Apple defies largest smartphone downturn ever, partly due to $399 iPhone SE success

iPhone SE
Apple iPhone SE was the darling smartphone in the second quarter, priced at $399 amid the global pandemic and economic decline. (Apple)

Global smartphone shipments declined 16% in the second quarter-- their largest decline ever-- but Apple saw a 13% surge, partly on the success of the $399 iPhone SE launched in April.

Worldwide, Apple finished third behind Huawei and Samsung. Despite a U.S. technology ban, Huawei took the top spot globally, while Samsung finished second as both companies saw declining sales.

Analyst firms IDC and Omdia reported on Thursday almost identical results for the second quarter compared to a year earlier with a decline of 16% and 15.7%, respectively. IDC pegged the total shipments for second quarter at 278.4 million, compared to Omdia’s tally of 279.7 million.  IDC said Apple shipped 37.6 million iPhones, while Omdia put the number higher, at 39.9 million.

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Nabila Popal, research director at IDC, called the overall smartphone reduction in the second quarter a “huge decline,” even though COVID-19 and its economic impact have made diminished productivity reports seem almost commonplace.  This week, the U.S. Commerce Department reported the biggest decline in gross domestic product on record, down by more than 30% compared to a year ago.

Popal cited a convergence of three factors in the decline: reduced consumer spending amid rising unemployment; the closing of retail stores; and increased consumer spending on technology other than smartphones such as PCs, monitors and tablets to facilitate work from home.

Regionally, China’s decline was 10.3%, compared to a U.S. decline of 12.6% and a Western Europe decline of 14.8%.  Recovery has been strong in China, according to Ryan Reith, an IDC vice president.

While Reith said the consumer demand for 5G phones remains low, there were some positive signs for the rest of the year for 5G handset chipsets from Qualcomm, expressed in the company’s earnings call on Wednesday. 

Qualcomm CEO Steve Mollenkopf said the company’s 5G handset chip shipments were higher than earlier anticipated in the fiscal quarter ending June 28. For the full calendar year, 5G chip shipments from Qualcomm will reach the higher end of a predicted range of 175 million to 225 million, he said.

Omdia predicted that the smartphone market will continue to feel the impact of COVID-19 through the end of 2020.  Apple’s iPhone SE hit the market just as lockdown restrictions reached important markets such as the U.S.

“A $399 starting price point makes the iPhone SE an attractive new device, especially in the face of continued economic uncertainty,” said Jusy Hong, director of smartphone research at Omdia.  Existing iPhone users who needed an upgrade found the SE to be an affordable option that didn’t require a large down payment or high monthly repayment.

RELATED: Apple iPhone SE:  a bargain smartphone perfect for COVID-19 downturn

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