Why Smartphone Sales Have Slowed Down

Prices may come down, soon, too.

  • Smartphone sales dropped off a cliff last year. 
  • High prices, stagnant products, and problems in China are all big factors.
  • You probably don’t need to upgrade your existing phone anytime soon.
The view of someone from the neck to the waist, holding an iPhone in front of them.

Jenny Ueberberg / Unsplash

Smartphone sales have tanked. iPhone sales dropped 15%, and other makers suffered even more. It seems like we have just stopped buying them.

Apple's sales in the December quarter were down to 72.3 million iPhones, compared to 85 million from the previous year. Samsung's drop was similar, and Chinese maker Xiaomi dropped by over 26%. While some of that was the effect of COVID finally going viral in China and shutting down iPhone factories for a good chunk of the quarter, it's also partly because we're just not buying as many phones. 

"I believe that the drop in sales for new smartphones isn't an anomaly and is here to stay as consumers become more conscious about their spending habits, as well as the environmental impact of the smartphone market. The cost of living crisis and the COVID-19 pandemic has played a part, with people less able to pay the skyrocketing price of newer phone models as they come out, choosing to stick with their old phones for much longer," UK-based telecommunications specialist Steven Athwal told Lifewire via email. 

Too Little and Too Much

When Athwal sums up the reasons behind the smartphone sales tumble, it’s easy to see how this has created a perfect storm of problems for smartphone makers. But two of these reasons stand out as being the phone makers’ own fault, especially for Apple.

One is Apple’s reliance on China as almost its sole source of iPhones. And not just China but a few companies in one part of China. Any kind of upset, from political to pandemic, was always going to cause a big problem. At the end of 2022, that’s precisely what happened and pre-Christmas iPhone orders were pushed back into the new year. Apple is trying to move manufacturing elsewhere, but it’s a slow process, and China is just so good at making things. 

Many people are holding on to their existing phones longer, as they may be able to continue using them and delay upgrading to newer models.

The other reason for slower sales might be Apple’s ever-increasing prices. As sales naturally slow thanks to ever-more-saturated markets, one way to satisfy shareholders’ insatiable (and shortsighted and unsustainable) hunger for growth is to jack up prices. Apple’s products were always expensive, but now they’re nuts. In 2018, the 512GB cellular 12.9-inch iPad Pro cost €1,659 in 2018 (These are European prices as those are what I have access to, but the differences are similar in the US). Today, this model costs €2,029, a 22% increase in a few years.

The iPhone and the Mac have seen similar price hikes, which is especially crazy for the Mac, as Apple now uses its own chips to power them, and no longer has to pay Intel hundreds of dollars for each one. 

The iPhone’s rising price, coupled with the fact that iPhones can and do last for years, means that many people may choose to just stick with the one they have. In the even more price-sensitive Android market, where handsets might not last as long, people may choose even cheaper options. 

Waiting Game

Then, the products themselves are quite mature. Why bother replacing your phone if the only difference is a newer, slightly faster chip and some extra camera features? The iPhone is especially great already. It's hard to see how there could be the kind of year-on-year improvements that were commonplace in its early years—things like adding support for video or extras cameras. And Android phones are in a similar situation.

Two people sitting at an outdoor cafe, taking a picture with folding phone.

Samsung UK / Unsplash

"Many people are holding on to their existing phones longer, as they may be able to continue using them and delay upgrading to newer models," technology writer Shahnawaz Sadique told Lifewire via email. 

The good news for buyers is that something has to give, and it probably won't be us. We can afford to wait it out if we already have a phone that works. And Apple has already shown signs of lowering its prices. The entry-level M2 Mac mini, for example, is $100 cheaper than the equivalent M1 model that preceded it. 

And if Apple doesn't want to lower prices? Then it will have to tempt us with better hardware and software, which is also win for the buyer, just in a different vein. In the meantime, let's just wait and see what happens.

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