Smartphone shipments Worldwide are expected to decline by 4.7% in 2023 to 1.15 billion units, the lowest volume in a decade, according to the latest forecast announced by International Data Corporation (IDC).
The firm’s newly released Worldwide Quarterly Mobile Phone Tracker forecast has again been reduced, from the 3.2% decrease seen in early June 2023, the 1.1 % slide forecast in March 2023 and an earlier 2.8% growth forecast.
The downgrade is driven by dampened consumer demand and lengthened refresh cycles because of the weaker economic outlook and ongoing inflation.
Manufacturers are still also very cautious about their business planning in the short term, even though inventory levels have normalised, “yet again kicking the recovery can down the road,” the researcher said.
In Kenya, a rapidly depreciation Kenya Shilling against the US dollar is making it more expensive for importers to bring in smartphones.
The situation has been made worse for retailers who face shortages as importers grabble with new taxation rules imposed on second-hand clothes, mobile phones, electronics and other household goods as they are now having to pay more to clear their cargo.
In 2023, IDC forecasts Kenya’s smartphone market to remain relatively flat, with shipments growing by just 1.4%.
“Inflation is expected to hurt the smartphone market this year and the recovery will begin only in the final quarter of 2023 as economic uncertainty diminishes, vendors bring price volatility under control, and supply shortages come to an end,” says Ramazan Yavuz, a senior research manager at IDC.
More Kenyan consumers have been able to access smartphones through various mobile financing schemes such as M-KOPA and Easy-Pay to obtain new devices even as prices continue to rise.
IDC still expects the global market to recover in 2024, forecasting annual growth of 4.5%. This is a bit slower than the 6% outlook given earlier.
Growth after that will remain in the low single digits, resulting in a five-year compound annual growth rate of 1.7%, says IDC forecasts.
Nevertheless, pricing remains a bright point. As consumers hold on to their devices for longer, they will likely be willing to pay more for their smartphones. This should help average selling prices lift again in 2023.
In 2022, the US smartphone market segment saw prices go lower by 1.7% while the rest of the markets worldwide) dropped by double digits.
The high-end smartphone market was helped by attractive trade-in offers and ‘buy now, pay later’ programmes. The used smartphone market has meanwhile been advancing by double digits, pushed mainly by a healthy inventory of very good used phones.
Looking at operating systems, iOS shipments should grow by 1.1 percent in 2023 to reach an all-time high share of 19.9 percent.
The operating system continues to remain more resilient to macro challenges than Android, which is forecast down 6.0 percent this year.
While all regions are forecast to decline, China, Asia/Pacific (excluding Japan and China), and Latin America will contribute the most to the fall, with shipments off 3.6%, 4.4 %, and 6.2% respectively.
The US and Western Europe will slip by an estimated 3.8% and 6.1%.
“During a time when the entire market is struggling, it speaks volumes to once again see Apple going the opposite direction,” IDC noted. Africa’s smartphone market declined by 3.4 percent quarter on quarter in Q1 2023 to 17 million units, the lowest level of shipments since the start of the Covid-19 pandemic in Q1 2020, according to International Data Corporation (IDC). Rising inflation and local currency depreciations against the US dollar have hit demand for smartphones across the continent. Shipments of feature phones across Africa also declined in Q1, although not to the same extent as smartphones.
Feature phones remain relatively affordable and are still the preferred secondary device option for many consumers. George Mbuthia, a senior research analyst at IDC says Africa’s smartphone declined throughout 2022 amid weak consumer demand, and this has been exacerbated by rising inflation and higher device prices.
Mbuthia said the average selling price (ASP) for smartphones grew Quarter on Quarter because of high import costs and the fact that many vendors’ flagship devices are now equipped with 5G and have therefore moved up in price to the premium segment.
The report shows Africa’s top three smartphone markets, South Africa, Nigeria and Egypt, recorded a mixed performance in Q1.
South Africa and Nigeria both saw shipments decline Quarter on Quarter, while the Egyptian market registered growth.
South Africa was hit seasonality issues and weak demand, meaning vendors were unable to bring in new units while they continued to clear the channel.
Egypt remains below its potential, but local assembly is picking up and the government has now dropped its “letters of credit” requirement for vendors, both of which have helped the market to recover from its low base.
Chinese made Tecno, Itel, and Infinix smartphone models accounted for the largest share for smartphone shipments across Africa in Q1, despite experiencing a decline in units.
Samsung came second and Xiaomi third.