Coronavirus causes worst smartphone market contraction in history

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The coronavirus pandemic has caused the smartphone market to suffer its fastest ever first-quarter year-on-year decline, according to new data from analyst firms. Counterpoint Research and Canalys both put the overall drop in global shipments at 13 percent, though Counterpoint says the drop in China alone was 27 percent while Canalys calculates it at 18 percent.

Whichever numbers you look at, the situation is clear: it’s the first time shipments have come under 300 million since 2014, with a precipitous collapse in China preceding falling demand around the world. “By the end of the quarter, as COVID-19 started to spread to other regions, and lockdowns of varying severity were imposed, the pendulum of disruption started to swing from supply to demand,” Counterpoint’s team of analysts writes in a statement.

Samsung, Huawei, and Apple are still the top three vendors, with Apple seeing the smallest decline in shipments year on year. Both Canalys and Counterpoint rank Xiaomi fourth, cracking 10 percent of global market share for the first time.

Counterpoint Research: Quarterly Market Monitor Q1 2020

“Demand for new devices has been crushed,” says Canalys senior analyst Ben Stanton. “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.”

“From the consumer standpoint, unless replacing a broken phone, smartphones are mostly a discretionary purchase,” says Counterpoint associate director Tarun Pathak. “Consumers, under these uncertain times, are likely to withhold making many significant discretionary purchases. This means the replacement cycles are likely to become longer.”

The true impact of the pandemic is yet to be felt. “Most smartphone companies expect Q2 to represent the peak of the coronavirus’ impact,” says Stanton. “It will test the mettle of the industry, and some companies, especially offline retailers, will fail without government support.”

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