The mobile phone industry is experiencing the worst moment of the last decade. Despite its great popularity, smartphone sales have been declining for almost five years (except for a rebound in 2021).
This week the spirits of the industry have been even lower after knowing the forecast that the consulting company IDC has published about 2023. According to their calculations, the drop in sales for the whole year will be 4.7%, and not 3.2%, as he had predicted at the beginning of the year. That means manufacturers will deliver 1.15 billion units, the lowest volume since 2013.
The reasons behind this decline are several. "The market is very cautious in the face of doubts about the recovery of the economy on a global scale", says IDC analyst Nabila Popal. According to its data, all regions will register declines, especially Western Europe (-6.1%) and Latin America (-6.2%), while in the large markets of China and the United States the reduction will be 3 .6% and 3.8%, respectively.
Fabio Capocchi, director general of the Motorola company in Europe, the Middle East and Africa, has the same perception as the consultancy. "The general increase in prices has slowed down the purchase of telephones because the consumer has had less purchasing power. In addition, since the end of the pandemic we see that the consumer prioritizes spending in the leisure sector before the electronics sector", he says.
In recent years, another problem that threatens the industry is the absence of significant innovations in the latest generation phones. According to Capocchi, the problem is not so much in technological advances as in the possibilities of use. "In many regions, 5G has not yet been deployed, and this means that many new developments do not make sense. That's why it doesn't pay for the customer to buy a new mobile phone", he says. In addition, IDC says that the consumer is waiting longer and longer to renew the phone, and this also lowers the growth expectations of the industry.
Among the strategies to attract consumers, IDC recommends that distributors launch incentives and make payments more flexible. However, Capocchi assures that prices will not drop. "Phones are increasingly incorporating more sophisticated features and, for this reason, it is logical that final prices go up if production costs also go up," he points out. As a result, the manager predicts a polarization of the market. "The consumer will opt for the two extremes: either they will look for a simple and cheap mobile phone, of less than 200 euros, or they will save up to buy an expensive mobile phone, which has all kinds of functions and which can be purchased for a price from 500 euros".
In fact, IDC data shows that the ranges most affected by the declines are precisely the intermediate and low ones. Just look at IDC's forecasts for sales of phones running Apple's iOS system, with iPhones at the top end. While sales of phones operating with the Android system will fall by 6%, mobiles operating with an iOS system will grow by 1%.
Looking ahead to 2024, IDC is confident that the industry will recover the evolution of growth and increase sales by 4.5%. Capocchi points out that he will not achieve this earlier, because there will still be too much uncertainty in the market in the last months of the year.
