Natural selection dictates the survival of the strongest and most adaptable, and this is something that can also be applied to the current bear market for smartphonesas leading analysts warn.
All brands are suffering from the decline in mobile sales. If an ecosystem –the mobile market– begins to lack food –sales–, what would happen?
In this context, coinciding with Darwin’s theories, There are manufacturers that aim to benefit from being bigger and stronger (Apple and Samsung) or for having adapted better and found the loophole to grow (like Honor and Google).
But this is not The Lion King or an animal documentary, it’s the technology market, so let me explain it to you with data:
If the market falls everyone suffers, even Apple
International mobile sales have been falling quarter after quarter after the pandemic. In all of last year, 1,193 million smartphones were sold, 12% less than in 2021, according to Canalys. And the trend remains in the first quarter of 2023 (-13%).
At an economic level it is evident that selling less is not good for any company. Samsung, leader in units, has sold 18% fewer mobiles in the first 3 months of the year. Last year it sold 12.5 million more smartphones between January and March.
It is the same thing that has happened to most brands on the market: Xiaomi, with 22% less sales; OPPO, which falls 8%; and I live, whose units drop 17%.
Fewer mobiles are sold, but not than you think
Apple is the only one that is saved from this trend, although its increase is practically flat: 3% more iPhones sold in the first quarter and a growth of 1% over the past year.
However, this does not mean that the American giant is not also suffering from the current bear market. The iPhone is the product that contributes the most revenue to Apple – it is usually close to 60% – and it fell 8.2% in turnover between October and December 2022, largely due to the shortage of inventory in the Christmas campaign.
The situation is a “unique opportunity” for some brands, analysts say
Tik Cook, CEO of Apple (left), and Jong-Hee Han, CEO of Samsung Device eXperience (right).
Although the drop in sales itself is negative, it may be just what the big manufacturers need to turn the market around and distance themselves from the brands that have challenged their leadership in recent years, especially the Chinese.
“For many brands, the current market downturn is a unique opportunity to gain market share and consolidate long-term positions.“, as Runar Bjørhovde, an analyst at the Canalys firm, has assured.
Despite the fact that it seems contradictory, the current market trend means that manufacturers that sell higher-end mobiles are the ones who are noticing the drop the least, because sales of $800 smartphones remain the same or grow.
“The share of premium smartphones (over $800) has passed from 16% two years ago (first quarter of 2021) to 22% in the first quarter of 2023. And in pure volume, while the market as a whole has decreased by 22%, the volume of the premium segment has grown by 10%,” says Nabila Popal, research director at IDC, based on data from the Mobile Phone Tracker of the mobile phone company. analysis.
“These sales drops hurt low-end mobiles and benefit high-end onesboth due to the transfer of the market towards this type of mobile with a greater market share and due to the lower sensitivity to the crisis and to prices”, according to Esteve Almirall, professor in the Department of Operations, Innovation and Data Sciences at Esade.
Apple and Samsung, big beneficiaries
Among the brands with a strong position and that can take advantage of that muscle to gain share despite the drop in sales, the 2 giants that lead the market: Samsung and Apple.
The strategy of prioritizing high-end models and increasingly higher prices is one of the reasons that Samsung and Apple are better coping with the current context.
“Apple and Samsung are prioritizing models that help bring more revenue: both look towards more expensive devicesconnected devices such as smartwatches and services,” agrees Bjørhovde.
On the opposite side are brands such as Xiaomi, OPPO and vivo, with a greater weight of the mid-range and value for money in their catalogues. This strategy makes them more dependent than the rest on a constant increase in sales.
“In the medium and low price segments where these brands [Xiaomi, OPPO y vivo] compete brand loyalty is not an important factor, so the winner of the 3 will surely be the one with the stock ready when demand returns“, predicate Nabila Popal.
The channel is another fundamental point, since the best results of the 2 leading manufacturers are not only explained by their catalogue, but also by their privileged position among retailers and telephone operators, which account for a very important part of sales.
“Samsung and Apple enjoy great confidence in Western Europe, which gives them a strong position within the channel,” adds the Canalys analyst. For this reason, they are the main beneficiaries of the great promotions of the operators that can significantly reduce the cost for the end user.
And to this we must add an increasingly common phenomenon such as financing the purchase of terminals through monthly payments of up to 24 or 36 months, which is also done through operators or large retail chains.
Other brands will compete to be the best fit: Google and Honor are well positioned
Honor Magic 5 Pro
But it is not only the strongest who survive in a complicated ecosystem, but also those who are able to better adapt to the new reality and take advantage of the available resources better than the rest.
Behind the top 5 global smartphone manufacturers there are other brands that are continually waiting for the opportunity to surpass the first, and the drop in sales of the last year and a half that seems to continue in 2023 can be a golden opportunity to get ahead in the race.
“Several brands are emerging eager to gain market share. My biggest bet for 2023 is that we will see a strong progression of the Google Pixel and Honor in Western Europe,” says Bjørhovde.
In the case of Google, its growth is explained above all by its renewed commitment to hardware, especially in the high-end with its Pixel family, which already even has folding phones such as the Pixel Fold.
In Honor, the Chinese brand continues to grow in market share compared to previous years as it consolidates in more markets and improves its awareness among users, since it is the youngest on the market and has only been independent since it spun off from Huawei in late 2020.
During the presentation of the economic results for the first quarter of 2023, Lenovo has also highlighted the progress of its mobile brand Motorola, which ensures that it is the fastest growing in the current context.