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Smartphone sales declining.

Worldwide smartphone sales lowest in a decade but second hand markets booming

Worldwide sales of smartphones will this year be the lowest in a decade. The explanations are weaker economic outlooks and that people hold on to their phones for longer in difficult times. The second hand markets have also grown with double digits.  A recovery for the smartphone market is forecasted for 2024.

International Data Corporation (IDC) expects shipments 2023 to be down 4.7% to 1.15 billion units,  down from its earlier forecast of a decline of 3.2%. That would be the second year in a row with a decline for smartphone sales. 

Despite the lower forecast for 2023, IDC expects the market to recover in 2024 with 4.5% year-over-year growth followed by growth in the low single digits through the remainder of the forecast, resulting in a five-year compound annual growth rate of 1.7%.

Market giants are doing what they can to stimulate markets. Apple will have its annual iPhone introduction of September 12 and Google will present its next Pixel phone on October 4

“Although inventory levels have normalized, the majority of OEMs (original equipment manufacturers) remain extremely cautious in their business planning for the short term, yet again kicking the recovery can down the road.” says  Nabila Popal, IDC research director.

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“While the market will undoubtedly return to growth, longer refresh cycles are tapering the rate of growth over the long run, preventing the total available market from reaching pre-Covid levels.” 

“In such an environment, it is crucial for vendors to strategize to increase their value and focus on channel incentives and promotions to attract consumers and bring them home by providing flexible financing options.”

“As consumers hold onto their devices longer, the bright side is they are willing to pay more, which will in turn help average selling prices to rise for the fourth consecutive year in 2023.”

From an operating systems perspective, IDC expects iOS shipments to grow 1.1% in 2023 to reach an all-time high share of 19.9% as iOS continues to remain more resilient to macro challenges than Android, which is forecast to decline 6.0% this year. 

While all regions are forecast to decline, China, Asia/Pacific (excluding Japan and China), and Latin America – focus regions for most Android players – will contribute the most to the decline with shipments down 3.6%, 4.4%, and 6.2% respectively. The United States and Western Europe are forecast to decline 3.8% and 6.1%, IDC says.

“During a time when the entire market is struggling, it speaks volumes to once again see Apple going the opposite direction,” says  Ryan Reith, IDC group vice president.. “Attractive trade-in offers and on-going expansion of ‘buy now, pay later’ programs have helped the premium segment of the market more than anything, especially in more developed markets.” 

“In 2022, the $800+ segment declined 1.7% while the rest of the market (all phones worldwide) dropped by double digits. As a result, the used smartphone market has been growing by double digits. This is largely driven by a healthy inventory of very good ‘used’ phones.”

Read Also:  PC sales forecasted to decline for second consecutive year

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