While inflation and numerous challenges are causing consumers to tighten purse strings, manufacturers should also boost product sustainability, security and innovation.

Amid poor and unpredictable economic conditions, sales of smartphones in South-east Asia have reportedly fallen by 21% year on year in Q1 2023 — the fifth consecutive quarter of decline.

According to a smart phone analysis service by Canalys, the declines have continued despite vendor attempts to capitalize on festive periods in Indonesia and Malaysia, and election-related activities in Thailand. Said Chiew Le Xuan, an analyst of the firm: “Smartphone penetration stumbled amid macroeconomic headwinds as cautious consumers from tier-2 cities in the region held back on high-value purchases. This was felt in large volume, price-sensitive developing countries like Indonesia and the Philippines, which saw their market size shrink by 21% and 17% year on year, respectively.”

Despite a 13% decline in Thailand shipments, the recent wave of M&A among operators there had powered a ramp-up of promotions and 5G bundling. Meanwhile, Vietnam’s shipments have plummeted by 40% year on year. There were significant reductions in inventories of older smartphone models amid a decline in consumer spending as local technology manufacturing slowed due to global economic conditions.” 

Chiew noted that the decline in smartphone upgrades and purchases was accompanied by lengthening replacement cycles that ”will further result in ballooning channel inventory and financial challenges.”  

On a more optimistic note, the firm expects the situation in Southeast Asia to improve by 2024, as the region is seen to be a promising market for smartphone manufacturers, thanks to the expanding middle class and young populations. Furthermore, the rise in digital payment and financing options makes high-end devices more affordable for the masses.

Meanwhile, with top-end smartphones bearing very similar hardware features and high depreciation rates, perhaps manufacturers will need to bridge the next innovation gap to make their products more secure, private, ecologically sustainable and cost effective.