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IDC reports shipments1 of new phones dropped 11.7 percent year on year in the first three months of 2020. That’s a total of 275.8 million phones.

It is the biggest year-on-year drop ever seen.

First quarter numbers are usually lower than the fourth quarter which includes all the phones purchased as Christmas gifts. The fourth quarter usually also captures sales of new phones immediately after the major product launches.

Yet this took place before phone buyers faced the full impact of the Covid–19 pandemic. Sure parts of China were closed down. And China does account for about a quarter of the worldwide new phone market. That’s going to have a huge impact.

Likewise, most of the world’s phones are made in China. Production and the pre-production supply chains were badly affected in the second half of the quarter.

It’s unlikely the current quarter will see much improvement. China may be back at work, but people elsewhere have been, many still are, in lockdown. That’s not great for phone sales. Nor is the economic uncertainty. That new phone sale is an easy expense to cut when the future looks tougher.

Samsung hit hard

While Samsung remains top dog with 58.3 million phones and a 21.1 percent share, it suffered the largest drop in shipments during the quarter. Year on year sales are down 18.9 percent.

There is good news for Samsung. IDC says the higher price of the Galaxy G20 phone means better profits.

Samsung has two important phones scheduled for launch later this year. The Fold 2 and the Note 20 are both likely to be expensive phones at a time when demand for pricey high-end models could cool.

Huawei better than you might expect

The political waves rocking Huawei’s boat have harmed phone sales less than you might expect. Year on year sales are down 17 percent. That’s bad, yet not as bad as Samsung.

Apple’s year on year sales were, in effect, flat with a 0.4 percent decline. This translates into an increased share of the overall market. It has 11.8 percent. The company’s success was mainly thanks to its iPhone 11, which in certain configurations is the most expensive non-folding handset.

IDC says that if the trend to lower price phones continues, and let’s face it that looks likely, Apple should have a hit on its hands with the iPhone SE.

What next?

To get an idea of how this quarter could go, Qualcomm, which makes chips for mobile phones, says it expects a 30 percent year on year drop for the current, second quarter. Given that it takes orders from phone makers ahead of manufacturing, it has a good handle on the market. That would be a huge drop.

IDC suggests a bright spot could be 5G. People need new handsets to use the faster wireless technology. It’s possible customers will trade up to 5G phones later in the year.

On the flip side of this, most users won’t notice any performance difference from switching to 5G. Data will download faster, but at the time of writing there are no mobile apps that can use faster data speeds.


  1. Shipments is industry talk for products that have left the warehouse en route for customers. While a shipment is not the same as a sale, it is close enough. Retailers don’t tend to carry huge inventories of product these days. ↩︎

Samsung’s Galaxy Z Flip is a another take on the emerging foldable phone format.

Unlike earlier foldable phones which are the size of everyday phones that open to become an iPad mini-sized tablet, the Flip opens long ways. It resembles the flip phones that we are supposed to feel nostalgia for.

It’s neat, but not as useful as other folding phones for reading complex documents.

Samsung Galaxy Z Flip

But there’s something else about the Galaxy Z Flip that appeals to me. It goes a long way to protect you from notification hell.

There’s a tiny screen on the front of the phone which lights up when there is an incoming notification. This is a lot less distracting than having a conventional phone screen light up with with a notification message.

Moreover, because you have to physically open the phone to read the full notification, there is a lot more distance between you and the incoming distraction.

It is easier to ignore the notification and easier to park it for later when you are not trying to focus. It’s not much protection, but enough to ease the cognitive load for a moment or two.

Of course the other possibility is to turn notifications off. That would be cheaper.

Samsung’s Galaxy S20 was one of the worst kept secrets in the phone history. By the time of the official launch everyone interested in the company’s hardware knew the $2200 top model Galaxy S20 has a main camera can capture 108 megapixels. It can also zoom 100 times.

The phone is also one of the first to work with 5G mobile networks.

There was a bizarre New Zealand twist to Samsung’s secrecy. Two days after the company advertised the phone during the US Super Bowl television broadcast and less than 24 hours before the official launch the company asked me to sign a non-disclosure agreement.

I’m not in the habit of signing these anyway, they are all about timing launches to maximise the marketing impact, that should never be a journalist’s concern. But to ask for one when all the details about the phone are already public is nothing but madness.

Samsung is on its second generation of foldable phones. Motorola and Huawei are a step behind, but remain in the game. Will your next phone be one you can fold?

The technology is impressive. All the foldable phones I’ve seen to date look great. They are also useful.

Folding means a handheld phone can morph into a small iPad Mini sized tablet. They make reading and simple online tasks easier than on everyday phones.

From a phone maker perspective they do three important things.

First, they give phone buyers a reason to upgrade. People have been hanging on to phones for longer because there is less pressing reason to upgrade. Adding a new functionality breaks that cycle.

Out of the cul-de-sac

Second, they give phone makers a route of the design cul-de-sac.

Phone formats have stabilised as slabs of glass and metal. They would be almost featureless if it were not for the ever swelling camera bumps. Makers add more lenses and more receptor pixels in a bid to competitive1.

Folding phones open up new ways to differentiate and compete.

The third benefit of folding phones for phone makers is they sell for premium prices. Phone makers can increase the average unit price at a time of intense competition downward pressure on prices.

Phone makers announced two more foldable models in the last week or so. Samsung’s Galaxy Z Flip and Lenovo’s $1,500 Motorola Razr are both flip phones with folding screens.

Foldables have not got off to a good start. Samsung’s Galaxy Fold was a botched launch. A second wave of models was better, but they are still fragile and expensive at NZ $3400.

Fragile, foldable

The Motorola Razr is as fragile and has poor battery life.

In other words, the models we’ve seen so far are undercooked. They will sell to well-heeled early adopters. These people will pay a king’s ransom to act as guinea pigs. Meanwhile the phone makers can go back to the drawing board and perfect their designs.

They will make it into the mainstream in one of two ways. Either Apple will create a folding iPhone that gets the technology right and resets the market or Samsung will brute force its way to success. The other possibility is that folding phones go the way of 3D television sets.

There’s no doubt this is a development worth watching. My advice is to hang on to your money for now, maybe squeeze another year from your existing phone. The benefits of having a bigger screen are not enough to outweigh the risk of spending a lot of money on something that’s easy to break.


  1. It’s questionable this is what most buyers want. ↩︎

Gartner analyst @MobileAnn forecasts worldwide #smartphone sales will grow 3% in 2020. Read more. #Mobilephone #Tech @Gartner_IT

Source: Gartner Says Worldwide Smartphone Sales Will Grow 3% in 2020

 

Phone sales dropped two percent in 2019. That’s the first time sales dropped since 2008. It’s been a wild ride since Apple introduced the first iPhone.

Gartner says it expects sales to climb three percent in 2020. The rebound is down to the 5G networks being built around the world. The research company says this is likely to stimulate a replacement cycle as people upgrade to the new, faster standard.

“However, in 2020, the market is expected to rebound with the introduction of 5G network coverage in more countries and as users who may have delayed their smartphone purchases until 2020 in expectation of price reductions begin buying again.”

— Annette Zimmermann, Gartner research vice president.

Gartner says it expects the industry will 221 million 5G phones in 2020. That’s about one in eight of the total number of phones sold. This will more than double in 2021 to 489 million units.

5G iPhone coming

Another aspect of this will be the first 5G iPhone, which Gartner says will boost demand in Asia-Pacific and China.

So far the big winner from 5G has been Samsung. The company sold more than 6.7 million Galaxy 5G devices during 2019. That was more than half the market last year. Which means the 5G phones market will grow roughly 20-fold in 2020.

Samsung has poured resources into 5G. It’s range now includes the Note S10 5G, the Note S10+ 5G, the Galaxy 10 5G, the Galaxy Fold 5G and, at the bottom of the range, the inexpensive Galaxy A90 5G. This tells another 5G story. While much fo the talk about the technology is looking at flagship phone models, there’s plenty of demand lower down the market.

Although Samsung’s early 5G dominance looks impressive, it’s not a big deal. those 6.7 million 5G phones were roughly two percent of the company’s output last year — a drop in the ocean.

Phone or smartphone?

Gartner and many other companies like to talk of smartphones. The idea is that these are distinct from phones that are not smart. (The industry calls unsmart phones feature phones, which is confusing because the main point is they have fewer features).

As far as countries like New Zealand are concerned, phones are nearly all smart, feature phones make up a tiny fraction of the total.