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New iPhones should be here soon. Will people buy it?

IDC has not yet released data for global smartphone shipments for the first quarter of 2020, which the company typically does in April. Global smartphone shipments declined several quarters in a row before the pandemic, as people stuck to older phone models for longer. There was a modest return to just under 1 percent growth in the third quarter of 2019, but that turned out to be a failure. In February 2020, the company issued a statement that Covid-19 could lead to a 10 percent decrease in smartphone shipments in the first half of 2020 compared to the previous year.

Now, says Reith, the company is beginning to see Consumption is also declining, especially in China, the world's largest smartphone market. He estimates that smartphone purchases in China declined 40 percent in January and 60 percent in February compared to the same months in the previous year.

"The first consumer goods to collapse in a recession are the durable goods, which include discretionary devices."

Ori Heffetz, Cornell University

Like the Bank of America in their report on the US economy noted last week that consumers are "at the forefront of the shock of the Covid 1

9 pandemic". At the beginning of March, travel and accommodation expenses fell sharply; By the middle of the month, this had expanded to recreation, clothing, entertainment and "other discretionary goods and services". Unemployment claims rose to 6.6 million last week. The St. Louis Federal Reserve Bank has estimated that the unemployment rate could rise to 32 percent in the second quarter of this year. Others, like Bank of America, forecast a much lower (but still record-breaking) unemployment peak of 15.6 percent.

Things like tax breaks, expanded unemployment benefits, and short-term trials could help offset people's loss of income. "However, it will be some time before income returns to pre-COVID 19 levels and the recovery is retrained," said Bank of America analysts.

"Certainly $ 1,200 checks – those that don't go to everyone – that don't." That doesn't mean people sit there and say, OK, great, I'm going to buy an iPhone now, even if it's $ 500, ”says IDC's Reith, referring to the stimulus check that is part of the corona virus Aid, Relief and Economic Security Act is

"The first consumer goods that collapse in a recession are durable goods, which also include discretionary devices," says Heffetz. “There was a time when these phones gave us freedom. You might not be in the office, on the beach, or at the bar, but you could still be working. You were always available. Now I am at home all the time, in front of a big screen and over WiFi. "He notes that regardless of how long our isolation periods last, this can change the way we think about what technology is needed in our lives.

After the 2008 recession, some people have convinced themselves That upgrading from a Nokia mobile phone to a smartphone was a justifiable effort to maintain professional networks.These must-haves could be a faster internet connection at home, a good laptop for remote work, or a tablet for your child to use can stream his homework.

How Apple and Samsung do

Analysts are mixed about how a weaker demand for smartphones could ultimately impact premium phone manufacturers like Apple and Samsung, despite the decline in global smartphone sales in the holiday quarter Apple showed signs of growth in 2019 compared to the previous year, in particular other in China. Samsung maintained its position as the world's leading phone manufacturer. At this point, however, concerns about the corona virus were not widespread.

"If this is extended until September, I think it really hurts Apple's heart," said Pat Moorhead, founder and principal analyst at Moor Insights & Strategy. “While Apple has done a good job diversifying into things like services, it's still mostly an iPhone company. And if you've lost your job, worried about the future, and can't delay your insurance payment or mortgage payment, the phone is a nice thing. The only exception is when it is broken. "

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