Ahead of the 2023 Mobile World Congress (MWC), where major players from the smartphone and gaming industry meet, new GfK data shows that the global telecom market declined roughly 10% in revenue during 2022, though some categories continued to perform well.

The 9.7% year-over-year drop – based on GfK’s exclusive POS (point of sale) data for retailers in 67 countries worldwide, excluding North America – still left the industry with $360 billion (US) in revenue from January to December 2022.  

The smartphone segment, including phablets, saw a 10.2% drop year over year, but still accounted for $330 billion (US) in revenue.

One of the few market drivers in 2022 was consumers with higher and middle incomes. These shoppers now account for 48% of all smartphone buyers, up 4 percentage points compared to 2021.

Demand for premium devices also increased; revenue for 5G models, for example, grew by 1.2% in 2022 versus the year before. The same applies to devices with more storage; smartphones with a capacity of over 256GB recorded an increase of 19% and accounted for 41% of total market revenue in 2022.

“While we had already predicted saturation effects in 2022 after the strong telecom sales in pandemic years, the additional weakness of the Chinese market significantly impacted the results,” explains Jan Lorbach, GfK expert for the Telecom industry. “But GfK expects a stabilization of the telecom market in 2023.”

While consumers who are still buying smartphones are opting for premium devices, the total number of purchases decreased in 2022. One reason may be that people are keeping their smartphones for a longer time. Data from gfknewron Consumer shows that, from January to September 2019, only 48% of consumers used their smartphones for two years or longer; for the same period in 2022, that increased to 57% (an increase of plus 9 percentage points).

This new longevity in ownership can especially be observed in Generation Z (15 to 25 years old), where the share of Gen Z consumers keeping their smartphones for two-plus years now stands at 14 percentage points above the average. This younger generation has a clear focus on sustainability and therefore may be consciously extending the lifecycle of their devices.

Wearables: Still stable due to new sensor innovations

One of the few telecom segments that managed to survive the difficult year 2022 in a stable manner is wearables. With $13.9 billion (US) in revenue, the wearables market achieved almost the same level in 2022 as in the previous year (minus 1.1% compared to 2021). Although popular segments have lost ground, this has been offset by growth in other product lines.

We also saw significant year-over-year (2022 vs. 2021) increases and declines in revenue in specific wearables categories:

These shifts have been driven by increasing consumer demand for greater control of their health, via smart features. Accordingly, wearables with a sleep tracking feature (plus 4%) or blood oxygen sensors (plus 20%) showed strong growth. This trend also led to innovations, such as the new feature of stress level measuring (EDA). Launched in the fourth quarter of 2021, these devices already account for 16% of revenue in the wearables market and continue to grow.

AR/VR headsets: First decline ever, but potential is still high

Further hot topics for MWC are virtual reality (VR), augmented reality (AR), and the metaverse — made possible by devices such as VR headsets. While awareness and discussions around the metaverse have risen, retail sales of VR headsets in the European market* actually declined by 15% year-over-year in 2022. This is the first decline ever, as the market has previously recorded double-digit growth for years.

“The European market seems to have accomplished initial consumer penetration of VR headsets,” says Sohjin Baek, GfK expert for global IT hardware industry. “The industry should now focus on providing more content, as well as better visual quality and security, to drive the market based on this initial penetration. Convincing consumers about the use cases will be key to drive VR/metaverse forward.”

Outlook 2023

GfK experts forecast a stronger year 2023 for the global Telecom market overall compared to the relatively weak 2022. At a regional level, China, which is the largest single market, is expected to pick up again and significantly drive global market growth. Additionally, developments within the three main product categories will have a positive impact:  

• Although replacement cycles are extending, smartphone purchases made at the height of the pandemic in 2020 and 2021 are entering the expected renewal cycle window this year.
• In wearables the next generation of Health Tracking sensors, which will expand the scope of applications, will drive the market. In addition, positive revenue growth is expected for the smartwatches segment.
• VR/AR is expected to become more tangible and grow into areas beyond gaming. This is one of the segments with the greatest potential in the coming years.

To remain competitive in the market and differentiate from competitors in terms of quality, retailers and manufacturers should continue to innovate for more powerful or faster devices that make consumers’ lives easier. “Innovation will further drive consumer’s demand,” says Jan Lorbach, GfK expert for the Telecom market. “When the holding time of smartphones is extending and budgets are tight, consumers will more than ever ask for value for money.”

About the method

Through its retail panels, GfK regularly collects POS data in more than 70 countries worldwide for the consumer electronics, photography, telecommunications, information technology, office equipment, and small and large household appliances sectors. All figures are according to GfK panel market, with global data excluding North America and presented in US dollars. Revenues are presented in US dollars Non Subsidized Prices (NSP).

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* European market data include Belgium, Denmark, Finland, France, Germany, United Kingdom, Greece, Italy, Netherlands, Norway, Portugal, Russia, Spain, Sweden

US media contact:

David Stanton

+1 (908) 875-9844; david.stanton@gfk.com