Apple & Samsung face tough times as global smartphone shipments set to drop 15%
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The smartphone market has been struggling for the past couple of months due to the COVID-19 pandemic and, although the situation is expected to improve in the second half of the year, a huge decline is still predicted. The latest report by DigiTimes Research claims smartphone shipments are now expected to decrease by a whopping 15% this year to 1.15 billion units. That is slightly more pessimistic than earlier forecasts and can be attributed to the worsening situation. Smartphone brands with large presences in the United States and Europe, which have implemented strict lockdown measures and are likely to experience an economic recession, are expected to feel the biggest impact this year.
Those competing in the premium segment will face extra pressure too. After all, customers are starting to live on tighter budgets, and smartphones aren’t typically high on the list of priorities, especially not high-end ones. DigiTimes believes Apple has already lowered orders for the iPhone 11, which is the best-selling iPhone device globally, for the second and third quarters. The newly released iPhone SE should help soften the near-term impact, but Apple itself is still expecting a noticeable decline.
So much so that it has reportedly decided to cut its internal iPhone shipment target for the entire year. There has yet to be an official comment on the matter, but the first indications of this should arrive later this week. Apple is scheduled to announce its results for the January-March quarter on Thursday, April 30. These should be accompanied by an official revenue guidance for the current quarter, which will provide a clearer indication of how Apple is battling shrinking global demand.
“To make matters worse, the next-gen Galaxy Note 20 series will apparently resemble the Galaxy S20 lineup very closely.”
The final quarter of the year should be more positive for the Tim Cook-led company, but it will be far from plain sailing. Apple is reportedly facing severe iPhone 12 delays and recent reports suggest the company has cut its orders for the second half of 2020 by 20%. Samsung is another company that has reportedly lowered its internal smartphone shipment forecasts for the year. The poor reception of the Galaxy S20 series is one of the main reasons for this outcome.
The COVID-19 pandemic combined with significantly higher prices has led to significantly lower demand than predicted. The Galaxy S20 Ultra is understood to be performing slightly better than expected, but the smaller and cheaper Galaxy S20 & S20+ have missed sales targets.
If the situation fails to improve, the Galaxy S20 series could become the worst-selling Galaxy S lineup in years or perhaps ever. That would massively impact revenue, profit, and valuable market share on a global scale. To make matters worse, the next-gen Galaxy Note 20 series will apparently resemble the Galaxy S20 lineup very closely. If true, Samsung may struggle to sell those flagships too.
More worrying for Samsung is the fact that it is also losing market share in the crucial Indian market. The company was number one only a few years ago but dropped down into third place during the first quarter. That was before COVID-19 had heavily impacted the market, which means the second quarter could be particularly bad for the company.
Questions & Answers
Q.What is the primary reason for the predicted decline in global smartphone shipments this year?
What is the primary reason for the predicted decline in global smartphone shipments this year?
The COVID-19 pandemic is the main cause, with stricter lockdown measures in the US and Europe leading to an anticipated economic recession. Customers are also tightening budgets, making high-end smartphones less of a priority.
Q.Which specific companies and product segments are expected to be most affected by the market downturn?
Which specific companies and product segments are expected to be most affected by the market downturn?
Smartphone brands with significant presences in the US and Europe, particularly those in the premium segment, are expected to face the biggest impact. Apple and Samsung are specifically mentioned as struggling due to various factors.
Q.What issues are specifically impacting Samsung's smartphone sales performance this year?
What issues are specifically impacting Samsung's smartphone sales performance this year?
The Galaxy S20 series has been poorly received, with significantly lower demand due to higher prices and the pandemic. The smaller S20 and S20+ models have missed sales targets, and Samsung is also losing market share in India.
Q.When can we expect more official information regarding Apple's financial performance and future outlook?
When can we expect more official information regarding Apple's financial performance and future outlook?
Apple is scheduled to announce its results for the January-March quarter on Thursday, April 30. This announcement should include official revenue guidance for the current quarter, offering clearer insights into their situation.
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