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27 Jan 2023

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Developing Nations Could Bear the Brunt of Smartphones Slowdown

A new report from IDC confirmed a recent slump in smartphones, in line with an earlier report from Gartner that reduced its forecast for overall enterprise IT growth, with a special emphasis on devices such as smartphones.

The IDC report tracked an 18.3% drop in smartphone shipments during Q4 2022, and an 11.3% decline for the year. Gartner had previously cut its forecast for 2023 enterprise IT spending from 5.1% to 2.4%, citing a projected 5.1% drop in spending on devices this year.

Smartphones and mobility are a key, “last-mile” component to the growth of Digital Infrastructure worldwide, and increasingly the point-of-user-experience for billions of people worldwide. IDCA Research has found that 63% of the 147 nations surveyed in its EESG Digital Readiness of Nations Index have mobility adoption rates exceeding 100% - that is, more than one mobile device or subscription per person.

Mobility is a Cornerstone to Growth

More important, the continued growth of mobility is a cornerstone of continued Digital Infrastructure development in developing nations. Mobile usage stimulates the need for connectivity, networks, and the datacenters that ultimately process the data streams that feed these devices.

A few examples show that three of the dynamic digital economies in East and Southern Africa – Uganda, Ethiopia, and Zambia – have mobile adoption rates of between 58% and 75%. In West Africa, Ghana and neighboring Cote D'Ivoire have reached mobile adoption rates of around 130%.

The world's largest markets, in Asia, Europe, and North America are still the big determinants in driving the overall smartphone market, which brought 1.2 billion new devices into the world in 2022. Perhaps a significant slowdown in the developing world could bring prices down worldwide, following classic supply-and-demand economics.

Developing Nations Might Bear the Brunt
However, as the covid pandemic has shown, if manufacturers overreact and cut their production too drastically and too quickly, a snapback in demand delivers an ugly combination of inflation (as consumers demand more than is available) and recession (as the manufacturing jobs are slow to be replaced). The extended, multi-region supply chains created during the past few decades of globalization have been stressed as never before as well.

This worldwide slowdown in smartphone demand thus bears close watching, as the dozens of dynamic developing nations found in IDCA's Digital Readiness research could absorb a disproportionate impact to their growth prospects if the slowdown continues.

Photgraph from IDC.

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