The buzz surrounding 5G is undeniable, with the new network technology seeing faster adoption than any before it. A new whitepaper jointly released by Counterpoint Research and fastest-growing smartphone brand realme today predicts that one out of every two smartphones will support 5G by the end of next year.
Titled as “Making 5G Global: Accessibility for All,” the paper looks at the regions, demographics, and brands currently leading 5G mobile phone adoption as well as the price points and specifications consumers are demanding. It concludes that while 5G uptake is currently concentrated in developed markets (including China), uncompromising younger consumers in emerging markets will be the ones to push adoption into the global mainstream.
5G smartphone adoption is currently concentrated in digitally developed regions, but emerging markets are primed to make their mark
In key digitally developed markers, such as China, the US and Europe, 5G technology has already enjoyed strong support and a rapid adoption rate. In Q1 2021, just one year after the launch of the world’s first commercial 5G network in South Korea, almost one in every three smartphones sold was 5G enabled. Compared to 4G, which took four years to reach annual shipment numbers exceeding 200 million, 5G hit the same milestone in just four quarters, despite the immense global disruption caused by the Covid-19 pandemic.
To date, developed markets have been the main source of growth for 5G, with 5G smartphone sales climbing past the 50% mark in Korea, China, and North America, while Europe and Japan are close behind. In Q1 2021, these markets accounted for 86% of the 5G devices being sold around the world. China, with its aggressive network rollouts and strong portfolio of homegrown 5G smartphone players, including the likes of realme, was the most robust among them, accounting for more than half of all 5G devices sold globally.
But while 5G will continue to grow in developed markets as adoption levels approach 80%-90%, Counterpoint predicts that the currently trailing emerging markets, with their large populations of increasingly connected young consumers, will soon lead the charge. The analysts expect to see the landscape change dramatically as 5G markets launch in many populous developing countries, such as India, Indonesia and Nigeria.
Expecting 5G phones to demonstrate a radical evolution from the past, young consumers are reluctant to compromise on functionality, design or price
The paper reveals that the next generation of consumers—especially the young— are demanding more than ever before from their 5G phones. Although affordability is important, they are demanding a better performance from slimmer, lighter, cool-looking handsets, weighing up a variety of considerations, such as camera quality, memory capacity, and battery life, before making a purchase. According to a recent survey of almost 3,000 realme users in China, respondents rated “thin and light devices” and “striking design” as two of the top five reasons for recommending their realme 5G device to others.
“5G smartphone development has entered the 2.0 era,” said Madhav Sheth, VP of realme, and CEO of realme India and Europe. “This means we need to deliver a complete 5G mobile experience from a performance view, but packaged elegantly in thinner, lighter, more unique designs. It also means offering a full portfolio of devices, from no-compromise affordable to premium flagships bringing technological innovation.”
It seems likely that the young consumers will see their demands met. According to Counterpoint, in Q1 2020, only 14 5G models were available for wholesale purchase between US$100 and US$399. A year later, the number of handsets in that price category had ballooned to 219—and it continues to expand. As it currently stands, one in every five 5G smartphones sold in the past two quarters were priced between US$200 and US$299, while more than a third came in below US$399. In 2020, 5G devices in the budget to mid-end segments accounted for nearly 40% of all products sold. Performance and design were, however, not notably compromised. Budget to mid-priced devices, such as those produced by realme, were found to have superior RAM on average when compared to those in the higher price bracket, for example.
Emerging markets will be the next big growth driver for 5G smartphone adoption
The strong industry support for budget and mid-range devices is providing the younger generation with earlier access to 5G products. This bodes particularly well for emerging markets, where the age of the average consumer is typically 8-10 years lower than in developed countries. The paper predicts, therefore, that the low- and mid-range segment will grow further in line with the roll out of 5G in these markets. Average selling prices will shrink by double digits through the foreseeable future, according to the report, a trend that has been seen before with previous technology rollouts in emerging markets.
“Lower-cost devices have been one of the key drivers of 4G growth in many low- and middle-income markets. We saw this dynamic happen in South Asia between 2017-2019, where smartphone adoption amongst adults increased by 30% to almost half the population,” said GSMA Intelligence Principal Economist Kalvin Bahia. “This will be just as important for 5G, especially as we start to see more emerging markets come online.”
With a combined population of more than 1.6 billion, India and Indonesia will be the main force behind the budget to mid-range segment, according to the paper. Even though 5G is not expected to launch in India until next year, the appetite for it is already apparent, with 5G smartphone sales reaching 7% in Q1 2021 and expected to hit 21% by the end of the year.
This also bodes well for realme, which has commanded a 13% share of Indian smartphone sales over the past year. With its offering increasingly weighted to a 5G portfolio that occupies the $100-$399 sweet spot, a design aesthetic that appeals to young consumers and a high-functioning feature set, realme is perfectly placed to help popularize 5G among the savvy and uncompromising users in India and other emerging markets.
Brands with a broad, youth-focused portfolio will thrive
With half of all smartphones expected to be 5G by the end of next year, the whitepaper says manufacturers that offer a broad portfolio across all price points—particularly in emerging markets—that speak the right design language and that can meet young consumers’ expectations on features and accessibility are likely to reap the rewards of future trends.
Such predictions seem to align with the success of realme, which has been named by Counterpoint as the fastest-growing player in 5G smartphone sales in the world. realme became one of the top ten 5G smartphone vendors in the first quarter, no doubt spurred by the company’s strong online presence and robust portfolio across the mid-end price segment. The company is also well-placed demographically with a business model targeted at young consumers, and a clear product strategy that focuses on making 5G smartphones that are lighter and thinner, fashionably designed and affordable without compromising on functionality.
In the highly competitive US$100-US$199 wholesale average selling price band, realme reached third place, while also gaining a significant share of the largest US$200-US$299 mid-end range. In its home market in China, 5G devices accounted for nearly 80% of realme’s overall product sales in Q1 2021, highlighting the importance 5G has in its future portfolio. realme’s strong growth momentum on the 5G front further paves the way for the company to become one of the major smartphone players in the world.
“Every generation of cellular technology has seen a different mix of players taking the lead,” said Peter Richardson, VP and Co-founder of Counterpoint. “In 3G it was Nokia, with Samsung taking over in 4G. As we look ahead, the list of players is growing more diverse. realme is one of the fastest-growing brands thanks to its appeal to younger users who are bound to form a core part of the 5G market.”