Global smartphones market contracts even as inventories rise and consumers renew less often

Consumers are choosing to renew less often but with more durable smartphones when they do

May 08, 2023 02:55 pm | Updated 04:04 pm IST

The Global smartphone market declined by 14% in the March ending quarter even as major brands witness pile-up in inventories and consumers rethink renewing their handsets.

The Global smartphone market declined by 14% in the March ending quarter even as major brands witness pile-up in inventories and consumers rethink renewing their handsets. | Photo Credit: Getty Images

The global smartphone market contracted even as major brands witness pile-up in inventories and consumers rethink renewing their handsets.

The market for mobile phones declined by 14% in the March ending quarter, compared to the same period last year. The drop is seen as the weakest holiday-season quarter for smartphone sales in a decade as slower-than-expected recovery in China, and waning consumer confidence due to unrelenting market volatility dampened consumer spending.

Global revenue from smartphone shipments also shrunk by 7% in the march ending quarter to around $104 billion. The decline comes even as Apple, Samsung, and Xiaomi increased their average selling prices during the period.

Consumers are choosing to renew less often but with more durable smartphones when they do, Harmeet Singh Walia, senior analyst at Counterpoint, noted in a company blog post.

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The flipside

Among top brands, Apple saw the least drop in its shipments. The company also recorded its highest-ever market share during a quarter at 21%, according to a report by Counterpoint.

Samsung and Apple alone cornered 96% share of the global smartphone operating profits. And the Korean smartphone maker replaced Apple as the top smartphone player in Q1, driven by its mid-tier A series and the S23 series.

The launch of S23 series lifted the company’s average selling price (ASP), which ensured its revenue fall was relatively less compared to other brands.

Apple outperformed the market as its sticky ecosystem halted consumers from switching to rivals. The Cupertino-based company had captured nearly half the secondary market, and consumers chose to spend on “longer-lasting devices”, the report said.

Gen-Z capture

Gen-Z consumers in the West enabled the Apple’s success even as the company filled the void left by Chinese premium smartphones. This allowed it to handle fluctuations better than its rivals, Jeff Fieldhack, research director at Counterpoint, said.

In China, Xiaomi, Oppo, and Vivo will have to wait longer for their shipments to rebound as they experienced double-digit declines in Q1 2023, the report noted.

“Even if the decline in smartphone shipments stabilises, a significant recovery is unlikely before the year-end holiday quarter,” Tarun Pathak, research director at Counterpoint, said, citing rising oil prices that could hike inflation and dampen consumer spending.

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