Consumers Use Smartphones Longer Than Before
Global smartphone shipments totaled 1,332.5 million units in 2020, continuing a downward trend for three years in a row, Counterpoint Research said on Feb. 1. The figure fell from 1,565.7 million units in 2017 to 1.505.2 million units in 2018 and 1.479.1 million units in 2019. In three years, smartphone shipments shrank about 15 percent.
The biggest reason for the continued decrease is that consumers use their smartphones longer than before. In the past, when smartphone companies released new models every year, many consumers replaced their phones with new models. However, performance gaps among new models from different smartphone makers are not noticeable these days as a result of an upward leveling trend of their technologies. On top of that, smartphone makers have been failing to differentiate new models from previous ones.
Korea's smartphone replacement cycle was 33 months in 2018, 10 months longer than 23 months in 2014, according to the Korea Internet & Security Agency. This means that a smartphone change cycle of every two years has been extended to every three years.
Some experts predicted that 5G smartphones, which were first commercialized by Samsung Electronics in 2019, would be a game changer in the smartphone market. Yet 5G phones fell short of expectations. Poor 5G networks triggered a lot of complaints from consumers. 5G services also lack content specialized for 5G phones.
Smartphone makers have come up with varied responses. Samsung Electronics lost its number one position to Apple which successfully released the iPhone 12 in the fourth quarter of 2020. Samsung Electronics' strategy was a price war. Prices of the Galaxy S21 series models introduced in January are 140,000 won to 250,000 won lower than those of their previous models.
LG Electronics is considering giving up its smartphone business. China's Huawei stands at a crossroads due to the U.S. trade sanctions.