iPhone SE attracting Android switchers, unlikely to cannibalize iPhone 12 sales

US Smartphone Sell-Through Volumes Fall 25% in Q2, 2020; iPhone SE a Bright Spot

New York, San Diego, Los Angeles, Boston, Toronto, Buenos Aires, London, New Delhi, Hong Kong, Beijing, Seoul – July 20, 2020

During the second quarter of 2020, US smartphone sell-through fell 25% year-over-year, according to Counterpoint Research’s preliminary US Smartphone Channel Share Tracker. Prepaid channels were hurt the most during the COVID-19 outbreak despite a higher percentage of stores remaining open compared to postpaid. Postpaid channels declined 20%, a steep fall but one partly offset by an almost doubling of the percentage of devices sold online.

Commenting on Q2, North America Research Director, Jeff Fieldhack, said, “Mid-March through mid-April saw the weakest sales as it was the height of the first COVID-19 lockdowns in the US. April was the weakest month for smartphone sell-through as about 80% of smartphone sales channels were closed; sell-through volume was down over 50%. Smartphone sales for May through the end of June grew week-over-week. June 2020 sales were stronger than June 2019 sales, which shows the US smartphone market is resilient.”

Fieldhack added, “US smartphone sales picked up when the first stimulus checks were received by consumers during the back half of April. Soon after, carrier stores and national retail began opening again which further helped the recovery. There was also a bit of pent-up demand created by the weeks of store closures. Many consumers who may have wanted a new device but still had a functioning phone simply put off their purchase. Finally, US operator net additions will probably not be as disappointing as smartphone sales due to spikes in sales of hotspots, other connected devices, and used smartphones being connected again.”

Commenting on OEM performance, Senior Analyst, Hanish Bhatia noted, “All OEMs were down in Q2 year-over-year. Due to lockdowns, the share of online sales grew to 31% from 14% last year. However, because of strong online presence, Samsung and Apple volumes fared better than the overall market aided by a higher percentage of online sales. Alcatel also performed well considering the tremendous market decline. Alcatel benefitted from solid sales within government-subsidized programs and within prepaid channels.”

Regarding the Samsung Galaxy S20 launch, Bhatia added, “The timing of the S20 family launch was unfortunate. Just as channels filled with devices, the majority of stores closed. This led to an estimated 38% fewer Galaxy S20 series activations than last year’s S10 series during the opening four months – March through June period. Many potential Galaxy S20 purchases will simply be pushed into Q3, but some will be lost.”

Commenting on the Apple iPhone SE launch at the end of April, Fieldhack added, “Apple volumes grew through the quarter and were especially helped by iPhone SE volumes. It was not a typical Apple launch with large fanfare and a launch event at the Steve Jobs theatre, which normally also includes a blitz of TV ads. However, the device has been successful and selling above expectations in both postpaid and prepaid channels. Since the iPhone SE launched, carrier stores and national retail have been re-opening. Some channels saw large promos to draw shoppers back to stores. This was especially true within Walmart, Metro by T-Mobile, and Boost. Our checks show that iPhone SE sales are unlikely to be cannibalizing fall 5G iPhone sales. iPhone SE buyers are more pragmatic about price, less concerned with 5G, and the smaller display is not considered a hindrance. Over 30% of iPhone SE buyers came from using an iPhone 6S or older handset—handsets four years old or older. Over 26% of iPhone SE users moved over from an Android device, which is higher than normal Android to iOS switching.”