Recession hits Brazilian smartphone sales

The previously bullish segment is declining and the forecast for 2015 is not positive, says analyst

Smartphone sales in Brazil have started to decline due to the recession - and the downward trend is set to continue, according to analyst firm IDC.

In April, some 4,86 million smartphones were sold in Brazil, 1 percent less than the same month a year ago. But May saw sales plummeting by 16 percent in relation to 2014, with 3,89 million devices sold, according to the analyst's Mobile Phone Monthly Tracker report.

According to IDC, the previously bullish segment will continue to decline due to the current consumer cautiousness in Brazil: for the second quarter, numbers suggest that sales should drop by 12 percent in comparison to 2014.

"We predicted growth of at least 5 percent and now we are working with negative volumes," says IDC Brazil analyst Leonardo Munin. The analyst form predicted that 63.5 million smartphones would be sold in 2015 in Brazil, but has now adjusted that forecast to 54 million units.

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"This reflects the current economic moment in Brazil. In 2014, when the smartphone market was strong, there was a 56 percent increase in comparison to the second quarter of 2013," Munin adds.

Local retailers and distributors have got plenty of products in stock, something that is "unseen" in the local smartphone market, according to the analyst.

As well as the unstable economic climate, other factors affecting the sales of smartphones in Brazil include the dollar hike in relation to the local currency, the real, which has resulted in price increases to consumers. This is also the case in the local tablet market, which has collapsed by 20 percent in the first quarter.

Price competitiveness in delicate economic conditions is something that new market entrants, such as Chinese manufacturer Xiaomi, who has just launched in the country,will have to face up to: however, the company acknowledges that it will have to entice cost-conscious customers and will be marketing a single model, priced below market average.

The presence of feature phones in Brazil is also a contributing factor to the current slowdown in the smartphone market: more than 45 percent of Brazilians still own feature phones, according to IDC.