Consumer spending in the telecom sector will remain inhibited for some time and a supply and output slump will cause delivery backlogs for popular smartphones even as supply chains restart, says GlobalData, a leading data and analytics company.
Anisha Bhatia, Senior Technology Analyst at GlobalData, comments: “In the short term, the financial impact and ripple effect of lockdowns will mute consumer demand for expensive flagship phones and stretch upgrade cycles. Carriers and original equipment manufacturers (OEMs) will have to take strong measures to spur consumer spending on smartphones.”
China saw a nosedive in smartphone sales in January 2020, but this is now slowly rebounding. As most phone sales occur in retail stores, the US will likely see a drop in sales too as leading mobile operators have temporarily closed many of their retail locations.
Bhatia continues: “Demand for smartphones is likely to remain weak in Q2 2020 as the majority of people in the US and Europe continue to remain on lockdown and will subsequently struggle with the prolonged economic uncertainties that come post-shutdown.”
New phone releases expected in 1H 2020 are already in an advanced stage of development, so their release is imminent. Carriers have stepped up to offer unlimited data to their customers temporarily, as data and voice services are now on the list of consumer essentials, so, consumer churn is expected to remain low.
Bhatia concludes: “Carriers will need to be aggressive in kick-starting smartphone sales again and should consider restarting the abandoned subsidy model to briefly jumpstart phone sales in some hard-hit regions.”