Smartphone shipments to rebound this quarter thanks to 5G push

Shipments will grow by 2.4% for the holiday quarter and then rise by 4.4% next year, projects IDC.

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Following a rough 2020 due to the coronavirus pandemic and resulting economic downturn, the smartphone industry is gearing up for a brighter future.

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(TechRepublic)

Smartphone shipments are estimated to grow by 2.4% this quarter compared with the fourth quarter of 2019, research firm IDC said on Wednesday. Shipments are then forecast to increase by 4.4% for all of 2021. Gazing further into the future, IDC expects a five-year compound annual growth rate (CAGR) of 1.3% through 2024.

The rebound will be triggered by a quick and healthy recovery of the supply chain along with a strong push of 5G smartphones by manufacturers and retailers. Seen as a driving force, 5G phones will capture almost 10% of all global smartphone shipments this year and reach as much as 29% in 2024, IDC projected.

The smartphone industry continues to push 5G as the latest industry standard, though concerns remain about the lack of high demand for such phones. One key to wooing more buyers will be cutting the cost of 5G phones so they’re close to or equal in price to 4G devices. The industry is working on this goal, and IDC anticipates that the average selling price for 5G phones will fall by 25% to $611 in 2020, and then to $453 in 2024.

“Despite concerns around weakness in 5G demand, smartphone volumes exceeded the forecast in 3Q20 and supply-side momentum headed into the holiday quarter and 2021 remains strong,” Ryan Reith, program VP with IDC’s Worldwide Mobile Device Trackers, said in a press release. “We’ve come to the conclusion that despite on-going lockdowns and economic concerns, consumers in many markets around the world have shifted their normal spending from things like travel, dining out, and general leisure to things like consumer electronics. Smartphones happen to be a benefactor of this transition.”

Most of the developed markets across the world, including North America, Western Europe, and Japan, should see year-over-year growth in smartphone shipments during the holiday quarter. These gains will be driven by hefty holiday promotions and special shopping days such as Cyber Monday.

The situation in China, however, looks more dour, according to IDC. The smartphone recovery in that country has been slower than expected due to 5G demand that’s been weaker than anticipated. All the major brands in China have transitioned most of their smartphones to 5G, so consumers there have fewer choices. As such, average selling prices for phones in China are forecast to grow this year by 11.4%. Those higher prices combined with the weaker demand will push down smartphone shipments in the region by 11.4% for 2020.

“Competitive pricing will play an integral role in shaping 5G development,” Sangeetika Srivastava, senior analyst with IDC’s Worldwide Mobile Device Trackers, said in a press release. “The COVID-19 crisis has influenced consumer behavior by tilting it toward more budget-friendly devices and narrowing the spend for essentials only. Aggressive promotions and more affordable 5G devices from major smartphone vendors are expected to partially offset the impact in the near term.”

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