Strategy Analytics: Global Smart Phone Market to Decline 25% in 2020
by David Kerr
Strategy Analytics updated smartphone shipment forecast numbers from the previous version published on March 2, 2020, given the latest available info and the escalating and global pandemic situation.
We further lower 2020 global and China smartphone shipment forecast numbers in this version, considering the rapid spread into more countries and the big impact on global economy.
The global smartphone market will ship -25% fewer smartphones than expected in 2020, due to the fear and “paralysis” caused by coronavirus. China smartphone shipments will be -16% less than expected in 2020. All regions will see an double digit annual decline rate this year. All industry stakeholders need to plan for a very soft and tough 2020.
No one wins. All OEMs will ship less smartphones this year, leading by Samsung, Apple, Huawei, OPPO, vivo and Xiaomi etc.
Strategy Analytics was one of the world’s first mobile research houses to spot the looming disaster of Covid-19, in January 2020.
The firm had previously reported that global smartphone shipments tumbled 38 percent year-on-year in the month of February, 2020. That was the biggest fall ever in the history of the worldwide smartphone market.
Linda Sui, Director at Strategy Analytics, said, “Global smartphone shipments tumbled a huge 38 percent annually from 99.2 million units in the month of February, 2019, to 61.8 million in February, 2020. Smartphone demand collapsed in Asia last month, due to the Covid-19 outbreak, and this dragged down shipments across the world. Some Asian factories were unable to manufacture smartphones, while many consumers were unable or unwilling to visit retail stores and buy new devices.”
Neil Mawston, Executive Director at Strategy Analytics, added, “February 2020 saw the biggest fall ever in the history of the worldwide smartphone market. Supply and demand of smartphones plunged in China, slumped across Asia, and slowed in the rest of the world. It is a period the smartphone industry will want to forget.”
Yiwen Wu, Senior Analyst at Strategy Analytics, added, “Despite tentative signs of recovery in China, we expect global smartphone shipments overall to remain weak throughout March, 2020. The coronavirus scare has spread to Europe, North America and elsewhere, and hundreds of millions of affluent consumers are in lockdown, unable or unwilling to shop for new devices. The smartphone industry will have to work harder than ever to lift sales in the coming weeks, such as online flash sales or generous discounts on bundling with hot products like smartwatches.”
About Strategy Analytics
Strategy Analytics is a global, independent research and consulting firm. The company is headquartered in Boston, USA, with offices in the UK, France, Germany, Japan, South Korea, Taiwan, India and China. Visit www.strategyanalytics.com for more information.
Linda Sui / +1 617 614 0735 / [email protected]
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A new report from Analysys Mason predicts that telecom revenue in developed markets will drop 3.4% year-on-year in 2020, although the sector is expected to hold up relatively well as COVID-19 keeps much of the world in lockdown.
The analyst firm had previously forecast growth of 0.7% in 2020 and 0.8% in 2021, but it said operators in developed economies are set to experience “lost” revenue of more than $40 billion each year. Growth of 0.8% is still predicted for 2021, “driven by pent-up demand in consumer broadband.”
The industry will return to growth in 2021, with a year-on-year revenue increase of 0.8% driven by pent-up demand in consumer broadband. This is a less pronounced rebound than for overall GDP. The sector will be 4% behind where we had previously expected it to be in 2021. Profits will be hit, but we do not expect the average EBITDA margin to fall by more than 2 percentage points. Operators will be able to manage their costs by deferring some capex, and scaling down opex where possible.
The consumer telecoms market is relatively resilient in an economic downturn. Consumer services, which account for the majority (68%) of telecoms revenue, tend to be more resilient than business telecoms services during economic downturns. The restrictions of movement in place in many countries and the emphasis on home working and entertainment means that fixed broadband services perform relatively well.
Business telecoms will be hit by the slowing economy. Large increases in unemployment, business closures and the overall decrease in economic activity will cause a sharp decline in business services revenue. Business mobile revenue, in particular, will struggle in 2020.
Capex will rebound quickly in 2021. Lockdowns will reduce capex and opex in 2020. Generally, capex will rebound quickly, but 5G capex recovery will be slower in Europe than elsewhere. The pandemic will reinforce and accelerate existing opex trends rather than introduce new ones. Profits will fall, but we do not expect EBITDA margins to fall by more than 2 percentage points.
Our impact assessment used an aggregate of data from 32 developed economies. The impact on telecoms markets will of course vary by country, as will the scale of the health and economic crisis. This document is an initial response from the Analysys Mason Research team. We are working on a more complete set of revisions to our market forecasts. At the time of writing, it is too early to make assumptions about the impact of the pandemic on emerging economies.
Telecom is regarded as a more resilient sector than most, performing ahead of general GDP trends. Analysys Mason expects telecom and pay-TV services to account for 2% of GDP in 2020, an increase from 1.9% in 2019. Consumer services account for 68% of telecom revenue, but the sector has been adversely affected by increases in unemployment, business closures and the overall decrease in economic activity.
Analysys Mason noted that operators should be able to limit the impact on profitability, with operator capex likely to fall in 2020. The pandemic will reinforce and accelerate existing downward opex trends rather than introduce new ones, the company added. “Profits will fall, but we do not expect overall EBITDA margins for the sector to decline by more than 2 percentage points,” it said.
Rupert Wood, research director at Analysys Mason and co-author of the report, said telecoms should stay healthier than almost any industry in this crisis.
“Telecoms should show some of the strongest post-crisis investment, in part because cashflow is more resilient in the telecoms sector than it is most others, and because some governments will emphasise 5G and fibre in stimulus packages,” Wood said in the report.
Certainly, it is difficult to predict what the full impact of COVID-19 will be once countries start to return to some sort of normality. Operators have been reporting high demand for broadband services, but shops have been closed, affecting sales, and opex is likely to decline. Analysys Mason certainly offers some reassurance to operators, predicting that telecom should stay healthier “than almost any industry” in this crisis, although the fates of individual operators will vary.
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