As consumers prioritize spending on essentials amid economic uncertainties in the pandemic times, they are buying more low-to-mid-range smartphones and 73 percent of smartphone shipments in 2020 are expected to be priced below $400, according to a new report.
According to a new price band forecast from the IDC ‘Worldwide Quarterly Mobile Phone Tracker,” smartphone value is expected to decline 7.9 percent in 2020 to $422.4 billion — down from $458.5 billion in 2019.
Overall, the low-to-mid end segment ($100 to less than $400) dominated global smartphone shipments with 60 percent market share in the second quarter this year and is expected to grow in the short term to 63 percent by next year.
“Rising unemployment rates and job uncertainty have influenced consumers’ buying patterns towards economic and affordable products. Subsequently, the overall portfolio in smartphones is moving toward low-to-mid end devices,” said Sangeetika Srivastava, senior research analyst with IDC’s Worldwide Mobile Device Trackers.
“This has intensified competition as market players need to continue presenting attractive deals and bundling offers to encourage consumers to purchase a new device, especially in the higher-priced segments”.
The mid-to-high-end segment ($400 to less than $600) grew its share of the market by almost four points to 11.6 percent in the second quarter.
Devices from Samsung, Huawei, and other Chinese vendors like Xiaomi, OPPO, and Vivo are the main vendors driving these segments.
Apple also recently entered the mid-segment with its new iPhone SE device, which has performed well, further validating the trend toward more budget-friendly devices, the IDC report said.
The pressure on prices is reflected worldwide, though it is most obvious in developing regions like Asia/Pacific (excluding Japan and China), Latin America, Middle East & Africa (MEA) and Central & Eastern Europe (CEE) were under $400 devices captured up to 85 percent of the market in 2Q20.
Even in the US, devices under $200 increased their share 10 points year over year to capture 27 percent of the market in 2Q20.
“Looking forward, as consumers increasingly want a better value proposition from their phones, the low and mid segments ($100-$200 and $200-$400) will remain the most popular,” said Nabila Popal, research director with IDC’s Worldwide Mobile Device Trackers.
However, in the long term, IDC expects the fastest growth will be in the $400-600 price band as 5G sales grow and the average selling price (ASP) for 5G phones drops to $465 in 2024.
