Worldwide Cell Phone Market Plummets for the 8th Consecutive Quarter, but Premium Segment Steals the Spotlight with Remarkable Growth

The worldwide mobile sector experienced an 8% year-on-year (YoY) decline and a 5% quarter-on-quarter (QoQ) decline in Q2 2023, marking the eighth consecutive quarter of YoY contraction, It was revealed in the most recent data from Counterpoint's Market Pulse service. The report highlights several key trends shaping the industry.

Samsung emerged as the leader in the market, holding a 22% market share. The success of its Galaxy A-series contributed significantly to its strong performance globally. Apple secured the second position, achieving its highest-ever sales percentage in the second quarter. Xiaomi, the third-biggest company, encountered challenges in its two major countries, namely China and India. To compensate for these losses, Xiaomi aims to branch out into new areas and update its product portfolio. OPPO performed exceptionally well in its native regions of China and India because of OnePlus. Despite registering losses in Western Europe, OPPO managed to maintain its global market share. Meanwhile, vivo (including iQOO) experienced significant growth declines in China. It was due to fierce rivalry from Samsung and OPPO and challenging market conditions in India and Southeast Asia.

The worldwide cell phone market has transitioned from a period of swift development to a more mature stage. Prolonged customer renewal periods, convergence in product creativity, and the advent of a thriving refurbished smartphone industry have impacted demand in the low-to-mid-tier cost bracket.

However, the higher-end industry (devices priced at 600 dollars or higher) is still expanding, driven by discerning consumers seeking a superior experience. The abundance of financing choices in crucial regions has further bolstered the premium segment, which recorded its highest-ever share of the entire market in the second quarter. Approximately one in five mobile devices sold throughout the quarter were part of the luxury market.

Apple has capitalized on this trend of "premiumization" by achieving record shares in non-traditional markets. Notably, the company experienced a 50% YoY growth in India during the second quarter of 2023. The resilience of the top-tier category has helped mitigate revenue losses. It has prompted companies to spend money on cutting-edge technology and market growth.

Sales contraction was observed across all regions worldwide. More advanced regions like the United States, Western Europe, and Japan experienced double-figure early losses. In contrast, markets in China, India, the Middle East, and Africa saw comparatively smaller declines. To address excess inventory, OEMs and channels made use of campaigns and "big sale" events. For instance, US postpaid companies revised their endless package plans to provide customers with a greater range of options. However, weak demand persisted due to increased interest costs affecting expendable money in the US. In China, lukewarm reception was observed despite aggressive promotions during the "618" sales event. Nevertheless, the event managed to stabilize the dip in the Chinese mobile market, indirectly impacting the global market in June.

Amidst the challenges faced by the industry, there is room for optimism. Counterpoint's Smartphone Inventory Tracker reveals that worldwide mobile stock levels have achieved a stabilized state during the previous couple of months. This provides OEMs with an opportunity to introduce novel versions and incentivize customers to upgrade, potentially speeding up the replacement phase.

Although a slow recovery is expected in the coming quarters, the smartphone market continues to evolve, driven by changing consumer preferences and technological advancements.

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