Early 5G adopters will pay a high price for phones

by Steve Blum • , , , ,

Huawei 5g ces 9jan2020

5G phones won’t come cheap in 2020. Although the Consumer Technology Association expects manufacturers to ship 20 million 5G-enabled smartphones to U.S. carriers and retailers this year, that’s not enough volume to drive prices down into the typical Android phone range (although iPhone users might not feel as much sticker shock).

The first 5G smartphone to hit the U.S. market last year was priced around $1,300 – that’s what high tech toys cost when they’re really just toys. The 2020 price point will drop by more than half to the $600 range by next Fall, according to a story on C|net by Roger Cheng and Eli Blumenthal. That’s iPhone territory.

As they typically do, most manufacturers kept their cards face down on the table at CES in Las Vegas in January. Samsung and LG had 5G smartphones on display, but deferred questions about price points to mobile carriers – that’s their distribution channel for now.

Huawei, on the other hand, was upfront about pricing. Its flagship Mate 30 pro 5G smartphone can be bought right now for $1,200 on the web. When a company is on the U.S. enemies list, distribution options are fewer and direct sales to consumers starts looking pretty good.

2021 will be different. CTA projects 61 million 5G smartphones will be pushed out into U.S. retail channels, which is about a third of total volume (the rest are 4G units). Add in previous year’s total and that represents a 20% to 25% market share, which goes beyond the technophile and early adopter segments, and reaches into the price sensitive general consumer population.

China is a wild card in this game. Like the two big South Korean manufacturers, Chinese smartphone makers have the advantage of a better developed home market for 5G products, and it’s a bigger market and, ultimately, a bigger advantage – Qualcomm expects 200 million 5G smartphones to be shipped worldwide in 2020, which, if taken at face value with the CTA numbers, means 90% will be going somewhere other than the U.S. If the likes of Huawei and ZTE can overcome U.S. government opposition and break into mainstream U.S. distribution channels, prices will come down faster.

Don’t expect to be able to buy a cheap – say, sub-$200 – 5G smartphone this year. Unless the doors to Chinese manufacturers open up, you probably won’t see that in 2021 either.