Mobile Phone Industry to Lose $51B in Revenue Amid Covid-19 Pandemic

[PHOTO - COURTESY]
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The coronavirus outbreak has caused the worst smart phone market contraction in history, as global demand plummeted in the first and second quarter of the year. Although the last few months witnessed a recovery in the number of smart phone shipments, the entire industry is expected to witness substantial revenue losses this year.

According to data that was recently presented by StockApps.com, the global mobile phone industry is forecast to lose $51.1 billion in revenue by the end of 2020, a 10% drop year-on-year.

Low demand

The revenues of the global mobile phone industry have been constantly rising over the last years. In 2016, the entire industry generated $435.7 billion in revenue, revealed Statista data. Over the next twelve months, this figure rose to $462.6 billion. By the end of 2019, global smart phone sales revenue surged to $506.2 billion, a 16% jump in three years.

However, as half of the world entered a lockdown, demand for new devices has been crushed in the first months of 2020. The IDC’s Worldwide Quarterly Mobile Phone Tracker data showed smart phone vendors shipped 275.8 million units worldwide between January and March, a 25% plunge compared to December 2019 figures and an 11% drop year-on-year.

The strong downsizing trend continued in the second quarter of the year, with millions of consumers cutting down their budgets and prioritizing spending amid the Covid-19 crisis. From the consumer standpoint, unless replacing a broken phone, smart phones are mostly a discretionary purchase, which became unnecessary in times of economic uncertainty. With global demand plummeted, smart phone shipments dropped 16% year-on-year to 278.4 million units between April and June.

Statistics indicate that smart phone shipments showed positive movement in the third quarter of the year, with vendors shipping 353.6 million handsets. Still, 4.7 million less compared to the same period a year ago. Although the industry shows a recovery from the initial impact of the coronavirus, the positive quarter three figures won’t be enough to close the gap noted in the first half of the year.

Statista data indicate the global mobile phone industry revenue is expected to drop to $455.1 billion  this year, under 2017 levels. However, the following years are set to witness a positive trend, with revenues rising by 21% and reaching $554.4bn by 2023.

With almost 1.8bn cellular subscriptions and $117.8bn in revenue in 2020, China represents the world’s largest mobile phone industry. However, the Chinese market has also been affected by the coronavirus outbreak, with revenues decreasing by 5.4% year-on-year.

As the second-largest mobile phone industry globally, the United States is expected to generate $57.4 billion in revenue in 2020, a 15.7% drop year on year. Brazil, Japan, and India follow, with $21.4 billion, $21.2 billion and $21.1 billion in revenue, respectively.

Analyzed by vendors, Samsung represents the market’s largest player with almost 23% market share in the third quarter of the year. Huawei ranked second with a 15% market share between July and September. Xiaomi follows with a 13.1% share.

The IDC data revealed Apple market share dropped significantly this year, falling from over 20% in the fourth quarter of 2019 to 11.7% in September.

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