Smartphone shipments dropped nearly 20% compared to the same time last year, according to International Data Corporation, making it the largest-ever quarterly decline. While analyst firm IDC notes that the data is preliminary, Nabila Popal, a research director with IDC’s Worldwide Tracker team, said that the 18.3% year-over-year (YOY) drop put a damper on prospects of economic recovery.
“Heavy sales and promotions during the quarter helped deplete existing inventory rather than drive shipment growth,” Popal notes in a release. “Even Apple, which thus far was seemingly immune, suffered a setback in its supply chain with unforeseen lockdowns at its key factories in China. What this holiday quarter tells us is that rising inflation and growing macro concerns continue to stunt consumer spending even more than expected and push out any possible recovery to the very end of 2023.”
Apple, which experienced the smallest drop, still saw a 14.9% YOY drop. Chinese manufacturer Xiaomi suffered the worst decline at 26.3% YOY. Samsung, which has the second-highest market share after Apple, dropped 15.6%.
“We have never seen shipments in the holiday quarter come in lower than the previous quarter. However, weakened demand and high inventory caused vendors to cut back drastically on shipments,” Popal adds.
This also highlights that smartphone sales did not necessarily drop during the quarter, but the lack of need for additional shipments denotes the overall decrease in consumer interest.
While the U.S. ended 2022 with the economy growing 2.9%, it seems consumers might not be ready to drop disposable income on expensive smartphones.
Anthony Scarsella, a fellow research director for IDC’s Worldwide Quarterly Mobile Phone Tracker, further emphasized the point.
“We continue to witness consumer demand dwindle as refresh rates climb past 40 months in most major markets,” he says.
Still, smartphones have (so far) been able to defy the rapid inflation people are seeing just about everywhere else, as CNBC reported. Whether that will continue or if the next models to come out will get a price jump remains to be seen.
“However,” Scarsella adds. “On a positive note, consumers may find even more generous trade-in offers and promotions continuing well into 2023 as the market will think of new methods to drive upgrades and sell more devices, specifically high-end models.”
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