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First 5G smartphones will start at $1,000

Price will be a big limiting factor in the 5G market. “Only 9 percent of Chinese customers buy phones whose wholesale prices start at US$500 and up. Without scale from China to drive device prices lower, can 5G forecasts from operators and device vendors really live up to their lofty ambitions?,” Ken Hyers, director of Emerging Device Technologies, said. Find out more about the first 5G smartphones and their prices.

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Carriers will be forced to offer subsidies to bring customers onto their 5G networks, that will be built with significant investment on networks and spectrum. Phone vendors will be pressured to meet price points for their 5G devices that will leave them with razor-thin margins.

At present, 5G operators are clueless about the use cases for 5G customers—both retail and business. GSMA earlier indicated that offering high-speed 5G connectivity to retail consumers will not be enough to generate money from 5G networks.

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The other bad news is that 5G device prices will decline at a much slower pace compared to 3G and 4G handsets. There’s no indication from chipset majors Qualcomm and MediaTek that global phone companies will start mass production of 5G smartphones so the price will crash depending on popularity and scale.

Strategy Analytics forecasts that the first 5G handsets will emerge commercially in H1 2019 and volumes will pick up after that. The main countries in the initial 5G deployment are China, the US, Japan, and South Korea.

The first 5G smartphones will have wholesale ASPs of $750 plus, which translates to close to $1,000 at the store. Best 5G smartphones, offering premium features, will cost much more. It will be a tough sell to get consumers to pay more for a smartphone that offers fewer obvious benefits for customers.

Strategy Analytics’ Emerging Device Technologies practice, in its latest handset technology forecasts for 88 countries observes that despite the imminent launch of multiple 5G smartphones in coming months, 4G will be the main technology used by handsets in coming years. In 2023 over 70% of handsets sold globally will be LTE devices.

Even more surprising, 5G handset shipments will only pass 2G in 2023 in terms of global sales. In its first 5 years substantial 5G handset sales as a proportion of total handset sales will be restricted to a handful of nations, in particular China, Japan, South Korea and the United States. Even well developed nations in markets like Western Europe will see slower 5G handset sales, for a variety of reasons.

In its latest report, Global Handset Sales Forecast by 88 Countries and 19 Technologies: 2003 to 2023,Strategy Analytics predicts legitimate mobile phone sales to grow 0.3% worldwide in 2018. Several billion 2G and 4G handsets will be sold globally during the next seven years, particularly in major countries such as China, USA and Brazil. LTE will be the most important growth category and global 4G volumes will grow 5% this year. 2G has risen back to the 2nd biggest segment due strong sales in emerging markets, especially in Africa.

 

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