COVID-19 not only reason for Apple and Huawei’s decelerating phone revenue growth, says Globaldata
While supply chain disruptions and retail store closures due to COVID-19 lockdowns in early 2020 have impacted smartphone revenues, other factors such as post-holiday seasonality, slowing phone upgrade rates and geopolitics have played a part on their bottom line, says GlobalData, a leading data and analytics company.
Anisha Bhatia, Senior Analyst at GlobalData, comments: “The shutdowns across China, Apple’s third-largest market after the Americas and Europe, corresponded to a 7.5% year-on-year drop in Q1 2020 iPhone revenues. However, China’s overall smartphone sales decline affected home-grown Huawei and other Chinese manufacturers more than Apple. Apple saw decelerating revenues for iPhones across regions as expensive phones slowed phone upgrade rates – though, the slowing growth for iPhones in Q1 cannot be attributed only to COVID-19.”
Apple’s growth in wearables and services in Q1 more than offset the declines in iPhone, iMac and iPad revenue. Apple reported $6.28bn in revenue from wearables and accessories (up 23% YoY) and $13.3bn in services revenue (up 17% from Q1 2019). With the impact of North American and European lockdowns on smartphone sales to continue into the Q2 2020 results and likely beyond, Apple is expecting iPhone and wearables to perform worse year-over-year in Q2.
Bhatia continues: “Huawei’s overall revenue growth slowed to 1% in Q1 2020 to $25.72bn, a steep drop from 39% growth posted in Q1 2019. While the sharp drop in Huawei’s revenue can be partially attributed to COVID-19 closures in primary markets such as China and some parts of Europe, Huawei has also been grappling with the aftereffects of the US ban and the lack of Google’s services on its phones since late last year. The lack of Google’s services and APIs, which renders Huawei phones rather impractical in European Android markets, has hampered Huawei’s position, the lingering effects of which were reflected in its Q1 2020 results.
“When COVID-19 forced companies to shut factories and retail stores, and lockdowns muffled consumer demand, crashing smartphone sales and losses were expected. However, the doomsday predictions have been stonewalled to a large extent with mixed results across the spectrum, and COVID-19 is not the only reason for slowing growth and sales for some OEMs.”
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