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Monday, 29 July 2019 16:27

Can 5G save the smartphone market from commoditisation? Featured

Oppo Reno 5G Oppo Reno 5G

In case you haven’t noticed, practically every man, woman and child has a smartphone these days and in concert with this ubiquity has come an increasing unwillingness for consumers to pay through the nose for premium flagship models. The market is fast becoming commoditised and the great white hope for smartphone makers is the advent of 5G but are they clutching at straws?

In the current smartphone space, perfectly good mid-range models offer a high percentage of the same features as the exorbitantly priced premium models on offer from the likes of Samsung and Apple. Whatever Trump may say about China’s trade policies, over the past five years that country has succeeded in bringing high quality affordable smartphones to the market worldwide.

Speaking from personal experience, I was all set to upgrade from my Apple iPhone 6 to the new “budget priced” iPhone XR, prepared to accept an old technology LCD display, non-expandability, and single SIM slot (are carriers offering eSIM usability yet?), until I saw the A$1300 price tag! This was not even the premium flagship iPhone XS series.

That was enough for me to look around for more affordable alternatives in the Android world - other than Samsung and Google. It was there that I discovered a plethora of Chinese brands such as Xiaomi, OnePlus, Oppo, Vivo, and of course Huawei.

Most of these brands offer premium versions in similar price brackets to the top end Samsung Galaxy and Apple iPhone range but their big sellers are the mid-range models which now start from as low as A$300.

I ended up buying a Vivo v11 smartphone for about A$550 and I am happy to say that I haven’t regretted my decision. This is the best phone I have ever owned.

Of course, I am by no means alone in making such a purchasing decision. The latest intelligence from market researchers all tell the same story. Chinese brands such as Xiaomi, Opposition, Vivo and Huawei are eating into the market shares of both Apple and Samsung worldwide.

Both Samsung and Apple have unambiguously signalled their intentions to halt the slide with premium priced 5G phones. Apple has even bought Intel’s smartphone chip business so it can make its own 5G modems instead of paying through the nose to Qualcomm. The question is will it work?

Unfortunately, in the long run the answer must be a resounding no.

5G will be a boom market for telecommunications carriers - IoT, smart cities, autonomous vehicles, faster and high volume downloads.

However, for smartphone makers 5G handsets will initially just be a high priced novelty - especially with ubiquitous 5G networks still a few years away. Meanwhile, the Chinese makers will be busily working at bringing mid-range 5G handsets to market because they know where their bread is buttered.

At the end of the day, the latest experience with contracting market shares at the premium end of the smartphone space while mid-range $400 and $500 segment continues to boom, is indicative of an ever more savvy consumer market will bear and 5G will make no difference to this.

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Stan Beer

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Stan Beer co-founded iTWire in 2005. With 35 plus years of experience working in IT and Australian technology media, Beer has published articles in most of the IT publications that have mattered, including the AFR, The Australian, SMH, The Age, as well as a multitude of trade publications.

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