Marta Pinto
Marta Pinto (Research Manager, Client Devices, European Region)

Two years into the COVID-19 pandemic and a lot has happened in the smartphone market. The current mood is fairly positive with component manufacturers, smartphone brands, channels and consumers busy announcing, launching or consuming devices.

For 2022, the main themes will sound a lot like the key themes from last year. I will highlight a few of these here:

  • Shortages, Production and Logistics

The disruptions in transportation, production cycles and component supplies are likely to continue — and continue to be influenced by the emergence of new variants, the vaccine rollouts and government restrictions. Chipset manufacturing is expected to return to pre-pandemic capacity by the second half of the year, easing the pressure but still impacting 1H22 launches and shipments.

Manufacturing disruptions due to potential new lockdowns and power constraints in China, Vietnam, India and Bangladesh will have a cascade effect, with brands already eyeing countries such as Turkey to diversify their assembly locations. Transportation costs have also increased over the past two years and are likely to remain high until the travel sector recovers.

  • New Product Categories

Foldables and 5G handsets are already three years old and will become mass market items in the next few years. While working on making these devices “current,” brands will focus on diversifying their scope, namely with AR/VR headsets and smart home gadgets that complement their ecosystem offering.

  • 5G Services Availability

5G services are now widely available in Europe and in most cases with no premium fee on top of the current prices. 5G smartphones came to the market earlier than the services were available but now the two are catching up, with advanced geographies (such as northern Europe) seeing the strongest adoption. Brands will continue to push for innovative use cases for 5G handsets, while 4G handset prices are likely to quickly erode or the devices be removed from portfolios, as happened with Apple.

The legacy network switch-off will push 4G and 5G hybrid phones (smart feature phones) and new operating systems that meet the needs of niche markets such as seniors and rugged devices.

  • Security

Smartphones are increasingly a hub to manage life (banking, personal information, photos, etc.) and the home. The pandemic has highlighted the need to adapt to remote learning, working and entertaining, and with that the focus of ill-intentioned agents has also shifted. Data protection regulations are already in place but smartphones are proving to be a weak link, with attacks increasing as users are mostly unaware of the dangers. Brands will push for more managed ecosystems and OS providers will have to ensure timely OS rollouts and security patches to help their customers keep safe online.

  • Channels

Channels were hit by COVID disruptions and will need to continue to innovate as they pursue return on investment and a new retail raison d’être after online channels have enjoyed two years of opportunity to increase customer loyalty. Innovations around business models, partnerships and added-value offerings will continue to be tested and rolled out.

  • Average Selling Price

There are no free lunches, as the saying goes, and this is true for smartphones: shortages mean fewer devices in the market and a focus on profitability to make the most of the volumes that get into consumers’ hands. Therefore, average selling prices could increase at least in the very short term while the supply situation remains unresolved.

  • Lock Consumers Into Your Ecosystem

Samsung recently merged its mobile division with the wider consumer unit — a sign that smartphones are becoming another device in a wider consumer electronics ecosystem and brands are restructuring internally to break silos between devices and coming up with an integrated offering across categories. Seamless experience across laptops, smartphones, tablets and smart home devices will continue to deepen in the coming years. Brands that are now preparing to compete in an ecosystem environment will likely thrive. Apple already has an installed base of loyal users but is still missing out on a lot of the ecosystem devices in the home that Samsung, for example, has. Apple either establishes the right partnerships and attracts the right developers to code for third-party devices (fridges, etc.) or it will risk falling behind the likes of Samsung, Xiaomi, and TCL-Alcatel.

  • B2B

In early 2020 companies and schools needed to quickly deploy productivity and work tools to meet their remote environment needs (including cameras, monitors and laptops), and this trend started to hit smartphones towards the end of 2021. By then, companies had a clearer outlook on the pandemic and were more able to prepare for the unexpected. Contingency plans, security mitigation arrangements, costs and data management required in some cases for organisations to renew entire fleets or readjust current smartphone devices to cope with flexible working, learning, entertainment and healthcare, etc. The enterprise segment will therefore continue to grow in the next couple of quarters.


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