Will Global Mobile Phone Sales Recovery Unlikely in 2021? 5G Handsets Should Be The Key

By Carrie Tsai,  Last Updated: January 07, 2021INDUSTRY

The impact of the coronavirus pandemic on the world was drastic, as it affected the globe in more ways than understandable. In the past 2020, damages caused by the pandemic had occurred day by day. Almost all businesses witnessed significant declines in profits during the year. These include the global mobile phone market that saw a dramatic drop in the mobile phone sales in 2020.

According to international market analysts, due to the global health issue, the mobile phone field was markedly hit in 2020, recording a significant decline in the worldwide mobile phone sales especially the worldwide smartphone shipments. Tech giants such as Samsung and Huawei have shown a considerable decline in their smartphone shipments in some specific regions.

But according to market research firms like IDC and DigiTimes Research, the global mobile phone market is expected to return to grow and could witness significant growth in 2021, after three consecutive years of drop between 2018 to 2020.

In this article, we'll make a detailed analysis of the worldwide mobile phone sales (mainly smartphone sales) by quarters to help you have a better understanding of it. Then we'll continue to explain why 2021 could see significant growth. Keep your reading.

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Global Mobile Phone Sales Were Estimated to Show "A Single Digit Decline" in 2020

Due to the impact of COVID-19, the overall 2020 was estimated to witness a significant decline in global mobile phone sales, according to a variety of market research firms.

Preliminary Predictions

In the middle of 2020, Gartner, the world's leading research and advisory company, forecasted that sales and shipments of total mobile phones worldwide could decline 14.6 percent in 2020, while smartphone sales would show a slightly slower drop of 13.7 percent to reach 1.3 billion units compared to 2019.

At the same period, according to the predictions from Worldwide Quarterly Mobile Phone Tracker of IDC (International Data Corporation), the total smartphone sales worldwide for 2020 were expected to achieve 1.2 billion units which would be an 11.9% decline year over year.

The preliminary estimations from the two research companies in the middle of 2020 both followed the global shipment results of the first quarter which experienced the largest year over year decline ever in mobile phone sales.

The Latest Estimation

Lately, following stronger than expected shipments in Q3 (third quarter) 2020 and an expected rebound during the holiday quarter (fourth quarter), the worldwide mobile phone sales in 2020 were estimated to witness a single-digit decline, while the smartphone shipments would experience a 6.4 % decline reaching 1.285 billion units, down from 1.373 billion in 2019, according to the IDC's Worldwide Quarterly Mobile Phone Tracker.

Note:

The disparity in the findings and predictions from different research and advisory firms could be attributed to the use of a variety of different methodologies with different surveyed numbers. However, all of them indicated a significant decline in global mobile phone sales in 2020.

Why Did Mobile Phone Sales Drop in 2020

The outbreak and spread of the novel COVID-19 around the world was the main reason that the sales of global mobile phones in 2020 had decreased, with the pandemic badly hitting both the supply side and the demand side.

According to IDC, the decline originated mainly from smartphones, with sales of these devices being estimated to drop 6.4% in 2020 to a total of 1.285 billion units.

In early 2020 when the pandemic broke out, the mobile phone market was hit hard by the shutdown of production at facilities that led to the halt of the manufacturing and supply of smartphones and their critical components. This caused the supply-side crisis in the earlier stage, leading to the substantial decline of the global mobile phone shipments in early 2020.

However, with the spread of the pandemic around the world, the pandemic turned to badly hit consumer spending, which caused the crisis of the smartphone market on the demand side. As Sangeetika Srivastava, senior research analyst with IDC's Worldwide Mobile Device Trackers stated, due to nationwide lockdowns, rising unemployment, and job uncertainties caused by the pandemic, consumers were pushed to cautiously reprioritize their spending towards essential & affordable items only, directly affecting the sales of mobile phones in the short run.

In fact, the decline of the global mobile phone sales in 2020 was partly attributed to the launch delays of some new phones of some smartphone brands. A typical example was Apple's delay in shipping the iPhone 12 in the fourth quarter of 2020.

Due to the impact of the pandemic, Apple had to put off the shipping and delivery time of the iPhone 12 to the fourth quarter of 2020, which was always in the middle or late September. This, of course, caused a drop in Apple's mobile phone sales in the third quarter of 2020.

Q1 2020 Mobile Phone Sales: Showed "Biggest Decline Ever"

According to preliminary data from the IDC's Worldwide Quarterly Mobile Phone Tracker, global mobile phone sales experienced the largest year-over-year decline ever in the first quarter of 2020, with smartphone shipments plummeting 11.7% reaching a total of 275.8 million units. Moreover, based on the data from Counterpoint Research, global feature phone shipments declined 12% annually reaching 83.5 million units in Q1 2020.

This was the first time since the first quarter of 2014 that the smartphone shipments had dropped under 300 million units in a quarter. However, the decline wasn't surprising as the pandemic led to the peak of production shutdowns in China, which had a huge impact on the overall mobile phone market.

* Geographic Findings

From a geographic perspective, China was the region that experienced the biggest decline in its mobile phone sales of 20.3%. As the quarter progressed, due to the global dependency on China's smartphone supply chain, other regions such as the United States and Western Europe across the globe also suffered substantial declines (the United States declined by 16.1% while Western Europe 18.3%).

* Smartphone Market Share

At the end of the first quarter, while the supply chain in China started to recover, due to complete nationwide lockdowns, the demand impact started to appear and depressed consumer demand, which further contributed to the decline in the sales of the mobile phone worldwide.

This eclipse constituted a huge impact on all the major smartphone OEMs around the world, with nine of the top-10 ones experiencing sales and shipments declines in Q1 2020.

For example, based on one report from IDC, Samsung, which repossessed its first place of the volume of the worldwide shipment with 21.1% share, still suffered a drastic drop in shipments of 18.9% year over year in Q1 2020. Huawei, which took the number two position with a 17.8% share, also witnessed a significant year over year decline in shipments of 17.1% in Q1 2020.

Q2 2020 Mobile Phone Sales: Continued to See Significant Drop

According to IDC's Worldwide Quarterly Mobile Phone Tracker, global mobile phone sales continued to witness a significant decline in the second quarter of 2020, with smartphone shipments falling 16.6% YoY reaching a total of 276.4 million units compared to the total of 331.7 million units in Q2 2019.

This plunge also made it the biggest year over year decline ever and was much greater than the decline in the first quarter of 2020. Nevertheless, it came with no surprise since the second quarter witnessed the peak of lockdowns all over the world, which greatly caused a lack of demand on behalf of consumers.

* Geographic Findings

From a geographic standpoint, in the second quarter of 2020, due to the impact of the COVID-19 pandemic, all the major regions around the world showed drastic declines in their mobile phone sales, with smartphone shipments of Asia, Western Europe, and the United States dropping 31.9%, 14.8%, and 12.6% respectively.

China, however, showed slightly better with a decrease of 10.3% due to a faster than expected recovery in its market and supply chain.

* Smartphone Market Share

When it comes to the top 5 best-selling smartphone brands, in the second quarter of 2020, except for Apple, all the other top 5 smartphone brands witnessed declines in their smartphone shipments, according to a previous report from IDC.

Huawei reached the top position of shipments with a 20% share but still showed a decline of 5.1% in the shipments. Samsung took the number two place with 19.5% share but had a significant decline of 28.9% year over year. Xiaomi and Oppo also suffered shipment declines in the second quarter.

Apple, however, showed a growth of 11.2% year over year in its smartphone shipments with a 13.5% shipment share. This was primarily attributed to the continued success of its iPhone 11 series and 2020 iPhone SE that focused on the lower-priced segment.

Q3 2020 Mobile Phone Sales: Showed Signs of Improvement

The worldwide mobile phone market especially the smartphone market showed signs of improvement in the third quarter of 2020, with stronger than expected shipment results.

Based on the data from IDC's Worldwide Quarterly Mobile phone Tracker, the global smartphone shipments achieved a total of 354.7 million units during the third quarter of 2020 compared to the 358.5 million units in the third quarter of 2019, leading to a declined of just 1.3%.

Although the smartphone market still witnessed a decline, the results were much stronger than IDC's previous estimation of a 9% YoY fall-off. This primarily resulted from the re-opening of global economies as nationwide lockdown restrictions were gradually lifted.

Besides, some key emerging markets such as Africa and India that achieved faster than expected returning to growth also drove the shipments improvements in the Q3 2020.

According to Gartner analysts, global mobile phone sales reached a total of 401 million units, resulting in an 8.7% year over year decline. While there is a disparity in the data from IDC and Gartner, their data both witnessed the improvement of mobile phone sales in the third quarter of 2020.

Geographical Findings

Regionally, the major regions including Asia/Pacific, Central & Eastern Europe, and Latin America all showed significant year over year growth in the third quarter. Emerging markets, such as Africa, Brazil, Indonesia, and Russia, witnessed a faster than expected rebound. The United States and Western Europe, however, continued to suffer year over year decline.

Smartphone Market Share

According to IDC, the global smartphone landscape changed in the Q3 2020, with Samsung regaining the top position with 22.7% share, Huawei in second place with 14.7%, Xiaomi in the third position, Apple in the fourth, and Oppo in the fifth.

Among the top 5 smartphone brands, Samsung, Xiaomi, and Oppo experienced year over year smartphone sales growth in the third quarter (Samsung/2.9%, Xiaomi/42%, Oppo/4.2%). Apple and Huawei, however, showed a drop in sales. Apple's slight decline is mainly led by its delay in the shipping and delivery of the iPhone 12. The decline in Huawei is mainly due to the continued decline in global markets impacted by the U.S. sanctions.

Q4 2020 Mobile Phone Sales: Was Estimated to Return to Growth

While the global health issue has badly hit mobile phone sales, according to IDC, the smartphone market was estimated to return to growth during the fourth quarter of 2020. Following a stronger than expected third quarter, smartphone shipments were expected to grow 2.4% from the fourth quarter of 2019.

The reason why the sales of mobile phones worldwide were forecast to recover in Q4 2020 mainly lied in the growing demand for smartphones during the crucial holiday season as well as the release of more new 5G models. For instance, Apple lured customers back in late 2020 as it launched the iPhone 12 lineup that supports 5G.

Geographic Findings

Regionally, due to weaker than expected demand for 5G and the growth in average selling prices (ASPs), China experienced a slower than expected recovery of mobile phone sales in late 2020. North America, Western Europe, and Japan, however, were all estimated to witness YoY growth in the fourth quarter of 2020, which was mainly stimulated by large seasonal promotions and shopping days.

Worldwide Mobile Phone Sales To Witness Growth in 2021

According to a new report from DigiTimes Research, global mobile phone sales could bounce back to post healthy growth in 2021, with the smartphone market is forecast to see double-digit growth, after three consecutive years of decline between 2018 to 2020.

As IDC forecasts, smartphone sales are estimated to grow 4.4% in the first quarter of 2021 and to grow each year through 2024 with a 5-year compound annual growth rate of 1.3%.

The predictions are all based on the results that almost 10% of smartphone sales in 2020 were accounted for 5G adoption. That said, 5G smartphones will play a crucial role in the recovery of global mobile phone sales in 2021. As IDC estimates, the growing trend of the 5G smartphones rate would continue in the coming years before finally achieving 29-30% in 2024.

In 2021, 5G will play an important role in bringing back the mobile phone market on its feet by accelerating the 5G adoption, pushing the transition towards the 5G network as well as making the 5G handsets more affordable.

The 5G Smartphone Market Is Growing Rapidly

With the development of 5G adoption in infrastructure and commercial operations in the major developed regions, the 5G smartphone market will continue to grow in 2021 with more and more new 5G phones to be manufactured and released worldwide.

Technically, 5G could be the major driving force for global mobile phone sales in 2021 and even in the coming years, which could lure the consumers back to purchase the novel and latest smartphone handsets.

5G Handsets Will Become More Affordable

A key element to bring customers back to the smartphone market is to push them to switch towards buying the latest 5G phones by reducing the entry price-point of these 5G handsets.

Since the pandemic has made consumers shift their spending towards more budget-friendly gadgets, lowering the ASPs of the 5G handsets can make the handsets become more affordable and competitive, which can push more customers to buy these 5G phones and in turn can increase the global mobile phone sales in 2021.

Competitive pricing is being achieved by lowering the cost of 5G components. Smartphone chip makers such as Qualcomm and MediaTek have been developing some mid-range and entry-level 5G cellular modem chipsets, which can help OEMs to produce more budget-friendly 5G smartphones.

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More Carriers and Regions Are Switching to 5G Network

Another important factor to shape the development of the 5G smartphone market which can contribute to the growth of the global mobile phone sales in 2021 is the transition towards commercial 5G networks. Thankfully, more and more carriers and regions are in motion to the switch towards 5G network technology, which is rapidly stimulating the demand for phones that support 5G.

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Final Words

Due to the impact of the global health issue, mobile phone sales worldwide saw a significant decline in 2020. After suffering the biggest ever expected decline in the first half of 2020, overall 2020 was forecast to record a double-digit drop in the global smartphone shipments, according to the previous predictions.

However, following a stronger than expected third quarter and the holiday quarter that was expected to recover, the global smartphone sales were estimated to see a single-digit decline in 2020. Also, with the rapid development of the 5G smartphone market and the acceleration of 5G adoption, mobile phone shipments could witness significant growth in 2021.