China Smartphone Sales Slowdown

[ Financial Times ] Simon Mundy:

A large part of the problem for the industry is a slowdown in handset sales in China, where the smartphone market had been growing at a double- or triple-digit pace in recent years. But last year, that growth rate was only in the “low single-digits”, according to researchers at IDC, who think the pace of global smartphone sales growth will continue to decline.

Samsung is forecasting lower smartphone sales. Apple is too. Apple bet the farm on China, but Apple’s products are more expensive and folks with more money generally buy them. Folks with more money are less impacted by the economy and so maybe Apple might not experience as steep a decline as Samsung. Unlike Apple, Samsung has a broad range — hundreds? — of smartphones; sales of mid- to low-end smartphones will be more exposed to economic downturns.

You might think an economic downturn might actually help sell lower-end smartphones. That might be true if your financial situation changes a little bit, but not when an economic downturn hits you hard. When you’re hard pressed for money — money for food, electricity, rent, etc. — you’re not thinking, “I need to upgrade my smartphone, but since I don’t have money I’ll upgrade to a cheaper one.” No, that’s not what you’re thinking; you’re thinking, “My smartphone works, so I’ll wait to upgrade until my financial situation gets better.”