February 2020 saw "the biggest fall ever in the history of the worldwide smartphone market" as sales tumbled 38 per cent year-on-year, according to researchers at Strategy Analytics.
Units fell from 99.2 million to 61.8 million due - in no small way - to the collapse of demand, particularly in Asia, as "many consumers were unable or unwilling to visit retail stores and buy new devices". Factory closures also served to disrupt the supply chain.
Strategy Analytics told us it expects global handset shipments to remain weak for the whole of March too. That sounds like an understatement, given that March has seen many countries and cities around the world declare varying degrees of lockdown.
EMEA analyst Neil Mawston told The Reg: "For March the decline will probably be roughly the same globally; the West is turning down but China and South Korea and other places are turning up and recovering. Some factories are still not fully up to speed in Asia or elsewhere so the supply of some models is still a bit uncertain."
There'll be fewer firms making smartphones..
What is likely to happen if the lockdowns are prolonged? "There's roughly 600 brands left making smartphone models worldwide. We expect to see that tip down in the next year or so," said Mawston. "Some will exit the market, some will stop altogether, others will merge. Some will get taken over in distress. We expect to see the supply side change dramatically over the next year or so."
There's roughly 600 brands left making smartphone models worldwide. We expect to see that tip down in the next year or so
Who is best placed to survive? "Somebody like Apple with huge buckets of cash will be able to last for years with low sales, others that have been making heavy losses in recent years, like Lenovo, Motorola or Sony, will struggle to last as long," said Mawston.
"Our working assumption is that there's about a three-month curve on it. If you look at China for example, January weakened, February collapsed, and March recovered slightly. If the West follows that, then March is terrible, April is the slowdown and May is the recovery. That's our current working thesis. But that depends how well these lockdowns go."
A report from retail research company GFK has looked at the impact of lockdown in China so far this year, describing the impact on retail sales (not just in smartphones) as "short, sharp and devastating", though it added that in China "the peak has passed, and consumption is gradually recovering". The issue was threefold. "Stores were closed, the supply chain faltered, and consumers postponed purchases as their income suffered."
This is a pattern we can expect to repeat in the west, with online sales partially compensating for lost revenue from physical stores – though sales of certain items have boomed. GFK reports that in the UK for the second week of March (as home working surged), sales of PC monitors were up 132 per cent. El Reg noted this dynamic on notebooks too.
The overall picture is grim, though. "We're living through a period where market dynamics are almost impossible to predict," said GFK. "We will no doubt look back at this and change how we handle pandemics in the future, but for now, we must all live day to day, and take decisions based on the best available information." ®