Sales of mobile phones won’t return to pre-pandemic levels until 2022 but pent-up demand, a wider macroeconomic recovery, and the wider availability of 5G networks and handsets are all set to drive recovery in the market., new analyst figures have said.
The smartphone sector has been hit by Covid-19 due to economic and production challenges that had caused supply issues and lowered demand. However, the easing of lockdown measures around the world has laid the foundations for a recovery.
CCS Insight predicts mobile phone sales will reach 1.67 billion this year – a 6% year-on-year increase but still 8% lower than in 2019. However, there is a stronger outlook for 2022, during which it is expected 1.97 billion units will be shifted.
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"Pent-up demand will be unleashed, and we expect suppliers will be able to satisfy this hunger, leading to a significant rise in sales of mobile phones. Our projections are for 1.97 billion phones to be sold in 2022, tantalizingly close the 2 billion mark the industry was aiming at a few years ago", said Marina Koytcheva, vice president of forecasting at CCS Insight.
Demand for 5G devices will be a crucial driver (one in three devices sold in 2021 is expected to be compatible) but so will the resolution of a components shortage that has hamstrung the industry. Although LG’s recent exit from the market was due to a number of reasons, it is thought that the shortage was the final straw. Analysts expect the situation to be back to normal early next year, but until then, it could be that the mid-range segment is disproportionately affected.
"Smaller manufacturers are far more exposed than market leaders Samsung and Apple, leaving sub-scale players in a tough situation", added Wayne Lam, senior director of research for CCS Insight's Americas business. "We believe phone-makers are prioritizing premium smartphones that deliver higher margins over cheaper devices, hindering markets that depend on more-affordable products.”
Although manufacturers, operators and retailers are set to benefit from a short-term boost, there was a warning that long-term growth prospects were largely the same as they were before Covid-19.
“This strong performance should not be confused with the sales peak we witnessed in the mid-2010s. In the mid-term, the untapped potential for mobile services to gain new subscribers is limited to certain regions like Africa and South-East Asia. In advanced markets, we expect consumers to hold onto their phones for longer than ever, freeing up money to spend on other smart devices such as wearables, smart glasses, smart speakers and other connected home gadgets."
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