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Demand for smartphones is drying up

(2022/07/19)


Demand for smartphones is fading amid households' fears about rising inflation and other monetary pressures, although brands including Samsung and Apple are weathering the economic storm.

Global shipments into the channel declined 9 percent in calendar Q2, according to preliminary data from market researcher Canalys, indicating sales volumes of around 287.5 million units.

"Vendors were forced to review their tactics in Q2 as the outlook for the smartphone market became more cautious," said Runar Bjørhovde, research analyst.

[1]

"Economic headwinds, sluggish demand and inventory pile-up have resulted in vendors rapidly reassessing their portfolio strategies for the rest of 2022. The oversupplied mid-range is an exposed segment for vendors to focus on adjusting new launches, as budget-constrained consumers shift their device purchases toward the lower end."

[2]

[3]

It was only a few years back that Samsung and Apple were clamoring to shore their mid-range line-up. Both companies fared relatively well during Q2, with Samsung boosting market share to 21 percent from 18 percent and Apple taking 17 percent of total sales, up from 14 percent.

The finalized figures for the vendors aren't yet available from Canalys but the direction of travel is clear: in third, fourth, and fifth place were Xiaomi, OPPO, and Vivo, all reporting market share declines.

[4]

This fall in demand is causing some sleepless nights among the "entire smartphone phone supply chain," said Canalys analyst Toby Zhu.

[5]Indian tax authorities raid offices of Chinese smartphone maker Vivo

[6]Huawei looks to staff for strategy to reverse declining fortunes

[7]Samsung fined $14 million for misleading smartphone water resistance claims

[8]End-of-life smartphone? Penguins at postmarketOS aim to revive it

"While component supplies and cost pressures are easing, a few concerns remain within logistics and production, such as some emerging markets' tightening import laws and customs procedures delaying shipments."

The upshot of growing stockpiles? Vendors will "look to accelerate sell-through using promotions" ahead of the winter holiday season.

Zhu said that in "contrast to last year's pent-up demand, consumers' disposable income has been affected by soaring inflation this year. Deep collaboration with channels to monitor the state of inventory and supply will be vital for vendors to identify short-term opportunities."

It's been a roller coaster time for smartphone industry, with sales shrinking for the first time in 2020 following disruptions caused by the pandemic.

[9]

The PC industry is also reporting declining sales into the channel on the back of worries about a global recession. ®

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[5] https://www.theregister.com/2022/07/08/india_vivo_raid/

[6] https://www.theregister.com/2022/07/06/huawei_employees_strategy/

[7] https://www.theregister.com/2022/06/23/australia_samsung_water_resistance_fine/

[8] https://www.theregister.com/2022/06/15/postmarketos_2206/

[9] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33YtbVIa0hv8WeV4gOysVuTgAAAA0&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0

[10] https://whitepapers.theregister.com/



Innovation

elsergiovolador

The PC industry is also reporting declining sales

Because there is no innovation. My desktop PC is due an upgrade, but there is nothing to upgrade it to. New products only offer cosmetic performance gains, so there is no point.

Re: Innovation

Neil Barnes

Quite. Does my phone still work? Yep. Has the maker manage to install enough software 'upgrades' to slow it to unusability? Nope. Then why the hell would I change it?

Re: Innovation

AMBxx

There was also a huge increase in sales at the start of everyone needing to work from home. It's going to take a few years for that to work its way through.

Meanwhile at Apple...

trevorde

Tim Cook: iPhone sales are down. What can we do?

Marketing1: A new 'innovative' colour!

Marketing2: Remove the charger!

Marketing3: Remove a port!

Marketing4: Increase the price!

Tim Cook: Great work! Make it so.

Re: Meanwhile at Apple... in a different universe perhaps

Lis

@trevorde

Did you actually read the article?

Fifth paragraph...

"It was only a few years back that Samsung and Apple were clamoring to shore their mid-range line-up. Both companies fared relatively well during Q2, with Samsung boosting market share to 21 percent from 18 percent and Apple taking 17 percent of total sales, up from 14 percent."

Hans Neeson-Bumpsadese

I'm sure that other macro factors are relevant, but I wonder how much of this isn't so much "demand for smartphones is drying up" and rather "demand for the smartphones on offer is drying up"

My old phone was getting a bit past it...basically the built-in, bit-of-a-pain-to-replace battery was ready for retirement. The shop was chock full of models, but hardly any (to be honest none - I ended up with a bit of a compromise purchase) fitted the bill for my requirements. I don't consider my requirements to be that outlandish - I want something that fits in my pocket, allows me to send/receive calls & texts, emailing, basic internet and app use.

Do I want a massive phone with a display only marginally smaller than my first portable TV set? No. So that's the vast majority off the table then, as so many of them just wouldn't fit in my pocket. Does nobody in mobile phone design consider trouser compatibility?

Do I want a high-performing camera? No, because I have a proper camera

Do I want tons of processing power and memory capable of running fancy modern games? No, because I'm not a gamer and even if I was I think I'd want a proper gaming device.

And so on.

In the end I got something - like I said, a compromise - but I know that some of the money I was parting with went on features that I didn't like and/or didn't need. I'd already delayed going shopping for a new phone for as long as I could - my service provider had been bombarding me with offers to renew for nearly a year before my old phone was finally as the death-rattle stage and I just had to go shopping.

Good enough

fishman

It doesn't take that new of a smartphone if all you do is surf the web, text, make phone calls, and take some pictures. After almost 5 years the battery is still in good shape - I try to keep from going below 30% very often, and never below 20%.

The telcos are upset

WolfFan

I have an ‘older’ phone; it has 4G, not 5G. It’s paid for, the battery is doing well, it works well enough for me. T-mob wants everyone to go to 5G. They’re pushing hard to replace my working phone, an iPhone SE 2nd gen, with a 5G capable phone, preferably a iPhone 13. There’s a reason why I got the SE in the first place. Hint: other phones are too damn big and cost too damn much. I might go with a SE 3rd gen, basically iPhone 12 guts in a smaller, cheaper, case, but not until this phone has problems. By which time there’ll probably be a SE 4th, or even 5th, gen. Or maybe sense will return to the cell phone industry and there might be a flagship phone actually smaller than a set of encyclopedias. I’m not holding my breath waiting.

This fall in demand is causing some sleepless nights

Mike 137

And we, the users, should worry?

Who's all this tech really for - us or the vendor?

Sorry - stupid question...

There's nothing to buy

Gene Cash

They're removing 3.5mm jacks, there's no removable batteries or SD cards any more, the designs are worse, and the phones are more expensive.

For example, the Pixel 5a I was forced to buy since 4G was discontinued has no bezel, so simply holding it opens apps on the edges of the display. I have to put it in a case just to avoid that. That's a serious misdesign.

Why would I buy one?

Re: There's nothing to buy

Marty McFly

Ah, but there is the long game. Batteries are consumable items. When it goes tango-uniform, the majority of users will opt for a new phone. So what if users don't buy a new phone this quarter, they will eventually be back.

You didn't really think the non-removable, non-user replaceable batteries were for your own good, did you?

Re: There's nothing to buy

Hans Neeson-Bumpsadese

For example, the Pixel 5a I was forced to buy since 4G was discontinued has no bezel, so simply holding it opens apps on the edges of the display.

If you open an app by mistake, then to dismiss it you only need to click the back button handily located at...errr...OK....as you were.

The ride is over

Marty McFly

New cell phones continue to be evolutionary, they are no longer revolutionary.

More memory, faster CPU, more pixels, more storage, different cell signals, more sizes, are all evolutionary changes. But they are hardly game changers.

Consumerism is down, good.

jdiebdhidbsusbvwbsidnsoskebid

Smartphone sales are down, good.

Ok. So not good if it really is happening because the recession means people can't afford them, but that's a different problem. I'll bet that people aren't throwing their phones away and saying "I'll do without one", rather it's people holding onto older models for longer before upgrading. In which case, good, that we're consuming fewer resources.

Maybe, just maybe, the big manufacturers will move away from the continual growth model they need to cling to. As if!

The following statement is not true. The previous statement is true.