5G smartphone demand was below expectations in 2019. Multi-Band Sub 6-GHz roll out and Apple iPhone will catalyze 5G smartphone demand in 2020

   New York, San Diego, Buenos Aires, London, New Delhi, Hong Kong, Beijing, Seoul

March 3, 2020

According to the latest Monthly Smartphone Model Sales Tracker, Counterpoint Research estimates the US market sold under two million 5G NR capable smartphones during 2019 in its first year of the rollout. This only represented 1% of total smartphone sales in 2019. Samsung was the clear leader capturing 74% of the total sales during the year. The Samsung Note 10 Plus 5G was the best-selling 5G smartphone in the USA in 2019.

Speaking about the muted demand in 2019, Jeff Fieldhack, Research Director at Counterpoint Research highlighted, “5G smartphone sales were below expectations in the US in 2019 due to multiple reasons. Verizon, the early mover, led with mmWave-only 5G smartphones while AT&T and T-Mobile took a hybrid approach. While Verizon rolled out mmWave in 31 cities it was not overly aggressive pushing consumers to a limited 5G portfolio. AT&T decided it was too risky to sell mmWave-only devices to consumers and sold only via limited business channels. T-Mobile’s mmWave 5G network was only available in six cities with its sub-6GHz 5G coverage being turned on very late in Q4 2019. However, this should change in 2020, as low-band 5G coverage is quickly rolled out.”

Fieldhack continued, “AT&T and T-Mobile will have near full coverage (over 250 million POPs) of low-band 5G by mid-year 2020. AT&T will also be launching devices with low-band and mmWave support. T-Mobile has increased its marketing campaign for its 5G network. Now that the merger with Sprint is finalized, it will be looking to smartphone OEMs to support 600MHz, Sprint’s 2.5GHz, and mmWave. T-Mobile has a limited amount of mmWave spectrum but will probably gain more in future spectrum auctions. Verizon will push to soft re-farm its 800 MHz spectrum for 5G use on its network aided by Dynamic Spectrum Sharing (DSS) technology, which will allow the operator to use it for both 4G and 5G workloads. Finally, 2020 we will see a large 5G push from channels when 5G iPhones hit the market considering Apple commands almost half of the smartphone user base in the USA.”

Source: Counterpoint Research: Monthly Smartphone Model Sales Tracker

Commenting on the top-selling 5G smartphone models 2019, Maurice Klaehne, Research Analyst said, “The Galaxy Note 10 Plus 5G was the top-selling 5G smartphone in 2019, ahead of the Galaxy S10 5G. Late in the year, the Galaxy Note 10 Plus 5G was heavily promoted at Verizon, AT&T, and T-Mobile, as carriers began lighting-up their 5G networks. Given that the device retails for $1299.99, carriers experimented with different financing and trade-in incentives to get the monthly device cost down to a sweet spot of about $35 per month. At this monthly price point, consumers were incentivized to purchase a 5G device despite the high total cost. The LG V50 was the only 5G capable phone for LG. Despite being one of the first 5G phones on the market, sales of the model have slowed as promotional offers were weaker. For OnePlus, the OnePlus 7 Pro 5G was the top seller for the OEM, as the lower price point of $840 helped drive sales. This was especially true for consumers who were looking to access Sprint’s 5G network but did not want to pay $1,299.99 for the Samsung S10 5G.”

Further commenting on 2020 expectations, Klaehne added, “In 2020, we expect to see strong promotional offerings from carriers and OEMs for consumer 5G sales and for adoption to increase. Carriers want to get customers onto their 5G networks as it’s less expensive than 4G and will help with stickiness as 5G plans generally have unlimited data plans that include, for example, free streaming and gaming services. As an example, the newly announced Samsung Galaxy S20, S20 Plus, and S20 Ultra are all being offered with big monthly credit offerings from carriers when a customer adds a new line or switches to a new 5G unlimited plan. We also expect 5G smartphones priced under $500 to be available this year. However, these will likely only be for sub-6GHz 5G as mmWave module costs are still high.”

Lastly, Fieldhack added, “While 5G penetration in 2019 was just 1% of total smartphone sales, we expect penetration to increase to around 25% in 2020. Much of this growth will be fueled by Apple iPhones having 5G capabilities from Apple’s expected September 2020 launch, and the proliferation of sub-$500 5G smartphones. However, we need to caution that due to the COVID-19 outbreak, the total smartphone market will likely be negatively impacted, resulting in fewer sales in the first half of 2020 as supply shortages impact demand. The coronavirus has caused many factories to reduce their production capacity, with some still being shuttered. Despite this, the US market’s advanced 5G rollout will likely be a priority for OEMs and will be less affected than other regions. We continue to monitor the situation closely.”

Analyst Contacts:

Jeff Fieldhack
 

Maurice Klaehne
 

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