21 September 2020
Smartphone market to fall 7.9% from $458.5bn in 2019 to $422.4bn in 2020
According to a new price band forecast from the International Data Corporation (IDC) Worldwide Quarterly Mobile Phone Tracker, economic uncertainties have increased the downward pressure on smartphone prices globally, with 73% of shipments in 2020 expected to be priced below $400. Worldwide smartphone value is expected to decline by 7.9% from $458.5bn in 2019 to $422.4bn in 2020. The downward trend is intensified by consumers turning to devices priced in the low- to mid-range as they prioritize spending on essentials.
Overall, the low-to-mid-end segment ($100 to less than $400) dominated global smartphone shipments, with 60% market share in second-quarter 2020, and is expected to grow in the short term to 63% by next year. The mid-to-high-end segment ($400 to less than $600) grew market share by almost 4 points to 11.6% in Q2.
Devices from Samsung, Huawei and other Chinese vendors like Xiaomi, OPPO and vivo are the main vendors driving these segments.
Apple also recently entered the mid segment with its new iPhone SE device, which has performed well, further validating the trend toward more budget-friendly devices.
“Rising unemployment rates and job uncertainty have influenced consumers’ buying patterns towards economic and affordable products,” says Sangeetika Srivastava, senior research analyst with IDC’s Worldwide Mobile Device Trackers. “Subsequently, the overall portfolio in smartphones is moving toward low-to-mid-end devices. This has intensified competition, as market players need to continue presenting attractive deals and bundling offers to encourage consumers to purchase a new device, especially in the higher-priced segments.”
The pressure on prices is reflected worldwide, though it is most obvious in developing regions like the Asia-Pacific excluding Japan and China (APeJC), Latin America, Middle East & Africa (MEA) and Central & Eastern Europe (CEE) where sub-$400 devices captured up to 85% of the market in Q2/2020. Even in the USA, devices under $200 increased their share by 10 points year-on-year to capture 27% of the market in Q2. In China, the mid-to-high-end segment ($400-600) grew the most, with an 8-point increase in market share to 21% in Q2.
“Looking forward, as consumers increasingly want a better value proposition from their phones, the low and mid segments ($100-200 and $200-400) will remain the most popular,” says Nabila Popal, research director with IDC’s Worldwide Mobile Device Trackers. “However, in the long term, IDC expects the fastest growth will be in the $400-600 price band as 5G sales grow and the average selling price (ASP) for 5G phones drops to $465 in 2024.”
Smartphone shipments fall a record 16% year-on-year in Q2 to 278.4 million