One Third of Consumers Plan to Cut Smartphone Budget by 20 Percent or More

One Third of Consumers Plan to Cut Smartphone Budget by 20 Percent or More

One third of smartphone users across seven major markets (the U.S., the U.K., France, Germany, India, Italy, and Spain) plan to cut spending on their next smartphone by 20 percent or more, according to a recent study.

In addition, on average half of the respondents plan to delay their next smartphone purchase, with India showing the highest rate of respondents planning to wait before buying (61 percent). This compares to 58 percent in Spain, 56 percent in Italy, and 41 percent in the U.S. Germany had the fewest respondents planning to delay their next smartphone purchase, 34 percent. 

The report shows that economic activity has been severely affected by Covid-19, with all major markets having seen a significant drop in consumer spending. This will likely result in negative smartphone sales growth worldwide in 2020. 

Tarifica’s Take

While the coronavirus pandemic has boosted the mobile markets in terms of people’s growing dependency on mobile service for working and socializing from home amid lockdowns, it has obviously had a very negative impact on economies worldwide, and that inevitably affects the mobile markets.

With incomes down for consumers, spending habits are bound to change. The research study cited here found fairly striking changes for two metrics—amount spent on smartphones and amount of time before the next smartphone purchase. Aside from intimating hard times ahead for device manufacturers and to a lesser extent mobile operators, they suggest that 5G, now on the cusp of full rollout in advanced markets, may face a hard time of its own.

In order for 5G uptake to occur, 5G-compatible devices must be in the hands of users. These devices tend to be relatively expensive. If large proportions of users are saying that they not only will not spend more but are likely to spend less on smart devices, that bodes ill for the acquisition of 5G-compatible phones. Lacking a sufficient number of those, 5G networks could see serious underutilization.

The best way for MNOs to address this issue is to do their utmost to get 5G devices to their subscribers. This they can accomplish by heavily subsidizing them or at least allowing generous installment plans for payment. Making deals with manufacturers of budget-oriented devices is, of course, an excellent strategy in this regard. Given that these pessimistic indicators are appearing in some of the most advanced mobile markets, the future of 5G globally is undoubtedly imperiled by the pandemic. Device-related issues should not be allowed to reduce the momentum of the new technology at this critical time.