This week, there were multiple reports of both smartphone and tablet sales declining across the globe during the second quarter. The specific figures reported varied by source, but the direction of sales was the same. While developed markets have experiencing these declines for some time, now the slowdown in device purchases appears to be showing up in emerging economies as well.
While some of the factors involved in this slowdown are likely transitory (economic uncertainty, geopolitical events, disruptions from Covid-19, and more), there are longer running trends, particularly slower smartphone upgrade cycles, that suggest this downturn may be a long-term feature of the market.
Although device sales were never a major profit center for operators, this shift will still result in lost income for providers. More importantly, however, is the fact that the moment a consumer purchases a new device is also one of the most likely times they consider changing their mobile service provider. As a result, many carriers target this moment in the consumer lifecycle to win more new users by offering devices as part of particularly aggressive switcher promotions. However, as consumers keep their devices for longer, these moments are spaced further and further apart. As a result, operators who relied on this strategy in the past will need to come up with new ways to win new customers.