- The COVID-19, as per a recent Counterpoint Research report, pandemic has disrupted the signs of any recovery in the smartphone market
- The pace of 5G rollouts has also been impacted by coronavirus outbreak
- Samsung has already reported a decline in its display business
The global smartphone market declined its fastest ever, down 13 per cent YoY in Q1 2020, according to the latest research from Counterpoint’s Market Monitor service. This is the first time since Q1 2014, that the smartphone market has fallen below 300 million units in a quarter. The COVID-19 pandemic has disrupted the signs of any recovery that the market started showing in Q4 2019.
“OEMs will have to embrace a more omnichannel strategy. Retailers will also have to find ways to reach their consumers digitally. This could increase the adoption of O2O channels and hyper-local delivery services in smartphones. However, users staying at home are engaging on their smartphone more than ever. This provides opportunities for services like mobile gaming and OTT services. This will likely lead to operators being able to upsell to larger data packages with higher ARPUs,” stated Tarun Pathak, associate director at Counterpoint Research.
In Q1 2020, OEMs with components and factories in the worst hit areas of China were exposed the most, for example, Lenovo. In the second quarter, the trend will be reversed, as China’s manufacturing recovers, but many other manufacturing centers are closed.
Started with 27 per cent YoY shipment decline in China
The first quarter decline was mainly driven by a 27 per cent YoY shipment decline in China, the initial epicenter of the pandemic. Some of the decline was offset by sales shifting to online channels.
Overall, the market share of China in the global smartphone market, in Q1 2020 reduced to 22 per cent from 26 per cent a year ago. The disruption in China also impacted the supply side of handsets and components for some OEMs, which in turn, affected global shipments. In the long run, this could lead to OEMs diversifying their supply chain across regions. This could be a silver lining for countries like India and Vietnam.
By the end of the quarter, as COVID-19 started to spread to other regions, and lockdowns of varying severity were imposed, the pendulum of disruption started to swing from supply to demand.
The pace of 5G rollouts impacted
The combined market share of the top 10 brands increased to 83 per cent, from 80 per cent in Q1 2019. The consolidation trend is likely to continue, as smaller brands, with a higher offline distribution, are likely to be affected more by the pandemic.
As expected, due to the pandemic, all the major OEMs declined during the quarter, except Xioami (seven per cent YoY) and realme (157 per cent YoY). This is partly because, India, which is the largest market for both these brands, implemented a severe lockdown in the last week of March.
COVID 19 has also impacted the pace of 5G rollouts in some countries. Commenting on this, Varun Mishra, research analyst at Counterpoint Research noted, “COVID-19 has disrupted the implementation plans of 5G in some countries, with auctions being postponed in markets like Spain and India. However, led by Huawei, the growth of 5G in China remains as expected.”
He continued, “As the situation returns to normal, the 5G sales will be further driven by OEMs including Samsung, Oppo, Vivo, Xiaomi and realme launching devices in the sub $300 price band. This is likely to be complemented by SoC players launching cheaper 5G-capable chipsets. The share of 5G smartphones increased to eight per cent in Q1 2020, compared to one per cent in Q4 2019. 5G is likely to help rate of recovery during the second half of 2020.”
