While mobile devices are proving essential tools for tracking and reporting Covid-19 infection and in keeping those in unusual isolation to keep in touch, buying new ones has been proved to be less important during the economic uncertainty caused by the pandemic..
In Q1 2020 spending declined by 11% to $69.4b and unit shipments by 12% to 246m; for the year sales and shipments were both down 4% to $330b and units to 1.2b.
This research post includes an update of my forecast to 2025 (see the first three Figures). I believe the market in 2020 will decline by 17% in both sales and unit shipments.
My Figure above shows annual market shipment data by the main types of product. While smart phone shipments grew rapidly to overtake basic phones in 2013, the number shipped has fallen every year since then.
2015 was the best year for sales of mobile devices reaching a peak of $418b – the inclusion of more computing in smart than basic phones driving up the market far beyond previous totals and creating fabulous success for its leaders – especially Apple, which has for some time been the world’s largest business – remarkably with annual revenues bigger than the GDP of all but the top seven countries globally.
At the end of Q1 2020 there was an installed base of 2.8b mobile devices in use worldwide (see my Figure above) – the equivalent average of one for 36% of the world population of 7.8b. Of course in reality there is a much greater proportion of the world without access to a mobile device, since many richer people have many more than just one.
Over time smart devices other than phones have been launched, but none ever look likely to overtake their success; tables and wearables have both peaked massively below the total for smart phones.
Although smart phones didn’t ship in higher volumes than basic ones, they far outstripped in terms of spending, which peaked in 2015. My Figure above shows the annual spending on mobile devices from 2005 with a forecast to 2025. I expect the declines to continue to 2025 and beyond.
What was a two horse has turned into a one and a half horse race as Samsung has failed to keep up with Apple over the last few quarters. Apple’s strategy of producing ever more sophisticated phones at higher prices is arguably the wrong one in the economic depression we’re going to go through for the next few years. There is now an opportunity for Samsung and the other (much smaller) leaders to grow with cheaper, but highly functional devices. There are still underpenetrated areas of the world where such products can succeed. Irrespective of the potential to grow revenues, smart devices will remain a vital link in the chain to limit the risk of infection for those countries with fully functional track and trace applications in place. The UK is not one of them – unfortunately for those of us living here.