Globally 2023 is set to be a year of caution as vendors will rethink their portfolio of devices while channels will think twice before taking on excess inventory. While this article features all categories of devices, the main focus would remain on smartphones.
Russia’s escalating war in Ukraine, ongoing China-US political distrust and tensions, Europe and USA facing their own challenges, growing inflationary pressures across regions, a growing fear of recession, and weakening national currencies all are likely to cause a further dent in consumer sentiment, hitting already weakened demand. Additionally, there is a sustained lengthening of smartphone replacement cycles since most of the new developments in this category are mainly considered gimmicky. The average replacement cycle of a smartphone globally is now between 40-43 months.
Interestingly, in all such scenarios, where there is a crisis, there is also an opportunity window. In times like these, Important global trading hubs such as Dubai play a critical and key role in re-allocation of goods via alternate routes. Over the years, Dubai as a trading hub has left the other two or three global trading hubs far behind.
However, it is important to exercise caution as increasing costs, declining margins in the trade, over-competition and excess inventories could put additional strain on the industry.
China may start bringing good news from the second half of the year.
-INDIA: About half of India’s smartphone users are planning to buy a new device in this year or by next year, since the 5G rollout is gathering pace. The Indian market may turn out to be the saving grace for some brands in this year. The sweet spot is likely to be in the usd 250-350 price range.
Samsung is still the most preferred brand, although Apple is making good inroads in the premium segment. OnePlus is also in the preferred category.
A large installed base, feature phone-to-smartphone migration, local smartphone production, development of supply chain and the emergence of newer use cases will continue to grow the market in the longer term.
Cumulative 5G smartphone shipments are likely to exceed 4G smartphone shipments by the end of 2023
-MIDDLE EAST AND AFRICA: Within this region, the GCC countries are exhibiting very high resilience. Higher inflows of energy revenues, strengthening of local currencies, most of which are pegged to the U S dollar have helped in keeping inflation in check in comparison to global levels. The region has also got a major boost by Qatar hosting the World Cup. The UAE’s relentless focus on travel, tourism, technology, events and exhibitions, new kinds of long-term visas continues to be a big boost.
On the other hand, many countries in Africa are seeing inflation accelerating. Persistent energy supply issues, as well as worries about several rounds of food shortages are likely to keep consumers more cautious.
The lower to mid-range categories, as well as the lesser known brands will likely continue to remain under pressure.
PCs: It is clear that the pandemic boom is over for the PC market, but despite recent declines, annual shipments for 2022 were well above pre-pandemic levels. However, 2023 demand will remain a concern as most users have relatively new PCs and the global economy worsens.
However, plenty of opportunity still lies ahead. The market will have pockets of opportunity throughout 2023 and will recover by 2024.
TABLETS: Apple and Samsung continue to be the main drivers for the tablet market. Apple remains the indisputable leader in this category.
Tablets, which were once used mainly for entertainment, have gained momentum in a range commercial applications. This category is likely to chug along at the same or slightly lower levels in 2023.
-REFURBISHED PHONES : The global refurbished market has grown by leaps and bounds in the last few years. Carriers and retail refurbishment players are growing but initiatives taken by brands on reclamation, refurbishment, and e-waste reduction are quite limited.
Even the best brands are not active enough in pulling back their used stock. The highest potential now rests with initiatives like trade-ins, which ensure a buyback of the older devices. Apple and Samsung lead here as well but most of the reclaiming and refurbishing is done by the other players in the secondary ecosystem. The end-of-life stage is quite complex but one of the most rewarding if done right.
Apple seems to be the clear leader in the refurbished phones business globally and in the US.
With the roll-out of 5G progressively speeding up, the prices for non-5G refurbished phones would start declining even more rapidly.
Those who are in the refurbished phones business will have a short window of opportunity to move the non-5G phones out into markets where 5G rollout will still take time.
Brands have a lot to do when it comes to reclaiming their smartphones and other devices once their useable life comes to an end. Getting pre-owned smartphones back into the system is extremely necessary to handle them sustainably. They need to be repaired/refurbished for reuse or recycled responsibly to complete the circular loop.
2023 will likely be the year when brands and operators will need to work out better strategies to mop up more and more of the 3G and 4G phones out of the market. This would be required to pull up the pace of new 5G phones.
MANUFACTURING SHIFT : India has almost the same population size as China’s, and a higher birth rate. In recent years, many local and international consumer electronics brands have started considering India as an important strategic market. Besides, with the continuous improvement and maturing of production technology combined with the government’s support policies, many smart hardware products and components have gradually landed in India’s local production.
To summarise – A wider range of age groups is purchasing multiple and different devices ranging from smartphones, tabs, laptops and wearbles. A higher share of older adults has phones than in past years and a higher share of children are adopting phones at even younger ages. As a result, the total addressable global market continues to expand. The global market for 5G devices is expected to show healthy growth as efforts to spread low and mid-priced 5G devices continue.