Economic uncertainty boosts sales of cheaper smartphones


Tuesday, 22 September, 2020


Economic uncertainty boosts sales of cheaper smartphones

A new price brand forecast from IDC predicts that 73% of smartphone shipments in 2020 will be priced below US$400, due to economic uncertainties increasing the downward pressure on global smartphone prices. Worldwide smartphone value is expected to decline 7.9% in 2020 to $422.4 billion, down from $458.5 billion in 2019. This is intensified by consumers turning to devices priced in the low to mid range, as they prioritise spending on essentials.

The low- to mid-end segment ($100 to less than $400) dominated global smartphone shipments with 60% market share in the second quarter of 2020 (2Q20), with 63% short-term growth predicted by next year. The mid- to high-end segment ($400 to less than $600) grew its share of the market by almost four points to 11.6% in 2Q20. Devices from Samsung, Huawei and other Chinese vendors like Xiaomi, OPPO and vivo are the main vendors driving these segments. Apple has also entered this segment with its iPhone SE device, which has performed well, further validating the trend towards more affordable devices.

Sangeetika Srivastava, senior research analyst with IDC’s Worldwide Mobile Device Trackers, attributed rising unemployment rates and job uncertainty to consumers’ buying patterns moving towards economic and affordable products. 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,” Srivastava said.

The pressure on prices is most obvious in developing regions like Asia/Pacific (excluding Japan and China) (APeJC), Latin America, Middle East & Africa (MEA) and Central & Eastern Europe (CEE), where under $400 devices captured up to 85% of the market in 2Q20. In China, the mid- to high-end segment experienced an eight-point increase in market share to 21% in 2Q20.

Nabila Popal, Research Director with IDC’s Worldwide Mobile Device Trackers, said that consumers increasingly want a better value proposition from their phones, with the low and mid segments ($100–$200 and $200–$400) to remain the most popular, going forward.

“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,” Popal said.

Image credit: ©stock.adobe.com/au/DisobeyArt

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