Device prices, at least in some markets, early on, will slow 5G adoption, one might argue. High prices are an issue. IDG estimates that 2019 5G device sales will be about half a percent of phone sales. IDG also forecasts that sales of 5G devices will represent about 14 percent of sales in 2020, for example, growing to perhaps 24 percent of device sales by 2023.
Others are much more optimistic. Canalys expects 5G sales to represent as much as 53 percent of smartphone sales by 2023.
According to NPD, fewer than 10 percent of U.S. consumers are spending over $1,000 on their smartphones. Since the first 5G devices are high-end devices, selling around the $1,200 price point, 5G service adoption will be slower for some time, until less-expensive devices are equipped to handle 5G.
In 2019, the U.S. average selling price of a phone was about $529, according to Statista. So it might be reasonable to suggest that 5G handset sales will not really accelerate until 5G devices are in that similar average price range.
Complicating the purchase decision is the fact that, early on, buyers of 5G devices will have to choose between models using lower frequency bands or those able to use the new millimeter wave frequencies available on U.S. 5G networks.
NPD also finds that consumers in the top 10 metro areas account for more than one-third (39 percent) of purchases of $1,000 or most expensive smartphones.
NPD’s Mobile Phone Tracking service, which uses advertising technology to capture active devices, shows that consumers in New York City and Los Angeles are most likely to purchase smartphones at the $1,000 price point.
Since consumers in the top 10 DMAs make up 29% of the U.S. population, consumers in these areas over index in $1,000+ devices by 25% compared to the rest of the country.
As such, these markets should be a primary target for manufacturers, as well as where carriers should focus on developing or advancing 5G networks and educating consumers.
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