Fewer but more expensive smartphones: how the mobile market is changing

If it ain’t broke, why change it? In 2018, 48% of consumers used their smartphone for more than two years. According to gfknewron Consumer, this share rose to 57% in 2022: an increase of more than 9 percentage points, especially among the very young (15-25 years), where it now stands at 14 percentage points above the average.

In between was the pandemic, which drove up sales, but the trend towards market saturation was clear even earlier. And so the global telephony business closed 2022 with a drop of -9.7% in value compared to the previous year. The trend, according to GfK, will also continue in 2023, thanks to the fact that the Chinese market is becoming increasingly closed, with new products that are not launched in the US, and that in Europe – when they arrive – arrive late, as also shown by Mobile World Congress in Barcelona.

Change your spending

The smartphone segment recorded a drop of -9.1% compared to the previous year, for a total of 908 million units sold. Revenue was hit even harder, dropping 10.2% to $330 billion. As budgets have shrunk for many people, in 2022 the market was driven primarily by upper-middle income consumers (48% of smartphone buyers, up 4% share from 2021). Therefore, the demand for premium devices has also increased: for example, the turnover of 5G models has grown by 1.2% year-on-year. The same is true for devices with more memory: smartphones with capacities above 256GB recorded a +19% increase and accounted for 41% of the total market revenue in 2022.

The exception of Italy

For the Italian market, on the other hand, 2022 was a positive year, which closed with a 4% growth. Compared to the previous year, both smartphones (+2.7%) and wearables (+8%) grew in value.

And in general, one of the few sectors that has remained stable in 2022 is wearables. With 13.9 billion dollars in revenue, the wearables market almost reached the same level as the previous year (-1.1%). Some of the most popular segments have lost ground, while other product lines have been more successful: health and fitness trackers have seen a contraction of -31%, while smartwatches have grown by +21%. These changes are linked to the growing demand for smart health monitoring solutions, as evidenced by the growth in sales of wearables capable of monitoring sleep (+4%) or detecting blood oxygen saturation (+20%). This trend has also led to the development of innovative features, such as the possibility of measuring the level of stress (Eda). Launched in the fourth quarter of 2021, these devices already represent 16% of the wearable market revenue and continue to grow.

One billion 5G subscribers

Meanwhile, from the point of view of the operators, Ericsson has published an update of the Mobility Report, with data relating to the whole of 2022. The year ended with around 8.4 billion SIM cards worldwide. In the fourth quarter of 2022 alone, mobile network subscriptions grew by 39 million units. The largest quarterly contribution comes from Nigeria (+4 million), followed by the Philippines (+4 million) and Indonesia (+3 million). There are more SIM cards in the world than people, with a penetration rate of 106%, while there are 6.1 billion unique mobile subscribers. The gap is largely due to the presence of more Sims per person or inactive subscriptions.

The use of the Internet from mobile devices is still increasing: in the fourth quarter of 2022 there were around 80 million new mobile broadband subscriptions, thus reaching a total of 7.2 billion. Today 86% of subscriptions are of the mobile broadband type, i.e. they allow access to the Internet, use of apps and online services.

In the last quarter, 5G subscriptions grew by 136 million units, surpassing the 1 billion mark worldwide. To date, 235 operators have launched 5G services and at least 35 have implemented standalone (SA) 5G networks.

The growth of mobile broadband subscriptions and the ever-increasing consumption of video also leads to an increase in mobile data traffic which grew by 40% between the fourth quarter of 2021 and the same period of 2022, to reach 118 Exabytes (EB ) per month. In absolute numbers, data traffic on mobile networks has doubled in just two years.