are often reluctant to upgrade phones every year due largely in part to increased pricing on hardware upgrades as OEMs increase costs due to scarce components resulting from US imposed sanctions on Chinese companies like Huawei. As a result, consumers opt for fewer upgrades resulting in longer cycles with their current device between upgrade cycles which has affected global shipments reducing associated revenue streams for participating OEMs.
Increasing prices and slowing innovation
Several factors have been contributing to the recent decline in smartphone shipments. One of the main reasons for this is the increase in prices of flagship phones from major manufacturers such as Apple and Samsung. This has led to a situation where people are not inclined to buy a new device regularly and instead choose to stick to their current phones for longer.
Another factor is that smartphone innovation has been slowing down, leading users to see less value in upgrading their devices. The current technological advancements have also allowed smartphones to become more efficient and last longer than their predecessors, meaning consumers don’t feel the need to upgrade as often as they used to. In addition, many manufacturers now include features like water-resistance and wireless charging in mid-range devices, reducing the incentive for people to purchase costly high-end flagships with more advanced features.
At the same time, there is increasing competition from other product categories such as tablets and wearables which offer functionality similar to smartphones but at a lower cost and with fewer features. This has further impacted smartphone sales by cannibalizing demand from other product categories, particularly around year-end holiday seasons when consumers typically have more money for purchases.
Smartphone shipments plunge to a low not seen since 2013 — their largest ever decline
Recent data has revealed that smartphone shipments have plunged to their lowest levels since 2013, the biggest decline the industry has ever seen.
Several factors have caused this decline, and the effects of this drop are being felt in the market. In this article, we’ll discuss the impact of the decline in smartphone shipments and why it has happened.
Impact on the global economy
The unprecedented decline in global smartphone shipments has caused ripple effects throughout the world’s economy as smaller mobile device makers shutter their operations and larger companies experience a decrease in revenue. As a result, the industry was estimated to suffer a 10.2% year-on-year decline this year.
The downturn in global demand for smartphones has immediately impacted both tech and non-tech firms. At the beginning of 2020, several of the world’s largest players like Huawei, Samsung and Apple were forced to move production away from China into other countries with economies more stable during the outbreak of Covid-19. The strain on these companies greatly pressured suppliers supplying components for these premier handsets.
On March 18, 2020, it was reported that Apple slashed its iPhone production by 10%. Still, it appears this figure is set to be exceeded as market research reveals that tens of thousands of jobs have already been lost in some Chinese provinces due to cutbacks at Taiwanese suppliers Foxconn and Pegatron.
In addition to rolling out quarantine measures and restrictions to contain the spread of Covid-19, some governments have implemented economic stimulus packages to curb further job losses resulting from falling smartphone demand. In many cases these initiatives have been paired with relaxed regulations or new tax incentives so parent companies can invest capital in expanding subsidiaries elsewhere while shielding against losses domestically due reduced demand for electronic devices like smartphones.
This combination of stimulus efforts and potential job creation initiatives are expected to offer some respite; however, only time will tell how severe the overall impacts may become due to this sudden disruption within the worldwide mobile technology sector.
Impact on smartphone manufacturers
The global decline in smartphone shipments has significantly impacted leading manufacturers, including Apple and Samsung. According to market research firm IDC, the fourth quarter of 2018 marked the sixth consecutive quarter of decreasing worldwide shipments of phones. Many consumers global-wide have delayed upgrading their devices as longer-lasting and more powerful handsets become available. This has caused a decrease in profits for many phone manufacturers and carriers, with shipment volume suffering its biggest year-over-year drop in seven years.
The immediate impact on Apple was serious, with the company posting its first year-on-year drop in revenue from its smartphone sales since 2007. Moreover, further financial difficulties are anticipated for upcoming quarters as iPhone sales lag further behind market leaders such as Huawei and Xiaomi. Similarly, Samsung experienced a 10% fall in overall profits due to increased competition from Chinese vendors and weakened demand for flagship handsets such as the Galaxy S9. This is exemplified by Huawei’s success, which registered an impressive rise in third quarter 2018 profits by 39%.
The declining demand of smartphones across developed and developing markets will continue to affect Apple’s profit levels over 2019, despite news that headship prices are now on an upward trend again which might protect it against the current situation. Moreover, Huawei’s growing global footprint may also stop Samsung’s increasing growth rate. Therefore, the only way to effectively counter this trend is for manufacturers to create innovative products that remain highly desirable; or at least for them to attempt new avenues towards promoting brand loyalty over mass adoption of flagship models such as Samsung’s Galaxy S9 or Apple’s iPhone XS Max.
In conclusion, the primary reasons for the decrease in global smartphone shipments are:
- A saturated market.
- Slower technological advancement.
- Higher prices due to an intensifying trade war between different countries.
- An increasing preference for second-hand devices.
In addition, changing consumer behavior due to the prevailing COVID-19 pandemic has hurt global smartphone shipments. Therefore, to tackle this issue and revive their sales volumes, smartphone companies must focus on revamping their prices and launching delivery services to attract potential buyers in light of the current circumstances.