Lockdown effect: Smartphone sales may take 20% dip

Corona has hit us badly the second time. Literally, it has gone out of control. The second COVID-19 wave is so ruthless that our health infrastructure has caved in. We have been seeing visuals of endless pyres and countless patients everywhere in the country. This pandemic is causing so much damage to our resources that lockdown seems to be the only fit option available today, but, remember the lockdown comes with unemployment, pay cuts, minimum production and logistic disruption.

Lockdown/ Night curfew

Many state governments have been implementing lockdown since the second wave gained its peak. It has started with night curfews, but now the weekend lockdowns are routine. Few states have gone for the complete lockdown till next week to curb the deadly spread, but it’s not actually doing anything good on the ground rather it is affecting daily business and movement of goods.

Market research firm IDC India associate research manager (client devices) Upasana Joshi, says, “The impact of lockdown will essentially impact the market in Q2 ’21 by 15-20% with major states being in partial or complete lockdown for a few weeks. However, as the cases decline, recovery is evident in the latter half of Q2, pushing the pent-up demand to H2’21.”

With the average 2,00,000 plus Covid cases coming up on a daily basis, people are anxious that they might have to face another complete lockdown in the entire country. Businesses are reducing to their minimum capacity, migrants have started moving out of metros, movements have been curtailed and because of that the entire supply chain now faces a very grim future, again. The positivity rate has now reached to 30 percent just in Delhi. It has announced a week lockdown to break the chain of spread till April 26.

“The lockdown in the states like Maharashtra, Gujarat, Delhi, among others has already affected markets which contribute to over 32 percent of sales for smartphones.  This will definitely impact the sales prospect and we can see early signs of gloom with some smartphone brands,” said Faisal Kawoosa, founder and chief analyst at techARC.

Impact of lockdown

Our economy plunged minus 23 percent due to the lockdown imposed last year. In the past few months, businesses have started showing some positive recovery signs but with the second corona wave which is creating havoc we could see them going down again and with them goes the employment as the demand is going to shrink very soon in the market. Mobile phones, laptops and other appliances included.

“As of now, IDC expects a single-digit growth for the India smartphone market in 2021. The supply shortages are also expected to remain through 2021 and will be reviving next year.”

Last year lockdown may have taught lessons to the manufacturers and suppliers as to how to prepare, plan and execute during the closure but this year it’s a new challenge for them altogether. E-commerce is now reduced to deliver the essentials, food items and medical supplies and that does not include mobile phones or laptops. With the curb on the movement across states and different levels of preparedness, logistics will have to suffer from delays. “Ecosystem players will be ready to tackle the situation with learning from 2020, and advance preps to face the immediate lockdown and impacts on production, transportation and logistics,” Upasana said.

The closure of brick and mortar stores is going to affect the non-metros cities and towns. The inventories have to be shifted to online channels which still has challenges in reaching out to all parts of the country. The mobile manufacturers may have the stock for two-three months but the challenge lies in supply. Faisal added, “April is still manageable for them; however, the acid test of the industry will be if May also shows similar behaviour, which in all probability is going to be the same as we see several experts projecting the behaviour of the pandemic.”

What lies ahead?

The chances of job losses again would be another unforced disaster the electronics industry has to look at. The savings of people have dried over the last year due to the extended lockdowns. The middle class majorly contributes to the growth of mobile and laptop sales but it has been the worst victim of the corona. The advent of online learning and e-classes/education has been a major force last year for the growth of mobile phones and laptops and the very need for these gadgets put extra pressure on them already.

As the migration has started again from metros and industrial towns, the workforce involved in the production of these gadgets is bound to decrease. Unemployment looms over these skilled labourers as the demand will automatically go down in days to come. The production capacity of the assembly units is bound to go down as the lockdown expands across various cities. The sourcing of the raw material for the distribution of mobile phones and laptops is going to get affected. Therefore, the prices of smartphones and laptops are likely to go up in the next few months.

We have to understand that lockdown does not only aim to put an end to the spread of corona only but somehow it will also affect the livelihood of many among us. Smartphones and laptops are now our only way to connect to the world and work from home or anywhere but with the decreased production capacity and lesser workforce, the future looks bleak at the moment.

Conclusion

The mobile and laptop industry is already battling chipset shortage across the world. Coupled with lockdowns it would damage the prospects for growth and recovery in the next few quarters in India. We have to tread carefully in days to come till the second wave dies down. Our new-age digital economy is largely dependent upon smartphones and with the restrictions on physical movements, they become extremely indispensable parts of our lives though we might have to face price hikes and supply constraints.

Your take?

What are your thoughts about the present crisis situation, share your views with us? What would you like to read about? Share your thoughts with us: editorial@the-electronics.com.

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