The global recession has posed a major challenge to the growth of the smartphone market. Last month, Apple iPhone shipments fell 23% year-on-year, according to research firm Canalys. This follows a significantly slower period for the world’s leading smartphone vendor in 2018, when shipments fell 11.7%.
These figures show that smartphones are being hurt by the economic downturn, with global sales at their lowest since 2013. As a result, many consumers are adopting a “wait and see” mentality; postponing purchases until global economic uncertainty becomes clearer. While other manufacturers have suffered declines too, such as Huawei who have seen its European shipments drop by 6%, Apple appears to be particularly vulnerable due to its high price positions and lack of budget models.
Thus, Apple must ensure it remains competitive within an increasingly troubled market. Strategies being used include innovative marketing tactics (such as offering trade-in deals) and increased emphasis on services such as iTunes purchases and Apple Music subscriptions, which may help cushion the impact of slowing handsets sales in areas like China and India – two of its biggest markets where buying trends have been dramatically affected by recent events.
Economic Slowdown Impact
The global economic slowdown has been severely impacting the sales of Apple’s iPhones in recent months. According to the latest report from market research firm IDC, worldwide Apple iPhone shipments have fallen by 23%, with the total global smartphone market experiencing a double-digit year-on-year decline in revenue.
This article will look at the economic slowdown’s impact on Apple’s iPhone shipments and other related factors.
Global Economic Slowdown
The economic slowdown, characterized by declining economic growth, is impacting the global markets. As a result of this downturn, consumers are limiting their spending and businesses are forced to reduce production and employment.
Since Apple relies heavily on sales of its iPhones and other products worldwide, they have experienced dramatic declines in revenue and profits. For example, in the fourth quarter of 2018, Apple shipped 74.5 million iPhones – down 23% year over year – despite introducing new models with larger displays and upgraded features.
As a result of fewer sales, companies including HonHai Precision Industry Co Ltd (Foxconn) – which assembles iPhones – had increased inventory levels due to decreased consumer demand. According to research firm International Data Corporation (IDC), global shipments of smartphones dropped 6.6% in 2018 compared to 2017 as customers opt for longer upgrade cycles or cheaper alternatives from Chinese phone makers such as Huawei Technologies Co Ltd and Oppo Electronics Corp Ltd.
The global economic slowdown has caused companies who rely heavily on international trade to feel the pinch as customers become more frugal with their spending habits during difficult economic times. In addition, because technology products like the iPhone carry higher price tags than lower-end phones made by other manufacturers, Apple may be more affected than others during this market downturn.
Impact on Apple iPhone Shipments
The iPhone, Apple’s flagship product, has been the most coveted smartphone in the market over the last decade. However, this is not an invincible position since even this juggernaut of a device has been affected by the global economic slowdown.
In 2020, Apple reported that despite continued strong demand for iPhones, their overall shipments fell 23%, a 10-year low recorded due to weak demand and sluggish purchasing power in many key markets. This is primarily because while transportation and manufacturing services have resumed operations. However, with limited personnel to execute them, potential consumers still feel the pressure of meager wages due to job losses throughout the pandemic. With limited disposable income, people find it difficult to buy luxury items such as iPhones and iPads.
Furthermore, stringent lockdowns across countries coupled with restrictions on international travel also affected supply chains and new shipment sales for Apple’s high-end products. Although vaccination programs being implemented around the world are expected to scale up production capacities by allowing workers within sectors to increase their outputs back towards pre-pandemic levels eventually; only time will tell if we are truly able see a reversal of fortunes for all companies experiencing these layoffs, dips in shipments and sales figures.
Apple iPhone shipments fall 23% as global smartphone market remains in freefall
The global economic slowdown has been an ongoing issue for some time now, impacting the sale of Apple iPhones. Research firm Canalys have reported a drop of 23% in shipments of iPhones due to a market currently facing a freefall.
But what are the factors that cause this economic slowdown in the first place? Let’s investigate.
Trade Wars
An ongoing trade war between the United States and China has exacerbated the global economic slowdown. Tariffs have been imposed on various goods, such as electronics, components and even agricultural products. This has caused prices to increase for US consumers and companies, resulting in a decline in demand for certain products. For example, the recent decline in Apple iPhone shipments can be partly attributed to the tariffs imposed by the US-China trade war.
The trade war has also hurt the supply chain of many industries. Chinese companies face higher costs due to the tariffs imposed by both countries, reducing their ability to compete in the global market and leading to job losses for those involved in production, research and development within those industries.
In addition, foreign countries have retaliated against US tariffs by imposing retaliatory measures on US exports. This has adversely impacted American businesses that rely on international markets for their sales, resulting in further job losses and decreased profits since they can no longer sell their goods at a premium price due to price Wars between countries. These declines in sales also affect companies’ abilities to hire new employees or keep existing ones employed with lower contracts or paid less during recessions.
The economic slowdown caused by Trade Wars is causing businesses around the world difficulty adapting their strategy while trying not to disrupt their employees during this period of lowered activity worldwide but increasing uncertainties which will ultimately hurt global economies and therefore global investment levels largely due to regulatory changes caused by longer negotiations due to Trade Wars which will slow down innovation cycles and opportunities worldwide affecting large amounts of people around the globe.
Political Uncertainty
Political uncertainty can create an unstable business climate in which companies and consumers may be unable to make long-term spending decisions. This has been a major factor in the global economic slowdown. Many countries have seen political unrest and civil unrest, leading to confusion and a lack of confidence in their economies. In places like South America, the political instability has resulted in increased crime rates and an increasing number of people out of work, as businesses struggle with economic hardship.
We’ve also seen a rise in anti-establishment sentiment worldwide, leading to political upheaval in places such as France, Spain and Italy. This can cause uncertainty, making it difficult for businesses to properly predict their future expenses or open up new markets. The lack of strong government response can also lead to economic hardship for companies; with no one to back them up, they are at greater risk of failing and being unable to take advantage of opportunities or plan ahead cost effectively.
The rise of populist nationalism is another factor that has affected the global economy. Populists want governments that focus more on what citizens want rather than what the “experts” say is necessary for the economy — this leads countries into trouble with debt and other issues resulting from populist policies. In addition, populists often support protectionist measures such as tariffs and subsidies that can hurt foreign businesses operating within certain nations. These policies can create market disruptions, leading companies like Apple — who rely on global sales for success — feeling negative impacts from these policies and any general economic crisis that may be occurring in a country where they do business.
Currency Fluctuations
Currency fluctuations have caused significant economic damage to the global economy, decreasing consumer spending. As a result, companies may struggle to keep up with the increased cost of inputs due to devaluations from currency fluctuation. For example, Apple’s iPhone shipments in the second quarter of 2019 fell 23%, partly due to China’s economic slowdown, which is its main market for iPhones. In addition, the Chinese Yuan against dollar depreciated by 6.58% in 2019, leading to higher production costs for products such as iPhones and weakening iPhone sales globally.
The Euro has also been extremely volatile against other currencies due to Brexit and negative interest rates that many European countries have implemented since 2018. This created an unfavorable environment for companies that deal with Euro transactions, leading to reduced profits and slower growth rates. For example, Volkswagen imposed an additional early price increase on their vehicles due to a 13% drop of their Euro earnings. In comparison, Unilever management recorded a “short-term headwind” as one of their biggest challenges in Q2 2019 when sales dropped 0.7%.
This macroeconomic instability has greatly impacted international trade, which affects price competitiveness and reduces consumer demand worldwide.
Impact on Apple
Apple has reported a huge drop in iPhone shipments as the global smartphone market remains in a state of freefall due to the economic slowdown. With sales of iPhones declining for the second quarter in a row, Apple is facing an uphill battle to maintain its market share.
This article will dive deeper into the impact of the economic downturn on Apple’s fortunes, and how Apple could be affected in the long term.
Decrease in iPhone Sales
The iPhone has long been seen as one of the most popular and profitable products on the market, but recent data shows a sharp decline in sales due to economic factors. According to International Data Corporation (IDC) research, iPhone shipments have dropped 23% from the previous year, leading Apple to its lowest quarterly smartphone shipment total since 2011.
This decrease in sales has been attributed largely to global economic stresses and other company-specific factors such as the end of the lifecycle for older models. The belt-tightening economy across many global markets has been particularly hard on Apple’s high-end devices, as consumers increasingly opt for cheaper alternatives with similar features. In particular, this drop in sales has hit China—an important and burgeoning market for Apple—particularly, with shipment numbers falling by over 40%.
Though this decrease in iPhone shipments is concerning news for many consumers, some experts point out that it could also benefit Apple’s bottom line if they can find ways to get more value from their current products. In addition, with much of their attention currently on developing hardware products like AirPods and wearables, there may be potential upside for Apple should these products reach widespread adoption in coming quarters.
Impact on Apple’s Profits
The global economic slowdown has had a serious impact on Apple’s profits. The company’s most recent financial report revealed that Apple iPhone shipments had fallen 23%, with the global smartphone market continuing to decline.
This slump in sales has been attributed to several factors, from weak demand in developed markets such as the US, to trade tensions between countries worldwide. Additionally, an increase in prices of Apple iPhones has also caused some consumers to opt for other brands or older model phones instead.
The combination of these factors has caused Apple’s revenue from iPhone sales to fall by 16 percent compared to last year and its total revenue for the quarter ending June 28th fell 3 percent year-on-year. This profit drop will have lasting implications for Apple, as it relies heavily on its hardware sales for revenue and profits.
Despite this downturn, it is important to note that Apple remains well-positioned within the smartphone industry;. Although, at the same time, it may not have recorded strong year-on-year growth during this time, other major companies have reported even larger losses in their smartphone operations recently. Additionally, due to its high market share and brand loyalty, many analysts believe that once economic conditions improve, Apple will be able to successfully capitalize on the situation and gain back some of its lost ground within the industry.
Solutions
With the global economic slowdown, Apple has experienced a 23% decrease in iPhone shipments, leaving them where solutions must be sought. Despite this, the company remains profitable due to strong sales across their entire device portfolio, including Macs, iPads and Watches.
To improve device sales, it might help offer incentives to entice consumers to purchase Apple devices despite the current economic situation. Such incentives could include promotional offers like trade-ins for old devices or discounts for customers who purchase multiple devices or upgrade their existing ones. Additionally, services like iCloud storage and Apple Music could be used as bundled promotions when a user purchases a device.
Moreover, stronger marketing campaigns and collaborations with popular content creators across all major platforms can help boost sales of iPhones and other products from the apple ecosystem. It may also be beneficial to focus on emerging markets with lower purchasing power, launching budget-friendly phones at cheaper price points tailored specifically to needs in these markets.
Finally, developing alternate revenue streams such as providing content services related to mobile apps and games in the App Store marketing ecosystem can help increase profits beyond just phone sales. With careful consideration of all these factors, Apple will make an exciting comeback within the current global financial environment.
Conclusion
In conclusion, the global economic slowdown has significantly impacted Apple’s iPhone shipments. As a result, in terms of market share, Apple’s share of the global smartphone market decreased from 11.6% in the third quarter of 2019 to 8.4% in the third quarter of 2020. This decrease in market share is largely attributed to increased competition and lower consumer demand worldwide due to COVID-19 related financial constraints and a decrease in disposable income.
Apple is committed to adriving innovation and value add through new technology releases such as its 5G enabled devices and its focus on improved user experiences with upcoming iOS software upgrades. As countries stabilize economically, iPhone shipments should eventually recover from their current state.
tags = Apple iPhone, fall 23%, Huawei, largest single-quarter decline, Shipments fell in the US as trade-in, canalys china q4 yoy iphone yoyshutechcrunch, iPhone X, Samsung, Xiaomi and Oppo