Latin America consumer tech market to see massive pandemic-driven shift

Smartphones, PCs and tablets will see a major drop in sales and prices to consumers will increase, but segments like wearables will continue to grow, says research.
Written by Angelica Mari, Contributing Writer

Sales of smartphones and personal computers will be among the hardest hit in the consumer technology space in Latin America in 2020 as the sector braces for a major coronavirus-related slowdown, according to a new report from research firm IDC.

The analyst firm had predicted timid growth in the smartphone market in March in large Latin markets such as Brazil. However, after analyzing the impact of the new coronavirus on China and the buying patterns seen in the region, the company revised its predictions, which now bring a bleak outlook with some potential upsides.

According to IDC, the smartphone segment, which accounts for 51% of total technology sales for end consumers will suffer the biggest impact. Before the pandemic, IDC projected a 0.2% drop for the segment, which has now been revised: smartphone sales in the region are expected to decline by 10% to 15%.

When adjusting its projections for 2020 in Latin America, IDC considered that capacity of factories around the world is currently at about 30% and 50% and this should continue to be the case until at least May, affecting the production and distribution of components for consumer devices. According to IDC, the smartphone markets of Brazil and Mexico should see the greatest impact due to the lack of parts and closure of local factories.

Traffic limitations imposed by quarantine measures introduced in some Latin American countries impaired the supply chain for consumer electronics caused delays, leading to the temporary closure or shutdown in some factories serving the IT industry, according to IDC. This, in turn, is causing a drop in sales or price increases, also driven by exchange rate volatility.

"The situation should be worsened by the macroeconomic contraction and aspects such as job losses and reallocation of family budgets to basic consumer goods", said Paola Soriano, director of consumer insights at IDC in Latin America.

When it comes to personal computers for the consumer market, PC sales went from a previously predicted contraction of 1.9% to a drop of 8% in 2020. Shipments will reach 7 and 8 million units, of which approximately 80% will be laptops, with more opportunities for ultra-thin and 2-in-1 models. For the segment of PCs for gaming, the sales forecast ranges between 700,000 to 900,000 units, driven by Mexico, Brazil, and Peru.

The tablet sales forecast went from a 9.9% decline prediction prior to the crisis to a drop of about 15% to 17%. According to IDC, tablets priced between $600 and $1,000 will be more demanded by mid-size companies - especially by businesses active in sectors such as health and consumer services and goods.

However, there are a few silver linings in the IDC forecast for the region. This includes a predicted increase in sales of wearables, which should grow between 13% and 16% compared to 2019. Smart headphones, which concentrate 40% of sales in this market should see growth between 20% and 26% in units shipped, driven by the replacement of traditional headphones.

The smartwatches segment, which has doubled in sales in 2019, is expected to grow between 1% and 3% in units shipped in 2020. According to IDC, the most affected product category will be fitness bands, which will increase from 122% in 2019 to grow between 4% and 8% this year.

Other markets where the analyst predicts opportunities will lie are e-commerce, games, collaboration applications, cloud computing and streaming, in addition to greater demand for notebooks, monitors, and accessories required to meet home office and distance education needs.

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