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In addition to use cases and coverage capabilities, two of the key gating factors for 5G adoption to date have been availability and price of 5G devices, but Ovum expects a rapid decline in prices through 2020 and beyond, with several independent factors driving affordability.
The analyst said 5G was set to become the fastest-adopted mobile generation, with a forecasted 63 million subscriptions by the end of 2020. It attributes this growth to two factors: more global operator launches and rapidly falling prices for smartphones and other 5G devices.
In this regard, Ovum cited Samsung selling 6.7 million 5G smartphones in 2019, with two-thirds of sales coming in the final three months of the year. This, said the analyst, was unsurprising given that Samsung added 5G capability to its Galaxy A90 product, making it the supplier’s cheapest 5G handset by several hundred dollars.
Overall, Ovum calculated that in the third quarter of 2019, the cost of buying a 5G smartphone decreased by 9.2% quarter on quarter. The analyst expects this rapid decline in price to continue.
At the vanguard of this price decline is what Ovum regards as meaningful competition for the 5G modem. It contrasted the current development scenario for 5G technology with that of 4G nine years ago when Qualcomm had a virtual monopoly on 4G modems.
Today, the likes of Samsung and Huawei have their own 5G modems produced by in-house silicon subsidiaries, and Apple is set to join them with its own 5G chip following the buyout of Intel’s modem business in 2019. MediaTek is also starting to sell 5G modems and provide choice to other manufacturers.
Ovum sees the respective abilities of Samsung and Apple to pursue their own path as putting pressure on Qualcomm to stay ahead on both performance and price.
The other key competitive vector is the healthy rivalry between the smartphone manufacturers themselves, something that Ovum said has already eliminated any pretence of a 5G premium. Moreover, it noted that brands that have focused primarily on open market countries are using 5G as an opportunity to build partnerships with operators and enter new markets.
Xiaomi, OnePlus and Oppo have each gained footholds in operators’ early 5G offerings as the more price-friendly alternative to Samsung and LG, and these brands will be looking to build on this position by aggressively pushing down prices further as Samsung lowers its own prices.
A further fillip could present itself if Qualcomm loses an appeal on an antitrust case over its requirement for its chipset customers to take on expensive patent licences. This could drastically lower the patent burden of all mobile technologies, including 5G.
Yet despite these positive moves, Ovum expects 5G to provide just a small boost to sales of smartphones. It said the smartphone market is close to saturation and both manufacturers and operators will need to look at non-smartphone devices such as tablets, headsets and smartwatches if they want to grow with 5G-connected products.
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