Omdia: Global smartphone shipments plunge in Q1-2020; Mobile communications revenue to drop 4.1% in 2020

Omdia reported today that global smartphone shipments dropped by 16.8 percent in the first quarter of 2020 as vendors struggled to manage coronavirus-driven production shutdowns, product-launch delays and depressed consumer demand.

Shipments in the first quarter fell to 274.4 million units, down from 329.9 million during the same period in 2019, according to the Omdia Smartphone Intelligence Service. This plunge impacted all the major smartphone brands, with nine of the top-10 OEMs suffering shipment declines compared to the first quarter of 2019.

Editor’s Opinion:  The decline will be much greater in Q2-2020 due to all the lockdowns all over the world.  Who needs a smartphone when you’re confined to your residence?  I hardly use mine at all as I prefer a laptop or tablet when at home.

“Early in the first quarter, the smartphone market was sent reeling by the shutdown of production at facilities in China, which halted the manufacturing of phones and their key components,” said Jusy Hong, smartphone research and analysis director at Omdia. “While concerns about this situation have been alleviated, the smartphone brands also faced new challenges, including disrupted launch schedules for new phones. Even more troubling for smartphone makers is a major decline in global demand due to government lockdown mandates.”

Despite expected rebounds in some countries, the rest of the year is expected to be challenging for smartphone OEMs. Omdia forecasts global smartphone shipments will decline to 1.20 billion units this year, down 13.1 percent from 1.39 billion in 2019.

OEMs feel the pain in the first quarter
Almost across the board, smartphone OEMs faced significant declines in unit shipments compared to the first quarter of 2019.

Samsung retained the top position, with 58.9 million units shipped during the first quarter—a 17 percent decline compared to the first quarter of 2019. Second-ranked Huawei saw its shipments decline by more than 17 percent, to 49 million units, down from 59.1 million in the first quarter of 2019.

Apple, in third place, saw shipments decline to 38.5 million units, down from 43.8 million a year earlier. The 12.0 percent decline comes during the first quarter, historically the weakest period of the year for Apple.

Rounding out the Top 5 are Xiaomi and OPPO. Out of the Top 10, Xiaomi experienced the second least severe decline in the quarter, of 8.2 percent. Only Tecno, in 10th place, attained a lower decrease better with a 7.6 percent year-over-year decline. Xiaomi shipped 25.3 million units in the first quarter, compared to 27.5 million units in 2019. OPPO, on the other hand, suffered a 19.2 percent decline, with shipments falling to 20.4 million units, down from 25.2 million a year earlier.


Realme bucks the downturn
The rest of the Top 10 is made up of vivo, Realme, Motorola, LG, and Tecno. The bright spot here is Realme, which achieved year-over-year growth based on its continued success in India. seventh-ranked Realme was the only top-10 OEM to attain growth during the quarter, with shipments totaling 6.1 million units, up 88 percent from 3.2 million during the first quarter of 2019.

For the others in this group, the first quarter brought significant challenges. Looking at vivo, company shipments declined 19.9 percent, falling from 24.3 million units last year to 19.5 million this year. Motorola, in eighth place, saw shipments decline 35.4 percent to 5.5 million units. While Motorola finally launched its updated RAZR, featuring a foldable display, the publicity surrounding that high-profile device was not enough to support the overall performance of Motorola’s product portfolio.

With or without the impact of the pandemic, LG continues to struggle with its mobile handset division. Shipments declined to 5.4 million units, down from 8.6 million units a year ago—a drop of 37.4 percent. Rounding out the top 10 is Tecno, which saw units decline by a relatively modest 7.6 percent, declining from 3.8 million units last year to 3.5 million units in the first quarter.

First-half struggles
“The smartphone market will face major struggles in the first half of 2020 as different countries experience the initial shock and recovery periods at different times. That’s why OEMs are more afraid of second-quarter sales results,” Hong said. “However, Omdia does expect the smartphone market to start to recover in some countries and regions in the second half of the year.”

Early in the first quarter, the most severe impact on the smartphone market was the shutdown of production and supply chain facilities in China. However, fears over a prolonged closure of essential production, supply chain and logistics operations in China have been alleviated, as signs point to economic activity ramping up quickly in the country.

Smartphone makers in the first quarter also had their product-launch plans disrupted by the cancellation of the Mobile World Congress event in Barcelona, Spain, where many companies had planned to roll out new products.

“Because of the cancellation of the Mobile World Congress, and uncertainty in the supply chain, original product schedules had to be re-evaluated,” said Gerrit Schneemann, senior analyst, smartphones, at Omdia. “However, OEMs seem to have found their footing on how to address new device launches going forward.”

Demand disaster
The impact of the outbreak on the smartphone business has now shifted almost completely to the demand side of the equation.

“Although handsets can be produced at nearly normal levels, the markets for these handsets are mostly in some state of shutdown,” Hong said. “Some countries have made more progress in dealing with the outbreak, while others are still in the midst of fighting the pandemic, and still others won’t feel the full effects of the pandemic until later in the year.”

In Europe, where some countries have been under strict lockdown rules for some time, initial efforts have been made to ease restrictions. Similarly, South Korea has taken steps to open up. In other countries, like in some parts of the United States, only the last few weeks of the quarter were impacted by broad stay-at-home orders, while consumer behavior had remained unrestricted until then.


Earlier today, Omdia issued this press release:

Coronavirus crisis deals a $51 billion blow to the global mobile communications industry outlook     Mobile revenue to drop 4.1 percent worldwide; regional impact to vary

LONDON (April 30, 2020) — Mobile services represent critical infrastructure that’s allowing people to stay connected during the coronavirus crisis. However, that doesn’t mean these services are immune to the pandemic’s economic shock, with 2020 market revenue now expected to come in about $51 billion short of the previous forecast, according to Omdia.

Worldwide mobile communications services market revenue will total $749.7 billion this year, down from the prior forecast of $800.3 billion. This compares to $781.5 billion in 2019. Annual revenue will fall by 4.1 percent this year, with the decline amounting to $31.8 billion.

“Mobile phone companies around the world are experiencing usage spikes as more countries encourage or enforce social distancing and work-from-home rules to slow the spread of the COVID-19,” said Mike Roberts, research director at Omdia. “However, the spikes aren’t enough to overcome the impact of the pandemic on consumer behavior. These rules are having a dramatic impact on various regions of the world, halting new subscriptions and upgrades in the United States, while slashing revenue for operators in Europe.”


Consumer uptake of 5G will be slower than previously forecasted, due to the economic situation as well as the possibility of delays in 5G network deployment and in the availability of 5G devices. Omdia will release more details on 5G shortly.

In the Americas, mobile service revenue is set to decline by 3.7 percent to $237 billion in 2020. Most of that loss will come in the United States as both net additions and upgrades to higher data plans slow or stop altogether.

Europe will suffer the largest impact of the crisis, with mobile service revenue falling 9.1 percent to $131 billion, representing a downgrade of 9.3 percent compared to Omdia’s previous forecast. This decline will be driven by significant reductions in mobile prepaid revenue and a dramatic drop in inbound roaming revenue.

Vodafone UK, for example, said mobile Internet traffic has increased by 30 percent and mobile voice traffic by 42 percent due to the crisis. At the same time, mobile service providers are seeing new business grind to a halt as retail stores close and consumers stop buying new phones as job losses mount. One example of this widespread trend is AT&T, which is closing 40 percent of its retail stores in the United States.

The Middle East and Africa will see a 3.9 percent decline in mobile service revenues to $84 billion, representing a downgrade of  8.4 percent from Omdia’s previous forecast. Major factors for the decline include the impact of low oil prices on Gulf economies and the fragility of economies and health care systems in parts of Africa.

While the impact of the coronavirus on the mobile market is significant in every region, it pales in comparison to the impact the crisis is having on sectors such as travel, tourism, hospitality and retail, which have suffered partial or complete shutdowns. The International Monetary Fund now expects the global economy to contract by 3 percent in 2020, according to its latest World Economic Outlook, which was released earlier this month.

“The massive contraction will clearly impact every segment of the economy, including mobile, but how long it will last in each country and region is virtually impossible to predict,” Roberts said. “One bright spot is that in China, the first country hit by the pandemic, there are signs that the mobile market and broader economy is starting to come back to life.”

Given the high level of economic and commercial uncertainty created by the COVID-19 pandemic, Omdia will be producing a full revision of its global mobile forecasts next quarter.

About Omdia
Omdia is a global technology research powerhouse, established following the merger of the research division of Informa Tech (Ovum, Heavy Reading and Tractica) and the acquired IHS Markit technology research portfolio*.

We combine the expertise of over 400 analysts across the entire technology spectrum, analyzing 150 markets publishing 3,000 research solutions, reaching over 14,000 subscribers, and covering thousands of technology, media & telecommunications companies.

Strand Consulting: Why the Quality of Mobile Networks Differs

Many believe that a mobile application can measure the quality of the mobile and fixt network. Strand Consult’s new report “The Moment of Truth – Why the Quality of Mobile Networks Differs” describes the many factors that affect the network’s capacity and coverage and the user’s experience.

It assesses and compares the mobile apps which claim to measure network quality at a time when mobile networks are evolving from 2G, 3G and 4G to a combination of 4G and 5G. The next generation mobile networks are more complex and use technologies such as carrier aggregation, spectrum management, and multiple input/multiple output (MIMO). These innovations change how a network is built and operated and therefore also how the networks performance can be measured.

As each cellular network is constructed differently, making comparisons across operators is difficult. The simple measurements collected and presented on a glossy app and the user’s experience will also differ considerably for various reasons.

While the effort to bring facts and evidence to policy and regulatory discussions is welcome, network measurement data from mobile apps is increasingly presented without adequate scientific and methodological background. Users of the various apps are perplexed about wildly differing measurements reported by the individual app even if the tests are run at the same time, in the same location and on the same device.

The same data may be used to praise a mobile operator one day but then to rank it in the bottom the next. Moreover, the performance of mobile operators varies widely across different apps. Vodafone, Orange, EE, Telia, Telenor, AT&T, Verizon, and Telefonica, and others have appeared either at the top or bottom of any one app report. This says more about the design of the app than the quality of any one network.

The report “The Moment of Truth – Why the Quality of Mobile Networks Differs” reviews the mobile apps and provides a common framework to judge their usefulness and applicability by better understanding they inner workings, potential and pitfalls.

Strand Consult’s report “The Moment of Truth – Why the Quality of Mobile Networks Differs” is offered either with or without a workshop. The report focuses on the many factors that influence the experience of network coverage, quality, and the capacity.

The report’s chapters include:

  • A review of the leading mobile network measurement apps. We describe and categorize how and which data the apps collect. We assess the marketing strategies of the apps in what they purport to measure versus the scientific state of the art of what can be measured.
  • An analysis of how the app interacts with the mobile phone and how the phone’s specifications can influence resulting network measurement. International examples are provided to demonstrate how wildly measurements can vary.
  • A review of the question of network quality in light of the relevant market factors. Network performance is mapped against factors such as gross domestic product (GDP), churn, ARPU, and so on.
  • An examination of the conditions for infrastructure development in the relevant country and different policies used by government actors for network deployment. It details how rollout policies vary considerably and compares these results to reported network quality, coverage, and capacity.
  • The report also examines measurement tools either mandated or preferred by telecom regulatory policies. The report examines the scientific basis for these tools and whether they can measure what they claim.
  • Viewpoints and analysis which is helpful to improve the discussion about the quality of mobile coverage and its measurement and can help to increase the scientific understanding of policymakers, press, and the public.

Strand Consult’s new report “The Moment of Truth – Why the Quality of Mobile Networks Differs” provides valuable scientific, policy, and market background to bring context to the growing popularity of network quality measurement by mobile apps. The report will help policymakers focus on the facts and other important scientific information when deciding how to measure network quality and what role apps should have in policy.

The report demonstrates that relying on mobile apps to measure network quality provides an incomplete and inaccurate picture of the network. It is based in part upon 7 years of experience of working with mobile coverage policy, regulatory issues and mobile measurement app initiatives across several countries.

If you want to know more, please request more information about our unique new report.

Juniper Research: Cellco revenues to fall by $50B over next 5 years

Juniper Research has identified a series of new revenue opportunities and cost savings which collectively could enable operators to sustain, or even increase, margins.  Here are two of them:

The study claimed that the opportunities afforded by the IoT (Internet of Things) should enable operators to increase revenues from that sector by over $8 billion by 2022. It also argued that A2P messaging adoption across a number of key verticals including marketing, banking and healthcare should result in a similar uplift in revenues from that source.

Meanwhile, the report highlighted a series of measures by which costs could be reduced, including network virtualization, the implementation of next-generation firewalls and improving customer relationship management.

The research also assessed the extent to which 15 leading operators across Europe and North America were in a position to implement innovation strategies. The Juniper Operator Innovation Index identified 2 main players, AT&T and BT, as “Leaders” in this space.

According to research author Dr Windsor Holden, “AT&T is a market leader in terms of IoT implementations and adoptions, while both AT&T and BT are at the forefront of research into (and deployment of) virtualizsation of the network.”

For more insights, download Juniper’s complimentary whitepaper, ‘Mobile Operators ~ 5 Mission Critical Strategies to Future-proof Your Business.’


Intriguing claim:  Cellco IoT revenue grows fast, but not fast enough

Operators’ enterprise reporting is poor and reporting on IoT is even worse. We are aware of only four operators (Telstra, Telefónica, Verizon and Vodafone) that regularly report IoT revenue, and only 11 that report connection numbers. For a segment that is supposedly key to future growth, operators are remarkably shy about providing progress updates.

The operators that do provide information are, by definition, atypical. That they are providing data at all probably skews the sample. We can, however, still glean some useful insights by exploring the data that is available.