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Phone Shipments Lowest In A Decade While iOS Usage Peaks

The economic outlook and continuing inflation will see smartphone sales drop by more than previously predicted.

The gloomy news is contained in International Data Corporation quarterly mobile tracker for year 2023. IDC had previously forecast a 3.2 percent shipment drop for the year. That forecast has been further revised down to a 4.7 percent decline to 1.15 billion units, which IDC says is the lowest volume in a decade.

Dampening consumer demand and lengthening refresh cycles forced the further downward adjustment, it says.

“Although inventory levels have normalized, the majority of OEMs remain extremely cautious in their business planning for the short term, yet again kicking the recovery can down the road.” says Nabila Popal, research director with IDC’s Mobility and Consumer Device Trackers.

“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 strategise 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.”

Source: IDC

There is good news for Apple in this otherwise gloomy scenario. IDC expects Apple iOS shipments to grow 1.1 percent in 2023 to reach an all-time high share of 19.9 percent, as the iOS mobile operating system continues to remain more resilient to macro challenges than Android, which is forecast to decline 6.0 percent this year, it says.

IDC group vice president Ryan Reith says it speaks volumes “to once again see Apple going the opposite direction to the market”. “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 US$800+ segment declined 1.7 percent 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.”

IDC sees Android’s problems as contributing to the larger declines in some markets. “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 percent, 4.4 percent, and 6.2 percent respectively. The United States and Western Europe are forecast to decline 3.8 percent and 6.1 percent.”

The research body  does see a brighter future in 2024. “Despite the lower forecast for 2023, IDC expects the market to recover in 2024 with 4.5 percent 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 percent.”

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