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Consumers still seeking a reason to buy 5G

Global smartphone sales slumped in the first quarter and it's not hard to find reasons why.

War, pandemic, lockdowns, inflation, supply chain – take your pick.

Counterpoint Research, which recorded a 7% fall in shipments, said: "The decline was caused by ongoing component shortages, as well as COVID resurgence at the beginning of the quarter and the Russia-Ukraine war towards the end."

China has tried to kick-start 5G with low prices, with the result that it has a huge population of 5G subscribers on 4G networks.
 (Source: Apple)
China has tried to kick-start 5G with low prices, with the result that it has a huge population of 5G subscribers on 4G networks.
(Source: Apple)

IDC research director Nabila Popal, who put the decline at 8.9%, concurs, adding: "Consumer sentiment across all regions, and especially China, is broadly negative with heavy concerns around inflation and economic instability that have dampened consumer spending."

But scrape away the factors weighing on demand and you can also detect a lack of enthusiasm for 5G, supposedly the industry's growth engine.

5G might account for just over half of all new handset shipments, but with a dearth of new services consumers have limited reason to embrace it. 5G might deliver a huge increment in bandwidth, but you need to pay upwards of $600 to get the full benefit.

China has tried to kick-start 5G with low prices, with the result that it has a huge population of 5G subscribers on 4G networks. Less than half of China Mobile's 467 million 5G subs are actually using 5G – a ratio that has remained constant for the past year.

Price cutting

Manufacturers have been cutting prices to make them more affordable for people seeking a phone to go with their subscription. But that's not how it's supposed to work – customers are expected to willingly pay more for their new devices in order to get fresh experiences.

Now mid- and low-end brands have run out of margins to cut, resulting in a 14% plunge in handset sales in Q1. Rest of the world, take note.

The other part of this is the humdrum phones themselves.

Smartphone reviews these days devote themselves to careful descriptions of camera, screen size, clock speed and so on. All worthy, but none of these is going to get a consumer's pulse racing.

There's some enthusiasm about foldable phones but they're a niche product – basically a small tablet. IDC predicts these will account for just 1.8% of devices sold in 2025.


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Even Apple seems out of inspiration. One of the big talking points on the forthcoming iPhone 14 is that it might do away with the notch that enables Face ID.

All that said, the current economic headwinds may be doing the 5G industry a favor by deferring consumer demand until compelling apps and phones hit the market.

The aphorism that every second mobile generation drives the industry forward may well apply here.

It wasn't until the midpoint of 3G that the iPhone debuted, taking advantage of the higher speeds of 3.5G. It may take until the middle of this decade before consumers get excited by 5G.

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— Robert Clark, contributing editor, special to Light Reading

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