The mobile phone industry is going through the worst moment of the last decade. Despite enjoying great popularity, smartphone sales have been declining for almost five years (except for a rebound in 2021).
This week, the spirits of the industry have been even lower after learning about the forecast that the IDC consultancy has published for 2023. According to their calculations, the drop in sales for the year as a whole will be 4.7%, and not of 3.2%, as it had predicted at the beginning of the year. This means that manufacturers are going to deliver 1,150 million units, the lowest volume since 2013.
The reasons behind this decline are several. “The market is very cautious in the face of doubts about the recovery of the global economy,” says IDC analyst Nabila Popal. According to their data, all regions will register decreases, especially Western Europe (-6.1%) and Latin America (-6.2%), while in the large markets of China and the United States, the reduction will be 3.6 % and 3.8%, respectively.
Fabio Capocchi, general director of the Motorola company in Europe, the Middle East and Africa, has the same perception as the consultant. “The general rise in prices has slowed down phone purchases because the consumer has had less purchasing power. In addition, since the end of the pandemic, we see that the consumer prioritizes spending in the leisure sector rather than in the electronics sector ”, he maintains.
In recent years, another of the problems that threatens the industry is the absence of significant innovations in the latest generation phones. According to Capocchi, the problem is not so much in technological advances as in the possibilities of their use. “In many regions, 5G is not yet deployed and that means that many new features do not make sense. That is why it is not worth it for the customer to buy a new mobile ”, he maintains. In addition, IDC ensures that the consumer waits more and more time to renew their phone and that also lowers the growth expectations of the industry.
Among the strategies to attract consumers, IDC recommends that distributors launch incentives and make payments more flexible. However, Capocchi assures that prices will not go down. “Phones increasingly incorporate more sophisticated features and, therefore, it is logical that final prices go up if production costs also go up,” he points out. As a consequence, the manager predicts a polarization of the market. “Consumers will opt for both extremes: either they will look for a simple and cheap mobile phone, under 200 euros, or they will save to buy an expensive mobile phone, which has all kinds of functionalities and can be purchased for a price starting at 500 euros”.
In fact, the IDC data suggests that the ranges most affected by falls are precisely the intermediate and low ranges. Just look at IDC’s forecasts for sales of phones running on Apple’s iOS system, whose iPhones are at the top of the range. While sales of phones that operate with the Android system will fall by 6%, mobile phones that operate with an iOS system will grow by 1%.
Looking ahead to 2024, IDC is confident that the industry will recover the path of growth and increase sales by 4.5%. It will not do it before, Capocchi points out, because in the last months of the year there will still be too much uncertainty in the market.
