The industry is set to welcome the first 5G smartphones into the market this year with most manufacturers planning to launch the new models early in the year. AT&T has announced it will add a Samsung smartphone to its 5G device collection, with Verizon doing the same. We can also expect to see 5G-ready devices from the likes of LG and OnePlus early on in 2019.
With every iteration of a new ‘G’ comes a lot of hype on what the next generation of technology will deliver, and what the devices that support this will look like. And with so many devices set to launch, it might seem as though 5G will become mainstream in the next year. But will the launches compel consumers to upgrade to the newest 5G models in 2019? And will the build-up translate into a boost in mobile trade-ins and growth of the preowned device market?
Will 5G help consumers let go of their old devices?
At HYLA Mobile, we know from our own research that consumers are holding on to their devices for longer and longer – 2.78 years to be precise. And part of the reason for this is the perception that the incremental improvements of the latest devices simply isn’t enough to warrant an upgrade for some consumers. 5G has the potential to turn heads. In fact, Qualcomm is placing its bets on 5G devices having a competitive advantage in the very near future. But the big question is whether the consumer demand is there yet?
Smartphone manufacturers and the carriers will no doubt use the promise of future speeds and capabilities of 5G to sell their new models. In preparation for 5G, these devices will also start to look a little different. They will strongly challenge the OEM’s design and engineering capabilities. For example, we can expect to see greater changes in form factor, weight, and thickness to accommodate the need for multiple antennas and increased battery performance needed in 5G devices. This is likely to result in larger devices and the use of different materials. The promise of faster speeds and less lag time, as well as the perceived change through design, will play a role in prompting consumers’ interest to adopt a new device in 2019 solely for 5G. Ultimately it will be up to the Carriers, OEM’s, and Application Developers to establish and market the use cases creating the demand for 5G devices and compelling consumers to make the change.
Upgrades are coming, but when exactly?
It is of course a given that the launch of 5G networks will eventually lead to a boost in new 5G device sales, and a boost in trade-ins of 4G devices. But the question is when exactly this change will come to the fore? While the manufacturers and carriers will be marketing new devices with the promise of high-speed and high-bandwidth connectivity, the reality is that consumers will be waiting until 5G networks are fully up and running and the benefits of 5G are better understood and desired.
In fact research even suggests 5G smartphones won’t dominate global device shipments until 2022, when it is expected that one in every five devices sold will have 5G capabilities. Additionally, we do not expect to see a 5G iPhone until 2020. It is entirely plausible that we’ll see the early adopters upgrade to the first 5G devices once they launch. But it’ll likely take longer for the average consumer to understand the benefits and make the change. That’s not too hard to believe when you consider that some consumers don’t even know about the new standard or when it is due to launch.
A welcome boost to trade-ins
The jury might still be out on when exactly consumers will upgrade to 5G devices, but when they do we can expect to see a boost in trade-ins. And this will be a boost that is welcomed by the secondary device market. A potential supercycle could see a massive increase in the supply of preowned 4G devices from developed markets, and huge demand for them in emerging markets.
There are many countries that are only just gearing up for 4G networks, which will provide a lucrative market for manufacturers looking to give a refurbished 4G device a second life. With the refurbished smartphone market currently growing faster than the market for new smartphones, we know the demand will be there for the carriers.