January 03, 2020
5G Phones To Be 40%+ More Expensive Than 4G - Strategy Analytics Confirms mobilityView’s 2018 Prediction
According to the latest Strategy Analytics PriceTRAX 5G smartphone pricing report, almost all 5G devices that have launched so far are in the ultra-premium price tier, meaning that they retail for close to $1,000 and cost about 150% more than 4G smartphones. When 4G devices launched they cost only about 75% more than 3G devices.
And not only are early 5G devices pricey, they are also 36% heavier, have bigger displays and more battery capacity than early 4G smartphones, Strategy Analytics says.
The analyst firm also found that there have been more 5G devices announced in a shorter time period than there were with 4G devices. For example, Strategy Analytics said that nine months after the first 4G LTE device was announced there were just 10 LTE devices available and it took 16 months for 50 4G LTE devices to be announced. By comparison with 5G, there were 16 5G devices announced in the first month, and after nine months there have been 56 5G devices announced.
Strategy Analytics notes that almost all 5G devices that have launched so far are in the ultra-premium price tier, meaning that they retail for close to $1,000, and cost about 150% more than 4G smartphones. When 4G devices launched they cost only about 75% more than 3G devices.
Samsung is currently the leading manufacturer when it comes to number of 5G smartphones. The OEM has announced 20 5G devices.
We’ve been advising our ecosystem for well over 18 months that 5G will be 30% to 40% more expensive than 4G hardware on a like for like and time for time basis.
Some of our ecosystem partners (who should know better) have said we were crazy….
“Strategy Analytics notes that almost all 5G devices that have launched so far are in the ultra-premium price tier, meaning that they retail for close to $1,000, and cost about 150% more than 4G smartphones. When 4G devices launched they cost only about 75% more than 3G devices.”
The scary thing is that you will see in the article that there will be more 5G devices available at launch than 4G and 3G; which theoretically should mean that pricing should be cheaper!
This would be especially true as the global user base of wireless technology have been very well educated as to the benefits of faster wireless connectivity vs. when 3G first came out.
What does all of this mean?
We predicted over 18 months ago that 5G hardware pricing will be 40% more expensive than 4G
Deloitte Confirms What MobilityView Said Early Last Year : 5G Represents Considerably More Costs For Operators… - More expensive chips - More expensive antennas - More spectrum, at more cost - More tower work at more cost
Do you think the Global Operator community is going to eat these incremental costs; or will they pass them to end customers both consumer and business. We predicted last year a very major price differential between 4G and 5G.
The Total Cost of Ownership can only increase over time; as the operators need to recoup investment. 5G Handsets are likely to be on average 15% to 30% more expensive at launch versus the equivalent 4G devices at launch
The average price of a cellphone is now around 50% higher than the average price of a laptop; and we know that we keep laptops for a considerable length of time
Employees need to be able to recoup the cost of the hardware associated with business related usage; and mobilityView allows an employee to do exactly that
Operators Reducing Level Of Subsidies On Hardware Globally
Tim cook says, “…consumers adapting to a world with fewer carrier subsidies…“ this confirms what we said well over a year ago that operators globally are getting out of the device subsidy game. Retail customers and Business customers are now starting to experience what it means when a $1,000+ device is being demanded
The challenge Apple is facing is not unique to Apple but will be faced by every mobile OEM
Take a look at an Operator’s P&L and you will see that the revenue growth is “Hardware Sales” and has been the case for well over 15 monthsBack