Like clockwork, many of us would expect shipment of smartphones to be at its peak towards the end of the year. But this is not the case, at least according to a report published by International Data Corporation (IDC), a market research firm.
The research firm has highlighted that the shipment of smartphones across the globe took a major hit in the fourth quarter of 2022 scaling down 18.3%. It is usually during this period that most people engage in a lot of shopping activities However, only 300.3 million units were shipped during 2022’s fourth quarter marking the “largest-ever decline in a single quarter”.
The significantly low shipments made in the fourth quarter of 2022 contributed to an 11.3% decline for the year. In retrospect, the total number of Worldwide smartphone shipments made in 2022 stands at 1.21 billion units per the report which is the lowest annual shipment total ever reported since 2013.
IDC further details that “dampened consumer demand, inflation, and economic uncertainties” are the main causes of why companies have experienced this downward trajectory in terms of smartphone shipping. In turn, the “tough close to the year puts the 2.8% recovery expected for 2023 in serious jeopardy with heavy downward risk to the forecast.”
Nabila Popal, IDC’s research director added:
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.
Per IDC’s findings, Apple ranked as the top smartphone having made 72.3 million shipments in the fourth quarter of last year which translates to a 24.1% market share and 14.9% year on year change. This is despite announcing its new flagship lineup of iPhones, the iPhone 14 which comes with good repairability.
Apple was followed by Samsung which made 58.2 million units and saw a 15.6% year on year decline. “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.”
The report highlights that both heavy sales, as well as promotions, played a significant role in reducing the smartphone inventory at the vendors’ stores. That said, moving forward vendors are likely to tread lightly in terms of shipments in a bid to enhance efficiency and effectiveness, while still running a profitable venture.
With the rise of inflation, people’s spending habits are changing and a lot of caution comes into play which also impacts the vendors’ setup and inventory at the store. “However, 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.”
On that note, while Microsoft was able to increase its overall revenue income by 2% year over year courtesy of growth in its cloud business, hardware and Windows business did however take a major hit translating to a 39% decline.