Canalys: US smartphone market recovered sequentially in 3Q23

Market research firm Canalys recently published a research report showing that the US smartphone market shrank another 5% year-on-year in the third quarter of 2023, but shipments grew 21% quarter-on-quarter to 31 million units, driven by Apple's latest iPhone release and carrier promotions targeting premium device upgrades.

"The US smartphone market is stabilizing, but there is no expectation that Q4 will make a turnaround," said Runar Bjorhovde, Analyst at Canalys.

Bjorhovde pointed out that the US wireless telecommunications industry is grappling with a prolonged slump, impacting device promotions and subsidies. Despite robust sequential postpaid subscriber net additions and upgrade rates from the tier-1 carriers, device sales still trail last year's figures.

"Carriers are intensifying their focus on driving service revenue through flexible plans and customer retention initiatives. They remained cautious on aggressive device promotions in Q3, which will continue into Q4 and the holiday season," said Bjorhovde.

Motorola achieved best quarter performance

Apple's shipments declined by a modest 8%, amounting to 17.2 million units. The late arrival of the iPhone 15, compared to the timing of the iPhone 14, contributed to the decline.

Samsung's volume recovered slightly compared to Q2 of 2023 as it shipped 6.8 million units. Its new foldables boosted its performance, which accounted for over 20% of its shipments.

Motorola achieved its best quarter since Q2 of 2022, taking 9% market share and achieving 14% year-on-year shipment growth.

TCL and Google Pixel rounded out the top five with each capturing 4% market share, shipping 1.3 million and 1.2 million units, respectively.

Growing trend of purchasing refurbished devices

"The iPhone 15 series had a strong start in September 2023, accounting for 34% of all iPhone sales in the US during Q3," said Le Xuan Chiew, Analyst at Canalys.

The annual refresh of the iPhone portfolio remains paramount to all carriers, even to smaller challengers such as Boost Infinite, to attract switchers. However, fewer current users opt for upgrades to the latest models. Instead, there is a growing trend toward buying older generations, refurbished devices, or keeping current phones longer.

"For Apple, recalibrating its portfolio, marketing strategy, and carrier partnerships will become imperative to address these changes in consumer behavior. Lackluster performance in the US can reverberate and impact Apple's global strategy and ambitions swiftly," said Chiew.

"Prevailing sluggishness of the US market could pave the way for a shake-up of established market dynamics, especially considering the strategic shifts from the leading carriers," added Bjorhovde. "Carriers are redirecting efforts to refresh and add postpaid offerings and to reshape prepaid business structures.

Given the prolonged and persistent high-cost business environment, demand recovery will take longer than expected. Carriers' current strategy will have sustaining implications for consumer purchase behavior while other factors emerge to drive device upgrades and refreshes, such as on-device AI capabilities and foldable phones. As the US smartphone market stabilizes, Canalys anticipates a mild recovery in 2024. The adjustments made by carriers in 2023 could mark the start of substantial shifts in the market's channel dynamics, prompting vendors to initiate preparations now."

Source: Canalys, November 2023.