Coronavirus pandemic sinks first-quarter global smartphone shipments by 13%

And the worst is yet to come, as smartphone vendors expect the second quarter to represent the peak of the virus' impact, according to research firms Canalys and Counterpoint.

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The coronavirus has been causing death and devastation throughout the world. But along with the toll on human life, the virus has impacted the business world, creating financial havoc for companies and industries. One sector hit especially hard is the global smartphone market, which saw shipments plummet for the first quarter of 2020.

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Based on new data released Friday by both Canalys and Counterpoint, worldwide smartphone shipments last quarter dropped by 13% versus the same period in 2019.

The two firms differ on their numbers—Canalys pegged last quarter's shipments at 272.5 million, down from 313.9 million, while Counterpoint's data pointed to shipments of 295 million, down from 341 million.

But the freefall marks the first time since late 2013 and early 2014 that the smartphone market has dropped below 300 million shipments in a single quarter, according to Counterpoint.

The coronavirus quarantine has actually spurred some demand for smartphones as replacement items by people forced to work remotely. But in light of the financial crunch affecting everyone, many consumers and business now see new smartphones as a luxury, thus delaying their purchases, according to Canalys. At the same time, weak business results, employee redundancies, and worker furloughs have created anxiety and uncertainty.

"Demand for new devices has been crushed," Canalys Senior Analyst Ben Stanton said. "In February, when the coronavirus was centered on China, vendors were mainly concerned about how to build enough smartphones to meet global demand. But in March, the situation flipped on its head. Smartphone manufacturing has now recovered, but as half the world entered lockdown, sales plummeted."

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Image: Canalys

Among the major players, Samsung was the top smartphone vendor with a 22% market share, followed by Huawei at 18%, Apple at 13.6%, Xiaomi at 11%, and Vivo at 9%, according to Canalys. The top three saw their shipments fall last quarter, while Xiaomi and Vivo eked out some growth. Though China's smartphone market suffered a huge plunge, smartphone makers showed some resiliency as the country started to recover from the initial impact of COVID-19.

"The smartphone's status as an 'essential' personal item has stopped [China's] market falling further during the pandemic," Nicole Peng, vice president of mobility for Canalys, said. "The Q1 performance was also buoyed by China's well-established ecommerce channel for smartphone distribution, and the fact that most Chinese businesses were able to resume work rapidly after two weeks of nationwide travel restrictions."

Following the first-quarter decline, the second quarter promises to be even worse as the full effects of the virus are likely to be felt across businesses. Smartphone vendors will be challenged to figure out how to adapt to a changing world and a changing economy.

"Most smartphone companies expect Q2 to represent the peak of the coronavirus' impact," Stanton said. "It will test the mettle of the industry, and some companies, especially offline retailers, will fail without government support. As lockdowns around the world start to lift, the full economic damage will become visible. Smartphone companies must adapt their strategies to mitigate the impact, as cash flow will be critical in the coming months. But if they cut back too much on product spend, marketing spend, and new strategic initiatives, they risk losing agility, and will lose ground to rivals once demand bounces back."

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