Friday, September 29, 2023

3 Causes of Europe’s Worst Mobile Sales Moment in 11 Years

In 2012, the smartphone market had already experienced a boom, but it was still common to find people who didn’t have a smartphone or were still getting used to their first device. More than a decade later, the industry has made great strides but is currently experiencing its worst sales period in Europe.

Throughout the Old Continent Mobile sales fell 12% in the second quarter of 2023 compared to the same period last year, according to data from analyst Counterpoint Research.

The decline could have been much greater if Russia had not been the only country growing in the region, registering a 4% increase in sales, which can be explained by comparing it with the previous year, when the war with Ukraine was taking place right now broke out. and big brands like Apple and Samsung have left the Russian market.

In fact, there has been a decline in units sold Western Europe, the region where Spain is located, was 14% compared to the 8% decline in Eastern Europe.

Apple is making more profit on the iPhone than ever before: Why it dominates the industry despite not being first in volume and declining in sales

Other analysts such as Canalys estimate that the number of mobile phones sold in the European market in the last full quarter was less than 30 million, a figure never reached in the last decade.

Sales are the lowest in Europe since the first quarter of 2012. The market actually fell by 6% compared to the second quarter eleven years ago, but it is also true that it has never again reached the data from 2016, the year in which the decline was 38%.

These sales figures in Europe are certainly far from optimistic, and in fact Canalys expects the European mobile market to end 2023 with a 13% decline in units, which is above the world average and more than expected. expected in the initial forecasts.

But what is the reason for this poor development of the European mobile communications market? Analysts have several explanations for this phenomenon.

The economy is not doing well

Two Dolls Of Elderly People Sit On Some Coins And Some Euro Notes.

Although countries in the region such as Spain have not suffered an economic recession, the impact of ongoing inflation is being felt very clearly on the European smartphone market.

“Economic conditions bear some of the blame,” admitted Jan Stryjak, deputy director of Counterpoint Research.

In a context where the prices of everything are rising, including unavoidable expenses such as accommodation and food, people have less money to spend on avoidable expenses at the end of the month, and it is clear that mobile phones are not at the top of the list this priority list.

The IDC analyst, in his industry analysis, agrees that the European market is struggling due to low demand, inflation and macroeconomic uncertainty. However, not all analysts agree with this pessimistic view of the European market.

“Economic conditions in the European mobile market remain difficult, but the decline in inflation and improving inventories have sparked some optimism,” said Runar Bjørhovde, analyst at Canalys.

Buyer behavior is changing

Several Iphones In An Apple Store

However, the main problem with the European mobile market is that no comparison is possible with 2021 or pre-pandemic levels. That’s because The way people use our smartphone and decide to buy another one has changed radically..

“User behavior is changing, which suggests that the current lower sales levels will create a new basis for the market,” said Jan Stryjak of Counterpoint Research.

Analysts recall a message already being heard in the industry: after reaching peak levels between 2015 and 2017, sales are now lower because people are using their mobile phones for longer, rather than the two years it took them to establish themselves on the market had plans.

Now people are keeping their phones longer, thanks in part to the fact that batteries are under less strain than before and manufacturers are now updating their operating systems for longer (for example, between 4 and 5 years for Apple and 4 years for Samsung).

And another innovation that was not so widespread just a few years ago is that people are increasingly turning to the used or refurbished market to buy their products, which limits the sales volume of new devices.

Cheap cell phones are becoming less and less profitable

Redmi 10C From Xiaomi
Redmi 10C from Xiaomi

And in connection with all this we must add one more difference: while a few years ago the lower price ranges were very interesting for brands, With each passing day they become less profitable and the lack of supply leads to lower demand.

It was not surprising that big brands like Samsung, Xiaomi and Realme sold several mobile models for less than 200 euros and sometimes even for less than 100 euros, but models in this price range are becoming increasingly scarce.

Following Samsung’s decision to deprioritize it and the departure of other brands, opportunities in the sub-$200 price range have opened up in Europe from this area because they have profitability problems,” says Runar Bjørhovde.

This is both a challenge and an opportunity because even though the supply is lower, manufacturers have to be very careful that these cheaper models continue to offer them enough advantages to keep their bet.

“Demand is still low in Europe, but There is only room for two or three brands to be it requires economies of scale and close collaboration with the broadcaster,” adds the Canalys expert.

Nation World News Desk
Nation World News Desk
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