Smartphone sales dip as consumers spend more on essentials

A new report has revealed that the global smartphone market recorded its third consecutive decline this year, dropping 9% year-on-year, marking the worst Q3 since 2014.

This is despite tech companies launching newer and more innovative devices with a plethora of features to attract consumers.

What are people spending money on?

According to research firm Canalys, people are spending money on essentials instead of the latest gadget.

“This will likely continue to dampen the smartphone market for the next six to nine months,” the market tracker said.

Brands

Canalys said Samsung retained its leading position with a 22% market share driven by heavy promotions to reduce channel inventory.

“Apple was the only vendor in the top five to record positive growth, improving its market position further with an 18% share during the market downturn thanks to relatively resilient demand for iPhones. While Xiaomi, OPPO and vivo continued to take a cautious approach to overseas expansion given domestic market uncertainty, retaining 14%, 10% and 9% global market shares, respectively.”

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Reactive smartphone market

Canalys Analyst Amber Liu said the smartphone market is highly reactive to consumer demand and vendors are adjusting quickly to the harsh business conditions.

“For most vendors, the priority is to reduce the risk of inventory building up given deteriorating demand. Vendors had significant stockpiles going into July, but sell-through gradually improved from September owing to aggressive discounting and promotions.”

“The pricing strategy of new products is cautiously crafted, even for Apple, to avoid significant pushback from consumers who now tend to be very sensitive to any price hike,” added Liu.

No signs of improvement

Another Canalys Analyst, Sanyam Chaurasia said demand shows no signs of improvement moving into Q4 and H1 2023.

“Going into the sales season, consumers who have been delaying purchases will expect steep discounts and bundling promotions as well as significant price reductions on older generation devices.”

New product pricing

Canalys said the pricing strategy of new products is cautiously crafted.

“Even for Apple, to avoid significant pushback from consumers who now tend to be very sensitive to any price hike.”

“Apple’s share of the global smartphone market climbed to 18% in the recent quarter, compared with 15% in the same period a year ago, while the share of leading smartphone maker Samsung rose 1% point to 22%,” Canalys reported.

Apple meanwhile has dialled back production of its recently launched iPhone+ model while it evaluates demand, news website The Information reported, citing sources.

Sales of smartphones improved in September due to “aggressive” discounts and promotions, according to Canalys.

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