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Smartphone shipments take a pummelling in Q1 2020

01 May 2020

Smartphone shipments have seen a sharp drop in worldwide as a result of the widespread economic implications of the COVID-19 pandemic, according to new data from Canalys.

Shipments fell 13% to 272 million units in Q1 2020, compared to the previous quarter.

Samsung retained its position at the apex of the worldwide market, despite shipments falling 17% to 60 million.

Huawei shipped 49 million units in Q1 2020, maintaining its second-place ranking despite seeing drops in overseas sales due to its US Entity List status.

Apple was the third-largest vendor, down 8% with 37 million shipments. Xiaomi, the best performer in the top five, managed 9% growth to hit 30 million units, while Vivo finished fifth with 24 million units, up 3%. 

With three of the top five vendors experiencing shipment declines by the quarter’s end, it clashes heavily with potential at the beginning of the quarter: the smartphone market heading into Q1 2020 was in remarkably good shape, having just recorded two consecutive quarters of growth. 

“But demand for new devices has been crushed,” says Canalys senior analyst Ben Stanton. 

“In February, when COVID-19 was centred on China, vendors were mainly concerned about how to build enough smartphones to meet global demand. 

“But in March, the situation flipped on its head. Smartphone manufacturing has now recovered, but as half the world entered lockdown, sales plummeted.” 

While many view smartphones as a necessity, others who may have bought a new smartphone as a luxury have delayed such a purchase due to the economic fallout from COVID-19.

Apple turned out to be one of the least affected vendors, due largely to the strong sales of the iPhone 11 it recorded in early in the quarter.

The launch of its mid-range iPhone SE, a cheaper alternative to its suite of high-end offerings, is seen as strategically vital.

Meanwhile, Huawei was forced to juggle the dual impact of coronavirus and its ongoing US Entity List problems, with Canalys reporting a drop of 35% in overseas shipments as it launched its first P series handset family without Google Mobile Services.

“The impact on smartphone channels is colossal,” says Canalys analyst Vincent Thielke. 

“Omni-channel retailers in strict lockdown regions, such as Europe, are doing their best to shift offline store stock into online distribution channels, but this is costly, and their capacity, in terms of warehousing, haulage and delivery, is not geared up for a full switch to online. 

“This also limits the brand-new devices they need to buy from vendors and distributors in the short term. 

“In these regions, it is the e-commerce channels that will have a clear advantage in the coming weeks.” 

But Canalys experts say the economic impact of the coronavirus in Q1 is only the tip of the iceberg.

“Most smartphone companies expect Q2 to represent the peak of the coronavirus’ impact,” says Stanton. 

“It will test the mettle of the industry, and some companies, especially offline retailers, will fail without government support. 

“Smartphone companies must adapt their strategies to mitigate the impact, as cashflow will be critical in the coming months,” continues Stanton.

“But if they cut back too much on product spend, marketing spend and new strategic initiatives, they risk losing agility and will lose ground to rivals once demand bounces back. It is vital to strike a balance.”