The Impact of Coronavirus on Smartphone Market in Q1 of 2020


Some calamities can come from an unknown source and hit at uncertain times which can disturb the conventional ebbs and flows of life. Similar is the novel coronavirus. The COVID-19 pandemic has proven to be devastating for many industries and markets around the world. One of the victims is the smartphone market. Quarter 1 of 2020 has left many smartphone companies on the verge of decline. It has now become bitter and disastrous reality. The shipments have fallen 13% or 272 million units.

Though Samsung climbed to the top position, the company’s shipments witness a steep decline of 13% or 60 million units. On the other hand, Huawei shipped 49 million units, as its supply resumes to turn toward China and away from abroad markets because of its US Entity List status. The US tech giant Apple being the third-largest vendor also witnessed a downfall of 8% with 37 million shipments. The Chinese company Xiaomi, the most solid performer in the top five list, accomplished 9% growth to knock 30 million units, while Vivo ended on the fifth position with 24 million units, an increase of 3%.

The Impact of Coronavirus on Smartphone Market in Q1 of 2020

The smartphone market started 2020 with a great boom, having just registered a couple of consecutive quarters of growth. “But demand for new devices has been crushed,” told by Canalys Senior Analyst @Ben Stanton. During Feb, when the COVID-19 was focused on China, merchants were essentially concerned about the manufacturing of sufficient smartphones to meet global need.

But, everything changed when the month of March came. The contemporary situation of the time flipped on its head. The smartphone manufacturing has now been revived, but as a significant portion of the world entered a lockdown, sales plunged. Weak business results, employee tautologies and furloughs are breeding a great deal of stress, anxiety and uncertainty. The smartphones are yet a requirement for most individuals, and smartphone availability in online channels has permitted those who demand to redeem a broken or lost phone to do so. But many buyers who would have bought a new device as a luxury have delayed that purchase.”

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Canalys Analyst @ Shengtao Jin told that “Some smartphone vendors were able to withstand the impact,” The tech giant Samsung was enjoying an obstinate place in the month of February, because of its production focus in South Korea and Vietnam. However, this advantage swiftly disappeared as COVID-19 proliferated around every corner of the globe.
The leading US smartphone manufacturer Apple was one of the least affected vendors, due to its widespread sale of the iPhone 11 in the initial stages of the quarter. Lately, Apple has launched iPhone SE, which can prove to be strategic ploy because of its much affordable price, which can undoubtedly ramp up the demand. The company needs to halt iPhone shipments from further declination as its flagship customers await 5G devices.
The Chinese tech giant Huawei has to fight on two fronts. The company was compelled to balance the binary impact of COVID-19 and its ongoing US Entity List problems. Huawei’s overseas shipments plunged 35% as it initiated its first P series smartphone family without Google Mobile Services like Google Play Store, Maps etc. The P40 is one such example. But various channels are cautious of endangering themselves to the risk of these untested devices, so they are arranged in fewer channels than their forerunners, and first channel orders are on the lower side than the company would expect.
 

Worldwide smartphone shipments and annual growth
Canalys Smartphone Market Pulse: Q1 2020
VendorQ1 2020 shipments Q1 2020

market share

Q1 2019 shipments Q1 2019

market share

Annual
growth
Samsung59.6 million21.9%71.5 million22.8%-17%
Huawei49.0 million18.0%59.1 million18.8%-17%
Apple37.1 million13.6%40.2 million12.8%-8%
Xiaomi30.2 million11.1%27.8 million8.9%+9%
Vivo24.2 million8.9%23.5 million7.5%+3%
Others72.4 million26.6%91.6 million29.2%  -21%
Total272.5 million100.0%313.9 million100.0%-13%
Note: percentages may not add up to 100% due to rounding
Source: Canalys Smartphone Analysis (sell-in shipments), April 2020

The table clearly depicts that most of the smartphone countries have witnessed a clear shortfall and declining trajectory. Only two companies Xiaomi and Vivo have retained their positive trajectories.

Canalys Analyst @Vincent Thielke told that “The impact on smartphone channels is colossal,”. Omni-channel vendors in severe lockdown regions, like Europe, are striving to do their best to displace offline store stock into online distribution channels, but this is expensive, and their capacity, in case of warehousing, haulage and delivery, is not ready for a full switch to online stores. This paradox also restricts the new devices they need to purchase from vendors and distributors in the short course. In these areas, clearly, it is the eCommerce channels that will have a fair advantage in the future scenario.
Stanton told that “Most smartphone companies expect Q2 to represent the peak of the coronavirus’ impact,”. It will test the courage of the smartphone industry, and few firms, particularly offline retailers, will collapse without government support. Though as lockdowns around the world begin to lift, the entire economic damage will become apparent. The smartphone firms must adapt their policies to alleviate the impact, as cashflow will be crucial in the following months.
But if the companies cut back more on product spend, marketing spends and new strategic initiatives, they risk losing agility. They will also lose ground to competitors once demand bounces back. Therefore, it’s utmost important to maintain a balance if they don’t want their companies of following a declining trajectory in the coming future. A good policy framework work is required to counter such matters as they are significant for the growth of the smartphone companies.

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