Europe has been a very fickle market in the last few month, as it turns out that the reliance on Germany to make things right may not be enough. For years now, Spain and Italy’s weakening consumption patterns were being offset by Germany’s strong smartphone demand. Therefore, while the distribution was very uneven, Europe remained a key market for smartphone makers. However, from 2012 fourth quarter results, it seems like that situation is changing. Retail sales in Germany fell by 4.6 percent at the end of 2012. While most analysts had predicted a reduction, no one thought the figure would be so large. French retail had a better story to tell, while Spain saw an appalling 7.7 percent decline in Y-o-Y retail sales.
The UK offered a ray of hope, as retail sales actually grew by 1.9%, in spite of dampened market expectations. Several retail storeowners associated this rise directly with smartphones and tablets, as consumers flocked to store to buy them. Cheap Android and Amazon tablets were the most popular, and preferred over the fancy, expensive models. This is an interesting turn of events in Europe, as the two weak markets of France and UK showed more resilience than one would expect while the usually sturdy market of Germany slacked off.
It is most crucial for smartphone vendors that Europe supports them in spring and summer this year. Blackberry and Nokia are aggressively trying to come back, and launching several new devices in the wake. Market leaders Apple and Samsung are just as adamant, and will roll out their new devices later in the year as they hope to keep the top spot. Last year, according to an IDC report, smartphone volume across the world topped 36%. This was three percentage points less than the research firm had predicted and a drop from the figures seen in 2011.
Microsoft is enjoying the benefits of Southern Europe’s recession mentality as consumers prefer budget Windows Phones to premium iPhones or Galaxy models. However, that mode is harmful for the market overall and therefore Europeans need to get out of it. That can only happen if Germany quickly recovers from this down period and the UK becomes progresses further along the retail sales ladder. Only then the two countries can offset the damage done by Spain and Italy. Without that, the high-end smartphone market doesn’t stand a chance in 2013.
