Market research firm Omida: 2020 will be the year of 5G for everyone

Despite some industry concerns about use cases and coverage capabilities, 5G will be the fastest generation of mobile technology to be adopted by users, according to a new research report from market research firm Omdia (formerly Ovum, now renamed, see notes at the end of the article). The number of users will reach 63 million by the end of 2020. This historic increase is entirely attributable to two factors – the increase in the number of operators launching 5G networks around the world, and the rapid decline in the prices of 5G smartphones and other 5G end devices.

In early January, Samsung announced that it sold 6.7 million 5G smartphones in 2019, two-thirds of which were sold in the last three months of last year. That’s perhaps unsurprising, considering that Samsung added 5G capabilities to the Galaxy A90, making it the cheapest 5G phone around, with prices in the hundreds of dollars. The “Ovum 5G Terminal Equipment Tracker Report” shows that the cost of purchasing a 5G smartphone fell by 9.2% from the second quarter to the third quarter of 2019.

Figure 1: The average total cost of purchasing a 5G smartphone across different brands.

Source: Ovum Digital Consumer Insights 2018.

Omdia expects this trend of rapid price declines to continue in 2020 and beyond, as several independent factors drive this decline.

First and foremost, there is fierce competition for 5G modems themselves. Nine years ago, Qualcomm had almost a monopoly on 4G modems, and now, Samsung and Huawei have 5G modems produced by their own chip companies. After acquiring Intel’s modem business in 2019, Apple may also join them to build their own 5G chips, and MediaTek has also started selling 5G modrms and offering options to other manufacturers.

Daniel Gleeson, chief analyst for consumer technology at Omdia, said this competition will be the main reason for the collapse of 5G prices in the next few years. Samsung, Apple and Huawei are the three largest smartphone brands, so the ability of these companies to conduct in-house R&D will put enormous pressure on Qualcomm to stay ahead in performance and price or lose out on profits. Generous market share in the flagship terminal segment.

Second, competition among smartphone makers has eliminated any excuse for a “5G premium.” Brands primarily focused on open-market countries are using 5G (and Huawei’s dispute with the U.S. government) as an opportunity to forge partnerships with operators and enter new markets. Xiaomi, OPPO and OnePlus have all established themselves in the carrier’s early 5G offerings as cheaper options than Samsung and LG. As Samsung lowers the prices of its own products, these brands will seek to cement this position by driving down prices even further.

Finally, the way Qualcomm charges for licensing its patents and chipsets could change significantly due to legal action in the United States. Qualcomm lost an antitrust lawsuit in 2019 after the company required its chip customers to accept expensive patent licensing fees. The case is on appeal and, if finalized, could significantly reduce the patent burden on all mobile technologies, including 5G.

This rapid price drop will also have interesting implications for non-mobile 5G end-devices such as tablets, headsets and smartwatches, which will be much more attractive to manufacturers and consumers as the cost of additional network connectivity falls. Increase.

Omdia expects 5G to bring a small boost to smartphone sales, but the smartphone market is near saturation and manufacturers and operators must consider non-smartphone devices if they want to grow. Making the premiums for additional internet connections more affordable will be an important factor in persuading consumers.


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