The era of smartphones reached its peak in 2016 and has been losing momentum since then. Both in terms of sales (the peak was reached six years ago, with 1.473 billion devices sold worldwide), and in terms of innovation and public interest. There is now much less excitement than a few years ago for these devices that have changed the world but are no longer able to present substantial innovations as often.

However, according to recent data from Canalys, 2022 was the worst year for smartphones. Worldwide sales fell below 1.2 billion devices. The most striking thing was that in the last quarter of the year, which is traditionally the quarter with the most sales as it includes the Christmas period and Black Friday, it recorded a real slump compared to 2021: the fall in sales was 17%, while for the whole year it moderated to 11%. Negative figures have not been recorded since 2013, the year smartphones began to overtake older mobiles, with around 1 billion sold in total.

Factors behind the crisis

“Smartphone manufacturers have faced a difficult macroeconomic environment throughout 2022,” explains Runar Bjørhovde, an analyst from Canalys Research. Issues with lockdowns in China, the Ukraine war, inflation, and the rising cost of raw materials and logistics are factors that have impacted sales.

The increasingly high prices of devices, lack of innovation, and decrease in purchasing power complete the picture. Mid-range and low-end devices, which are the highest in volume but lower in margin, were the most affected in Q4 of 2022, though premium models also experienced a decline. The market behavior in Q4 of 2022 contrasts with that of Q4 of 2021, in which there was an increase in demand and a mitigation of supply issues. The consumers are looking for more value for their money, which is why manufacturers are struggling to keep the sales numbers up.

What to expect in 2023?

For the new year, there are few prospects of change. Technologies such as 5G, which were considered important for boosting sales a couple of years ago, have revealed all their weaknesses. By now, almost all phones are 5G, but no one is rushing to change a 4G phone just for the sake of having 5G, because the services are still embryonic and the benefits in terms of speed and network quality are not yet significant.

According to Le Xuan Chiew, another analyst from Canalys, “providers will approach 2023 with caution, prioritizing profitability and protecting market share,” and “they are cutting costs to adapt to the new reality of the market”.

Although inflationary pressures will gradually decrease, the effects of interest rate increases, economic slowdown and a increasingly tight labor market will limit the market potential, negatively impacting saturated and mid- to high-end markets like Western Europe and North America. Manufacturers will have to come up with new strategies to attract customers and stand out in the market.

Apple regains top spot

According to Canalys data, Apple regained the top spot among manufacturers in Q4 of 2022 and reached its highest quarterly market share in history, with 25% of sales, despite production issues at its Zhengzhou mega-factory in China.

Samsung finished Q4 in second place with a 20% market share. Xiaomi held onto the third spot despite its market share falling to 11% in Q4, largely due to difficulties in India. The other two Chinese companies, Oppo and Vivo, round out the top 5 manufacturers, with 10% and 8% market share respectively.

The data suggests that even with production challenges, Apple was able to maintain its position as the leading manufacturer in the market, while Samsung and Xiaomi continue to be major players in the industry.

Analyst’s viewpoint

Although the sales level remains high (over 1 billion devices are sold per year), can it be said that the golden age of smartphones is definitely behind us?

Paolo Pescatore, analyst at PP Foresight and technology and digital expert, attempts to answer: “It’s becoming increasingly difficult for smartphone manufacturers to differentiate their devices. They have been designing models driven by users’ insatiable desire for larger screens, longer-lasting batteries, and better cameras for years. Therefore, emphasis is now being placed on significantly improving existing features, user experience, and preparing devices for the future by extending the product’s lifespan”.

It seems that the market is shifting towards longer lasting, more durable and sustainable smartphones, rather than the constant release of new models.

The golden age of smartphones may have come to an end, according to industry experts. Despite the fact that more than one billion smartphones are sold each year, manufacturers are struggling to differentiate their devices and offer new and exciting features. Paolo Pescatore, an analyst at PP Foresight, explains that “it’s increasingly difficult for smartphone manufacturers to differentiate their devices.

They’ve been designing models driven by users’ insatiable desire for larger screens, longer-lasting batteries, and better cameras for years. Now, the emphasis is on significantly improving existing features, the user experience and preparing devices for the future by extending the product’s lifecycle”.

In terms of future developments, Pescatore warns that many technologies may be launched prematurely, such as 8K displays and foldable smartphones, which are not necessarily in high demand among consumers. The high cost of these devices may deter consumers from purchasing them.