For the first time in many years, the US market is looking for new handset OEM vendors. This is in stark contrast to many years of carriers actively attempting to reduce the number of OEMs and SKUs carried. For the past five years, the US market has been dominated by only five OEMs responsible for up to 90% of handset volumes.  The large portfolios have hefty expenses due to carrying costs, training, care support, and other lifetime management costs. The market remains top heavy--so why the change now?  There are many reasons why carriers are looking for more OEM support:

• Void left by ZTE creates need for new entry vendors. ZTE was banned from purchasing US components for selling devices to Iran. This ban was later reversed by President Trump, however, the company lost a few months of work and completely missed out on the 1H19 ranging process.  ZTE had owned as high as 14% US market share in 2017. These were important devices sold with large prepaid channels and had hit very competitive prices. It is difficult getting down to ZTE-level pricing and it takes competing OEMs to do it.
• Larger cost range in the portfolio. Carriers now have devices which range in price from $40 to $1400.  More OEMs are needed to provide this range as no carrier wants to be left without even a niche device a competitor will carry. The price diversity needed to competitively supply hardware within postpaid, prepaid, B2B, online, and national retail increased. At the same time, most OEMs have reduced the number of global variants they are producing to reduce R&D costs and to become more efficient.
• Carriers do not want to cede more control to open channels. Carriers prefer better-controlling devices lighting up on their networks. Better control means better management for HAC requirements, software and security pushes, and other carrier-specific requirements for devices going through the lab-cycle process. Carriers also save the payment paid to the channel when it lights up a activation on behalf of the carrier.
• Carriers will want 5G pushed to lower price tiers. Carriers are planning their second half ’19 and early ’20 portfolios now. Carriers will be driving 5G devices into more price points of the portfolio 2020 and beyond---not just the flagship segment. With its extra costs, 5G handsets will be difficult to scale for OEMs and they may plan on strategic and fewer variants. This will have US carriers looking for alternatives.
• We expect a return of major carriers looking to offer white labels. Cricket is the most recent launching a low-cost Cricket branded smartphone from Hipad. White labeled devices allow carriers to market their own carrier brand on device(s). At the same time, it allows the carrier to bring in an unknown brand who may have no name recognition and would have a difficult time breaking through on their own. White labels allow carriers to work closely in the concepting of the device to get the exact specs and price point desired. An added benefit to carriers is it gives them a window into component costs which will help them negotiate pricing with their suppliers.
• New vendors allow for exclusivity possibilities. OnePlus in T-Mobile is the latest to hit a major US carrier. T-Mobile announced it will be selling the OnePlus 6T at New vendors can dangle exclusivity offers to US carriers—a rarity in today’s market. There were already 200,000 OnePlus’ activated on T-Mobile’s network, so getting them officially sold through T-Mobile channels was not a surprise. Exclusives are not as important as the once were, but any edge a carrier can have they will take to differentiate.
• New companies, such as Emblem Solutions, will further drive white label devices. The company, backed by AT&T, will support hardware OEMs launch devices into AT&T US channels. This includes helping with roadmap planning, logistics planning, care, and helping with carrier lab cycles.

Expect more new OEMs and white labels to be selling in the US market in 2019 and 2020.