If 5G capabilities are made available first on high-end devices, it is logical to expect device costs to be high as well. And that is what an analysis by IHS Markit concludes. According to Joshua Builta, IHS Markit senior principal analyst, 91 percent of surveyed consumers expect to pay more for 5G devices compared to existing 4G LTE smartphones.
Three quarters of respondents stated they expect to pay an additional 10 to 25 percent for a 5G-capable phone. But that expectation likely is based on average sales price of a smartphone of $319, notes Builta. So a 10 percent higher cost adds $32. A 25 percent increase would boost price by $80.
Of course, early 5G models are top of the line devices. Samsung’s S10 5G phone is retail priced at $1,300, a 335 percent premium compared to the $388 average for the company's existing 4G smartphone models, he says.
But consumers who buy high-end phones, early in the cycle, are not the same as consumers who buy budget models.
“Newer technologies almost always come first to premium smartphones, which typically are two to three times as much as industry ASP,” Builta notes.
Will “sticker shock” be an issue. Yes, but not as much as one might think. Early adopters always are willing to pay more. But prices also will fall, as usual. And 5G network capabilities will roll out to less-costly devices as well.
Source: IHS Markit
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