Slumping demand for smartphones could lead to more promotions

You can expect to see a slew of new smartphone promotions and bundles in the second half of 2022, according to the research firm Canalys, as vendors attempt to counter the slumping consumer demand for smartphones in North America.

A Canalys study shows that smartphone shipments in North America suffered 6.4% decrease in the second quarter of 2022, with 35.4 million units shipped. This decrease can be attributed to economic challenges and high inflation.

“A combination of high inflation, decreasing consumer confidence, and an economic slowdown is shrinking demand in North America, which was previously the world’s most resilient market,” said Runar Bjørhovde, Canalys Research Analyst. 

Economic challenges are forcing consumers to rethink purchasing decisions. Consumers are now more likely to go for low-end or high-end devices, causing a demand gap for mid-range devices. 

SEE: As smartphone production volume drops, Samsung overtakes Apple

The iPhone SE (3rd Gen), Galaxy A53 and Galaxy 33 models performed poorer than expected because the consumer base that would typically consider buying devices between $250 and $600 are forced to consider cheaper options due to financial pressures, said Canalys Research Analyst Brian Lynch. However, the low-end and high-end market remained stable.

“In the low-end, demand remains solid, but competition between vendors is fierce. Motorola’s refreshed G Power, Samsung’s A13 models, and TCL’s new launches with Tracfone, Verizon, and T-Mobile provide numerous budget-friendly options that are increasing in demand,” said Lynch. “The high-end’s performance also remained strong with Apple’s iPhone 13 series and Samsung’s Galaxy S series finding opportunities.”

SEE: Apple iPhone 13, Samsung Galaxy S22 win out – but smartphone market slides overall 

Both Apple and Samsung dominated the top 10 shipped models in North America in Q2 2022.   Despite the overall shipment decrease, Apple saw 3% annual growth and Samsung grew 4%.

Low-end market challengers that want to grow their market share and defend their carrier slots will have to appeal aggressively to customers, according to Lynch. 

“Vendors are expected to invest heavily in marketing and offer promotions and bundles to speed up sell-though,” he said.