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Making the leap to 5G

Posted by Scott Bruce on Mar 3, 2020 9:00:00 AM
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leap to 5G 5G is now a commercial reality in many countries around the world. We are also at a global tipping point – the number of 5G devices being purchased and activated is set to accelerate dramatically. Ericsson predicted that 13 million 5G devices would have been shipped by the end of 2019 – and will increase to a staggering 160 million units by the end of 2020.

This is great news for the mobile industry, but does this increased supply meet increased consumer demand for 5G? CCS Insight surveyed more than 2,000 mobile phone users across the UK and US to better understand their attitudes towards 5G. The results were interesting— CCS Insight found that consumers expected 5G to be a major factor when choosing their next phone.

Read Blog: Accelerate Your Workforce with Device Trade-In

The 5G hold up

CCS Insight’s research found that one-third of those surveyed plan to start using 5G within the next 12 months. The survey also uncovered several reasons that consumers weren’t upgrading to 5G devices, specifically (in ranking order from highest to lowest):

  • “I don’t need 5G”
  • “My mobile phone is not due an upgrade”
  • “5G is too expensive”
  • “5G coverage isn’t good enough yet”
  • “I am concerned about the security of 5G networks”
  • “I don’t know what 5G is”
  • “I worry about the health efforts of 5G”

These findings are interesting for a number of reasons. Much has been spoken about 5G consumer use cases. Early adopters have upgraded to 5G for the promise of faster speeds and more capacity – so a better service experience. Operators have been very realistic about pricing however, with only moderate increases in 5G tariffs. While pricing strategy for the first 5G iPhone (expected Q3 2020) is unclear, the 5G smartphones that are currently available do carry a premium over 4G devices. For example, in the US, the Galaxy Note 10 Plus 5G is $200 more expensive than the 4G version. This suggests that device prices could be a reason why consumers may not move to 5G yet..    

“My mobile phone is not due for an upgrade”, however, is an interesting response, given that US consumers generally do not use contracts and are now holding onto their mobile devices for longer. Our Q4 trade-in trends data showed that US consumers were typically holding onto their devices for three years before they traded it in for a new device. The response does suggest however, that UK consumers are very aware of their current contract lengths, where contracts are still a popular choice, and will be ready to consider 5G when their existing contracts expire.  

Early upgrades equal early adopters

As with previous technology launches, consumers will upgrade to 5G. The only question will be how soon. A vibrant mobile industry needs healthy smartphone upgrade cycles and operators and OEMs are working hard to sustain them. A massive consideration to achieving this is ensuring the affordability of new 5G smartphones and the maximization of the secondary market.

Operators, retailers and OEMs need to incentivize consumers to depart with their devices sooner if they are to get them to migrate to 5G. Our data shows that on average, US consumers received $100 for their device at trade-in in Q4—a device that was likely to be three years old. But $100 towards a $1300 device isn’t going to make it affordable. If consumers upgraded sooner, they’d retrieve more money for their devices, and would be able to make a significant cost savings on a new 5G device. For example, if a consumer was to upgrade an iPhone XS, our data shows that in Q4 they would have received around $400 for that device—this money would make a real difference towards the purchase of a new device.  

Ultimately, we’re still some way off of 5G becoming mainstream. But with Apple set to launch its 5G devices this year along with other OEMs, such as Samsung, introducing additional 5G offerings, we’re surely going see more traction in the market in the coming months. Operators, retailers and OEMs need to educate their customers on the benefits of trade-ins now if they want them to make the most of these programs and get consumers to upgrade to the next generation of cellular technology.

If you are an operator, retailer or OEM looking for new ways to incentivize your customers to trade-in their pre-owned devices, download our white paper on the 16 steps to optimize your mobile device trade-in program.

2019 Annual Infographic

Topics: 5G

About This Blog

The HYLA Mobile blog is a place for thoughtful dialogue that will ultimately change the perception of “used” phones around the world. Visit the HYLA website to learn more.

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