How does the Mobile Phone Industry work? Read more about it here!

Read how the Cellphone industry works

The mobile phone market is growing exponentially and is more likely to develop in the future. This industry will shape many more markets in the upcoming years. This article will help you know why this market slowed down after having a CAGR of 15%.

The mobile market is vast and ever-changing. Earlier, the cell phone was meant for incoming and outgoing calls. This device connected people overseas. Nowadays, mobile phones work like computers and do the most complicated work, from bill payments to filling applications.

Smartphones are now combined with the latest technology to cover most of your everyday chores. Highly functional software, sensors, HD display, robust camera are the basic features of any smartphone.

The state of the mobile phone market

The number of mobile phone users surpasses three billion and is expected to thrive by several hundred million in the next few decades. The United States, China, and India are the highest number of smartphone users; each nation surpasses the hundred million user streak.

From the last five years, more than 1.4 billion smartphones were traded annually across the globe. As you can see, the stagnation in the smartphone market still has a strong potential to grow. The smartphone penetration rate is 70% low in many highly populated countries such as India and China.

Samsung, Apple, and Huawei are the three technology companies that account for about half of all smartphone shipments globally.

Since the inception of smart devices, the rate of usage has witnessed significant growth. In 2016, 2.5 billion people were using smartphones, whereas, by 2021, it is estimated to cross 3.8 billion lines.

In recent times, smartphones can perform multitasking, so there are fewer reasons to upgrade the device. The display comes in 4k resolution, which means the explanation of smartphones matches the human eye's definition.

Various leading mobile companies have faced severe technical issues. The Samsung Galaxy Note 7 recorded instances of overheating that lead to an explosion. Pixel 2 was also found to have various problems regarding the screen display. However, many factors can trip over sales and cover the image deterioration in the market.

The western countries are hiking the price as they are providing advanced technology locked in a handy device. These devices have set the bar high for small manufacturers. As they cannot offer great technologies, their sales are going down every quarter.

However, countries like India and China are witnessing a sudden surge towards cost-efficient mobile devices. In India, over half of the smartphone trading costs less than 120 dollars. The mobile market has reached new territories with a cost-efficient approach.

Chinese companies are also manufacturing cheaper smartphones with advanced technologies. Oppo, Vivo, and many other brands compete to achieve the number one position in the low to medium range category.

Also Read: Mobile Brands in India

Industry Profile

This industry has grown dramatically in the past few years. A report published in 2009 stated that there were 4 billion mobile phone subscribers worldwide. The report claimed 3.1 billion were unique.

New handsets are traded at a rate of 1.15 billion per year. This figure keeps on increasing every year, so does the economy.

Effects of Pandemic on the Mobile phone Industry

The quarter of 2020 exemplified a historic decline in the smartphone industry. Some technology sectors witnessed a massive hike in sales, whereas some did not meet the primary investment.

As per the counterpoint research, the smartphone industry witnessed a 13% YOY loss in the first quarter of 2020; it is the fastest repudiation in history. This sharp plunge is the outcome of the various issues, from changing market demands to production problems. As most of the industry changes are not consistent still, the majority of companies are facing similar issues.

Stumbling demand for new phones

The pandemic has lowered the demand for new smartphones. It is not that the virus outbreak has rendered smartphones less useful, but the sudden recession has changed the customer's priority. In this economic distress stage, people are more likely to make a purchase when they need a smartphone.

Every country is suffering from significant unemployment, and it is the highest since the Great depression of 2009. Millions of people without a consistent income are posing threats to the smartphone industry. People will not invest much money to buy high-end devices this year.

Production Issues

Cell phone sales are not the only digits that are getting meagre; even the production is lowered. Smartphone manufacturers had to stop all the production work according to the prevention guidelines issued by the government.

Some news sources have stated that many leading smartphone companies like Samsung have reduced its monthly production to 10 million units in April. As production units in India and Brazil are shut down, they cannot maintain average production even if it is the reason for the economic downturn.

Changing Market shares (for manufacturers)

The latest Counterpoint data suggests some shifts within the mobile phone market shares. Every smartphone manufacturer and vendor is facing an economic drought. However, not all are facing equal consequences. In the first quarter of 2019, Samsung had a 21% market share, 20% in Q1 of 2020.

Apple witnessed a hike of 2%, and Huawei remains the same.

5G Adoption

Before the Covid-19 pandemic, leading smartphone companies were busy bringing 5G technologies and network into the market. With a shrinking market and dooming revenue, this alteration is less likely to take place soon.

Apple and Verizon have delayed the new releases of 5G services and devices. Other mobile companies have also played a pause button at the inception of 5G. However, the craze for 5G among consumers is still high, so it can also be the next milestone for smartphone manufacturers and vendors.

Hierarchy of needs

Computers and smartphones have become more critical than before. However, with the current circumstances, people are forced to consider what is essential for a smartphone. When you face economic distress and need to save for the uncertain future, high-end devices don't attract and seem hot anymore.

For the last three months, the most popular smartphone was not an expensive number, but a mid-range Galaxy A51 topped sales worldwide.

Current Statistics of the Smartphone Market

Conclusion

From understanding the current state of the mobile market and how Covid 19 affects the production and sales of mobile devices. The present market scenario is pretty straightforward. The decline of sales varies from brand to brand. Huawei is doing good in China but is witnessing major denial in other countries.

As the market shifts are not consistent, still unemployment has affected the mobile industry and many more related industries.

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FAQs

Ans: Samsung comprises 21% of the total market share of the Indian mobile phone industry, as per reports in 2020.

Q. Until when will India receive 5G coverage?

Ans: India is expected to receive a nationwide 5G network coverage by the first half of the year 2020.

Q. Which is the leading service provider of mobile networks in India?

Ans: Currently, Reliance Jio holds the market share for being the no 1 service provider in the country.