European Smartphone Market Is At An All-Time Low, US Might Be Next

For more than a decade now, the smartphone market has been one of the fastest-growing industries in the world. Smartphones are never going out of fashion, and the annual cadence of new models ensures there will always be something new to pique consumers' interests. That doesn't mean, however, that the status quo will remain unchanged for years to come, and there are looming fears that the market has plateaued and is on its way down. Those fears may have been confirmed by one market intelligence company that paints a rather dreary forecast for smartphone companies and their shareholders this year, especially in Europe, where things might get worse before they get better.

Very few markets or product categories have been able to keep a steady hold in terms of sales, shipments, and revenues for long periods of time. Markets are always subject not only to consumer whims but also to global and regional situations that either push numbers up or pull them down. Many countries in Europe are seeing unfavorable times, and Counterpoint Research cites these factors as the reasons for the smartphone market's nosedive.

The report reveals that smartphone shipments declined by 12% in the first quarter of 2022 compared to the same period last year. With only 49 million units shipped from January to March, the European smartphone market has seen its lowest number since 2013, according to analysts. The economic recession that many countries in the region are going through is primarily to blame, but the war between Russia and Ukraine also plays a significant part. Unfortunately, the report isn't so optimistic that things will change for the better in the second quarter of the year.

Across the Atlantic, the situation is less dire but is still unfavorable for vendors and retailers. Counterpoint Research revised its shipment forecast for the year-on-year growth of the smartphone market in 2022 from 6% down to 2%. Both figures are already low compared to previous years, but the downgrade isn't that reassuring. Of course, the reasons for the market's decline are different between the two regions, and so are the outlooks.

Inflation is the primary culprit in the situation in the U.S., as people are forced to reevaluate and make changes to their expenditures. Demand for new smartphones has dropped, and people are making fewer trips to phone retailers because of rising fuel prices. Interestingly, the analyst notes that retailers like Walmart that sell phones along with other groceries and products are faring better than dedicated electronics stores like Best Buy because consumers can get everything they need in one trip.

That said, Counterpoint Research is more hopeful that the U.S. smartphone market won't decline further, mostly thanks to a continuing strong demand for postpaid phones. Carriers reported a strong increase in YoY phone additions last quarter compared to weaker sales of prepaid devices. Given different economic factors, it's a bit difficult to say how long the U.S. smartphone market could keep out of the red, but there might be fewer negative impacts from global situations unless another chip shortage or pandemic happens.