2022 has been filled with external factors that have negatively affected the smartphone market for the larger part of the year, and according to analysts at Canalys, it looks likely that we will be in this situation for the foreseeable future.
In their latest Q3 2022 report, Canalys explains that the smartphone market recorded its third consecutive decline this year, dropping 9% year-on-year, marking the worst Q3 performance since 2014.
This drop in demand for smartphones is attributed to users preferring to hold on to their current smartphones, channelling their money to essential needs amid the rising inflation and the economic downturn influenced by the Russia-Ukraine conflict among other external factors. Canalys expects this situation to remain the same for the next six to nine months.
In terms of individual player performance, Samsung retained its first position with a 22% market share, largely driven by heavy promotions to reduce channel inventory, as we had previously covered. Apple came in at second place with an 18% market share, and interestingly, is the only player in the top five that recorded positive growth over the ended period. Rounding up the top five is Xiaomi, Oppo and Vivo with market shares of 14%, 10% and 9% respectively.
“The smartphone market is highly reactive to consumer demand and vendors are adjusting quickly to the harsh business conditions. For most vendors, the priority is to reduce the risk of inventory building up given deteriorating demand. Vendors had significant stockpiles going into July, but sell-through gradually improved from September owing to aggressive discounting and promotions. The pricing strategy of new products is cautiously crafted, even for Apple, to avoid significant pushback from consumers who now tend to be very sensitive to any price hike,” says Canalys Analyst Amber Liu
As we move to Q4 2022, Canalys analysts expect no significant improvement in the market stretching into Q1 2023. They predict that those consumers who had been delaying purchases will expect steep discounts, bundling promotions, as well as big price deductions on older-generation devices. Whether this will be enough to see a positive resurgence in the smartphone market will be interesting to see. However, with all the market uncertainty across most industries, the next few months might be rough for smartphone manufacturers