Today, the majority of smartphones sold by US merchants are not 5G. However, as we set off into 2021, 5G is right on the brink of becoming mainstream. Showcased at trade shows for years, and available to US consumers since early 2019, 5G hardware had its breakout year in 2020, and the future looks fully-5G from here. This upcoming spring 2021 smartphone refresh cycle will nearly complete the saturation of 5G across the US omni-channel product landscape as a year’s worth of momentum and diversification continues.
Year-over-year, there are 3,234% more 5G smartphones available for US consumers to purchase across retail and online channels than there were at 2019’s end. This growth equates to 1,467 unique 5G SKUs, a spectacular improvement over the 44 buying options that holiday 2019 shoppers could choose from. 5G’s progress now earns the segment a 38% share of the total US omni-channel product landscape, a major advancement from its 1% share at the close of 2019, but not yet a market majority.
What fueled 5G’s running away year? It was not huge consumer demand and enthusiasm. It was not the comprehensive network coverage of US carriers. It took two things: hardware price erosion and Apple getting involved.
Pricing Plummets for 5G Devices
One year ago, $840 served as the minimum net price threshold for a 5G smartphone. Today, one can be obtained as low as $179. The dramatic 79% decay in pricing for 5G smartphones reflects the diversification of a segment where new contenders strive to be “affordable 5G” options. Every price tier of the US smartphone market now has 5G models, and support for the next-gen network appears across prepaid, postpaid, and unlocked products. Outside of Sony, every participant in the 5G segment has smartphones available below $600 today, and three of the segment’s latest entrants, Apple, Google, and TCL, sit with introductory options between $400 and $530. The pioneers of 5G, LG and Samsung, now race to meet T-Mobile’s REVVL 5G at the segment’s opening sub-$200 price point in order to meet a massive pool of buyers who remain apathetic to flagship devices.
Apple Enters the Arena
5G began with, and grew with Samsung in the US market, but even after its careful nurturing, Apple is now the one bringing the next-gen network to the masses. Samsung represented over 75% of the 5G smartphones offered in retail and online, and over 80% of all 5G advertising throughout 2019. 2019’s only other 5G players, LG and OnePlus, nurtured respective ~10% shares against Samsung in the aforementioned metrics, but everyone’s shares now contract as Apple’s weight is tossed into the market.
The fall 2020 launch of Apple’s iPhone 12, a robust four-model lineup, all with 5G and all widely distributed, was the definitive catalyst for the segment’s rise. Almost instantly, Apple took control of the 5G market with an iPhone 12 generation that makes up 61% of the 5G products available today, while Samsung settles for second at a 31% share, down 46 points on-year. Samsung still remains the 5G marketing leader with a 73% share of 2020’s 5G advertising, although Apple immediately claimed a 20% share of the full year’s activity with its iPhone 12 lineup, impressive considering that the generation has only been available for three months.
What the 5G Future Holds
The discussion around 5G stands ready to become a conversation about the mainstream smartphone market at large, not just a segment, because nearly every US smartphone launched in 2021 will support 5G. If not, that hardware faces no chance at gaining visibility in the US market. Brands and merchants proved this during 2020 with the products that they chose to launch and assort. In 2020’s first half, 15% of the new smartphones entering the US omni-channel were equipped for 5G, while 78% of those introduced in the second half of the year were 5G-capable, revealing a clear prioritization.
The saturation of 5G is set to continue as 2021 begins and the months ahead bring new Android handsets to the US market. Each brand will lean heavily into “affordable 5G” messaging as a source of differentiation as the segment marches toward maturity and into mainstream. Soon, there will not be any other option other than a 5G smartphone.
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About the Author
Scott Peterson is a Senior Analyst covering the smartphone and smart speaker categories at gap intelligence. Since 2010, Scott has supported the strategic efforts of the world’s top brands, and is recognized for his thought leadership in the industry. Prior to joining gap intelligence, Scott held management positions at both national and specialty retailers, developing his deep understanding of the channel and end-user perspectives.