Smartphone sales are so bad even the holidays couldn’t help, says IDC

A smartphone market recovery in 2023 looks unlikely as consumer demand weakens amid rising inflation.

Smartphone shipments have dropped nearly 20 percent year over year during the recent holiday period, as consumer demand softens amid inflation and economic uncertainties. It’s the “largest-ever decline in a single quarter,” according to IDC, and it contributed to 2022 having the lowest annual shipment of smartphones since 2013.

While there were still 1.21 billion smartphones shipped in 2022, shipments during the all-important holiday quarter were actually down from the previous quarter for the first time ever. “We have never seen shipments in the holiday quarter come in lower than the previous quarter,” says Nabila Popal, research director at IDC. “However, weakened demand and high inventory caused vendors to cut back drastically on shipments.”

Smartphone vendors are being cautious with shipments, according to IDC, with sales and promotions over the holidays taking up existing inventory rather than new shipments. That all points to weaker consumer demand and the fact that modern smartphones have reached something of a plateau in terms of capability, with older models doing the job perfectly well.

IDC says it’s seeing people wait until 40 months after purchase to update their handsets “in most major markets.” We’ve witnessed this trend for years now, with AT&T and Verizon warning back in 2019 that upgrade rates had hit an all-time low thanks to fewer customers upgrading their devices. The smartphone market has matured and saturated in many countries, and there are fewer reasons to upgrade to the latest smartphone every two years.

While shipments from all of the top smartphone vendors are down year over year, Apple maintains the top spot with Samsung in second place. Both saw shipments drop around 15 percent, according to IDC, which we’ll likely see reflected in Apple’s earnings results next week. Samsung recently warned of a plunge in profits after demand for electronic devices dried up in the recent quarter.

A weaker smartphone market might not be good for industry giants like Samsung and Apple, but it could be good for consumers looking for deals. “Consumers may find even more generous trade-in offers and promotions continuing well into 2023 as the market will think of new methods to drive upgrades and sell more devices, specifically high-end models,” says Anthony Scarsella, research director at IDC.