The global smartphone market is set for a return to growth after a difficult year, according to IDC, which says strong Christmas sales and demand for 5G connectivity will build on a better than expected third quarter.
The analyst firm believes worldwide shipments will increase by 2.4% during the fourth quarter, driven by a rapid supply chain recovery and incentives from manufacturers, operators and retailers on new 5G devices.
Looking further forward, IDC anticipates the market will expand each year through to 2024, with five-year growth rate of 1.3%.
- What is 5G? Everything you need to know
- These are the best business SIM-only deals around today
- And the best business broadband deals
Worldwide smartphone sales
"Despite concerns around weakness in 5G demand, smartphone volumes exceeded the forecast in 3Q20 and supply-side momentum headed into the holiday quarter and 2021 remains strong," said Ryan Reith, program vice president with IDC's Worldwide Mobile Device Trackers.
"We've come to the conclusion that despite on-going lockdowns and economic concerns, consumers in many markets around the world have shifted their normal spending from things like travel, dining out, and general leisure to things like consumer electronics. Smartphones happen to be a benefactor of this transition."
The prediction of growth comes despite an apparent contraction in China, the world’s largest mobile market. As lockdown restrictions around the world saw consumers unable or unwilling to make smartphone purchases earlier in the year, the improved situation in China was a rare bright spot for the market.
However, IDC says weaker than expected demand for 5G has affected sales. Manufacturers have started including 5G support in more of their handsets, increasing average selling prices (ASP) by more than a tenth. This has reduced the number of options for consumers who don’t want or can’t afford 5G and sales are expected to fall by 11.4%.
Elsewhere, however, 5G is expected to provide a boost, aided in no small part by the iPhone 12. IDC expects 5G shipments to account for a tenth of global volume in 2020 and rise to 29% by 2024. Even if early adoption rates are low, 5G connectivity will slowly be introduced to handsets at all price points, with the ASP of a 5G device falling by a quarter in 2020 and reaching $453 by 2024.
This growth will be music to the ears of manufacturers who had struggled with market saturation prior to the Coronavirus pandemic and had hoped 5G would revive the market. The pandemic had put an end to those hopes, but there is optimism that the benefits have simply been delayed by 12 months and that lockdowns have proved the value of mobile technology.
"Competitive pricing will play an integral role in shaping 5G development. The COVID-19 crisis has influenced consumer behaviour by tilting it toward more budget-friendly devices and narrowing the spend for essentials only," added Sangeetika Srivastava, senior analyst with IDC's Worldwide Mobile Device Trackers. “Aggressive promotions and more affordable 5G devices from major smartphone vendors are expected to partially offset the impact in the near term.”
- These are the best 5G phones available today