The coronavirus pandemic impacted consumer spending significantly, causing many telecom companies to suffer.
The worldwide smartphone market is expected to decline 11.9% year over year in 2020, with shipments totaling at 1.2 billion units, IDC said. This forecast follows the most significant year-over-year drop in history in the first quarter of 2020, mainly due to the novel coronavirus.
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Gartner recently reported that global smartphone sales plummeted by 20.2% in the first quarter. The unit sales decreased from 374.9 million in the first quarter of 2019 to 299.1 million during this same period this year.
IDC's Worldwide Quarterly Mobile Phone Tracker, however, predicted that smartphone shipments are now expected to decline by 18.2% in the first half of 2020. The disparity in the Gartner and IDC findings could be attributed to the use of different methodologies, with the number of those surveyed differing, but both indicate a marked decrease in smartphone sales.
Why smartphone sales dropped
COVID-19 is the main reason the shipment of smartphones has dropped, with the pandemic hitting consumer spending hard. The severity of the virus caused customers to focus on purchasing essential items, placing nonessential orders on the backburner, said Ryan Reith, program vice president with IDC's Worldwide Mobile Device Trackers.
The effects of nonessential spending were seen in the number of retailers that recently filed for bankruptcy, which included J. Crew, Neiman Marcus, JCPenney, and Tuesday Morning. The lack of demand appears to also apply to the tech world, with PC shipments also falling in the first quarter of 2020.
While PC shipments have fallen, even that market is in better shape than smartphones because more people working remotely might consider replacing PC devices for an at home office before replacing their smartphones, Reith noted.
China's economy was significantly impacted by the outbreak of COVID-19, however, the country has seen significant improvements as lockdowns and supply chain disruptions have begun to ease, the report found.
Factories in China have mostly resumed operations and the market has opened some travel regulations, which means China's domestic market might only see a single digit decline in 2020, according to IDC.
Europe, on the other hand, was severely hit by coronavirus, especially in Italy and Spain. These areas will continue to see double-digit decline this year, the report found.
"Italy and Spain are markets that already had extreme challenges, from an economic standpoint, heading into the pandemic," Reith said. With an already rocky foundation, these regions will naturally have a tougher time recovering.
Refresh rates and 5G development, however, may help give smartphone sales a boost toward the end of next year and going into 2021, Reith said.
"The reality is in both developed and developing markets, depending on whatever phone you're on, they just don't last three or four years. It's rare you see someone with a four-year-old phone a lot of time because it breaks," Reith said. "We are expecting a rebound next year, stronger than we had originally anticipated because there's just built up refresh cycles."
As 5G phones become more popular, consumers may see that the prices are comparable to that of refreshing their current phones. The presence of 4G phones is expected to dwindle, leading to more 5G purchases and an overall gradual increase in smartphone sales, Reith noted.
"We're going to see a lot of consumers who go in to buy that next device, they're not going to buy it because it's 5G, they're going to buy it because it's 5G and it's also the same price point of what they probably would have purchased had they upgraded their current device," Reith said.
For more, check out Coronavirus impacts global smartphone sales with worst decline ever on TechRepublic.
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