US Smartphone Market Down 21% as COVID-19 Impacts Both Supply and Demand

 New York, San Diego, Buenos Aires, London, New Delhi, Hong Kong, Beijing, Seoul

May 7, 2020

According to Counterpoint’s latest US Channel Share Tracker, Q1 2020 saw a 21% year-over-year (YoY) decline in US smartphone sales driven by store closures and stay-at-home orders in the latter part of the quarter.

Speaking about Q1 market dynamics, Research Director Jeff Fieldhack said, “In Q1 we began seeing impacts on smartphone supply in February and early March due to Chinese factory closures due to COVID-19. OEMs that had their production factories located in Wuhan were affected the most. A late tax season bump saw a sales rise for prepaid devices in late February, but supply shortages limited this sales growth. In mid-March, demand plummeted due to COVID-19. States began to issue stay-at-home orders and both carriers and national retailers closed stores restricted foot traffic and offering curb-side pick only in some cases. Around 70% of postpaid stores closed in March leading to a steep decline in smartphone sales for the last month of the quarter.”

Commenting on OEM trends for the quarter, Research Analyst Maurice Klaehne stated, “While Apple stores also closed in March, demand shifted to online sales for the OEM as it has a base which often knows which device they want and are familiar buying online. Apple only declined 13% YoY, which is far better than the other tier one OEMs. Samsung declined 23% YoY. The A-series continued to be a sales driver for the OEM as S20 series sales were off to a weak start due to COVID-19 shutdowns taking affect right as devices hit the market. Samsung offered a $200 online promotion to drive sales in March and even initially launched the devices through its own online channel similar to how Apple drives sales through its Apple Stores during launch months. Samsung is offering both the S20 Plus and S20 Ultra with both sub-6 and mmWave 5G, while the S20 only has sub-6 5G. This means that the lowest cost S20 model is currently not being offered at Verizon, although the carrier did announce it will be carrying it soon. Other OEMs saw steeper declines as they were hit more strongly by early supply shortages or had weaker sales due to store closures. While OnePlus did see growth in the quarter, their sales grew YoY from a small base. OnePlus continues to make inroads into US carrier markets, especially through their competitively priced 5G smartphone offerings.”

Commenting on top sellers for the month, Klaehne continued, “The iPhone 11 was the top seller in Q1 followed by the iPhone Pro Max and the iPhone XR. The 11 Pro was just outside of the top five. Apple sales remain the least affected due to COVID-19 showing the strength of the Apple brand. Apple’s services such as Apple TV+, Apple News+, Apple Arcade, and Apple Pay have helped the company retain a loyal customer base. Sales declined at a lower rate compared to other OEMs due to this. The second-generation iPhone SE which launched in April may also help Apple keep sales from declining further. The $399 price point and the latest A13 bionic processor chip make the device a compelling offer for many customers looking to upgrade their older devices such as iPhone 6 or iPhone 7 series.”

Fieldhack added, “Samsung’s A10e and A20 devices were the top sellers for Samsung in Q1. This is the first quarter that the A-series made it into the top five top sellers list. Flagship sales have remained muted for Samsung and due to COVID-19 the S20 has had a particularly weak launch. Look for substantial marketing once stores are re-opened. Samsung is refreshing its A-series smartphones in Q2 which will help the OEM maintain market share, especially with lower cost devices such as the new A01. The new A51 will compete against the iPhone SE as it is also priced at $399 and offers a 48MP quad camera and a 6.5” display with an Exynos 9611 chip.”

Lastly, speaking of 5G sales trends and 2020 expectations, Fieldhack commented, “5G sales have slowed due to COVID-19. Premium flagship sales in general have declined—if a subscriber has a functioning device, many purchases have been postponed. We expect that 5G sales will see an increase in the following quarters as social distancing guidelines decrease and more 5G smartphones are announced. 5G devices are coming down in price. We already are seeing 5G smartphones such as the OnePlus 8 5G offered at $699 and other OEMs such as Coolpad have announced 5G smartphones that will be priced at around $500 in the coming quarter. Finally, low-band 5G rollouts continue and dynamic spectrum sharing will increase 5G coverage dramatically in the second half of the year. Carriers will have a strong desire to push subscribers to 5G as coverage is much broader.”

Analyst Contacts:

Jeff Fieldhack

Maurice Klaehne

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