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Global smartphone sales took sizable hit in Q1

The first quarter of 2020 brought a 20% decline in global smartphone sales. Analysts cited weak demand and pandemic-related disruptions as reasons for the drop.

Industry observers said a recent decline in global smartphone sales was caused by several factors, among them a mature enterprise mobility market and pandemic-related economic uncertainty.

Gartner reported this week that first-quarter 2020 global smartphone sales had dropped by 20.2% compared to the first quarter of 2019.

Anshul Gupta, senior research analyst at Gartner, said this was the worst-ever decline for the market. He attributed the decline to both supply chain disruptions and weaker demand -- a function, he said, of shelter-in-place restrictions and COVID-19-related economic uncertainty.

Anshul GuptaAnshul Gupta

"There has been a drop in business spending on smartphones, though the drop in demand from business users was not as much as from customers," he said.

Per Gartner, the top three phone manufacturers all saw a decline in the first quarter of 2020. Samsung, Huawei and Apple saw drops of 22.7%, 27.3% and 8.2%, respectively.

A mature market

Analyst opinion as to what caused the global smartphone sales decline varied, although they agreed that enterprise mobility challenges remain.

Holger MuellerHolger Mueller

Holger Mueller, vice president and principal analyst at Constellation Research, said companies have slowed the rate at which they are purchasing new phone hardware. He cited a mature market as the primary driver of that trend.

"Growth can only come from the consumer side," he said. "Workers who need a smartphone have one."

Enterprise investment in mobility has moved away from smartphones and tablets and toward security, he said, pointing to the uptick in interest of device management software.

Ray WangRay Wang

Ray Wang, founder and principal analyst at Constellation Research, said the variety of mobile devices has grown and enterprises are beginning to branch out.

"We expect [companies] to go with devices other than mobile phones," he said. "We see an increase of MiFi [portable broadband] cards [and] IoT devices … for mobility, which is cutting into the mobile market."

Eric KleinEric Klein

Independent analyst Eric Klein said some of the most notable new features included in high-end phones -- like cameras with ever-higher numbers of megapixels -- aren't driving enterprise purchasing decisions.

"In general, people are just holding onto their devices longer, because that need to upgrade isn't quite there yet," he said. "The features we're seeing, and the innovation we're seeing, have really plateaued."

The future of the market

Experts said the market should recover somewhat over the near term. Gupta said Gartner was forecasting lower smartphone sales in 2020 than in 2019, but sales should trend higher as the year progresses and pandemic-related issues fade.

"Demand should pick up in the [second half of 2020], and we project positive growth in 2021," he said.

Klein said that with little business reason to purchase high-end devices, manufacturers may look to pivot to lower-end phones.

"I think the majority of sales are going to be in the entry-level or mid-market space," he said.

In time, Klein said, new features like 5G capability or foldable displays may drive sales, but the main reason for users and businesses to upgrade in the short term will be to keep pace with the latest iOS and Android OS updates.

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