Another Tough Year for Bruised Mobile Phone Market

The global mobile phone market is forecast to endure another tough year in 2023. Shipments are set to be at their lowest annual level for well over a decade at 1.35 billion units, declining by 4% from an already weak 2022, and worldwide shipments of new smartphones will fall to 1.16 billion units. These are just some of the conclusions from our recently published market forecast (clients can access the full report here).

There are three main reasons for the ongoing difficulties faced by the mobile phone market. Firstly, consumers are fine with using their phones for a longer period, so they upgrade less often. Secondly, persistent economic uncertainty is causing consumers to be more cautious with their purchases. And thirdly, the increasing attractiveness of used devices is driving consumers toward more affordable and eco-friendly options.

The market for second-hand devices is forecast to continue growing in 2023 as people seek cost-effective options in a weak economy — and choose pre-owned phones to support a more environmentally friendly lifestyle. This surge in demand will be aided by supply advancements in many markets, resulting in the sale of an estimated 330 million used devices. Additionally, a greater proportion of these sales will be facilitated through structured distribution channels. We’ll be hosting a free webinar covering this topic in more detail on 30 March; to register, please click here.

The decline in new device sales is expected to be more pronounced in the first half of 2023, with a trajectory toward recovery in the fourth quarter when economic headwinds are expected to calm. Most regions will see shipments drop, with Western Europe and North America particularly hit by inflationary pressure and financial uncertainty. But demand in China is forecast to improve throughout 2023, after the lifting of Covid-19 restrictions at the end of 2022. Demand in India will remain stable.

Data from our recurring Connected Consumer Radar survey shows that brands focussing on premium phones are likely to benefit from the polarization of the market, as consumers from higher income groups are less affected by the weaker economy. In contrast, those targeting low- and mid-range markets will probably face trouble, as their customers become even more price-sensitive.

As the high-end market segment is expected to remain relatively strong in 2023, 5G-enabled phones are forecast to reach 700 million shipments, accounting for more than one in two phones sold in the year.

Although the global economy remains vulnerable, the market is expected to gradually improve from 2024. But we don’t expect the global market for new devices to recover to the levels seen in the mid-2010s, because the increasing strength of the second-hand device segment will suppress demand for new phones (see chart below).

The market for used mobile phones is expected to continue growing even once the financial outlook improves as people become more environmentally conscious. This trend is likely to continue in the coming years, with second-hand devices as a proportion of all sales forecast to almost double by 2027.

Mobile phones remain the most popular connected device, but people may not be inclined to buy new phones as frequently as they did before. Instead, they’ll seek cost-effective options in the aftermath of the pandemic. The industry will need to adjust to this new reality.

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