Yahoo Finance 5G smartphone sales soar, but not because of interest in 5G technology
Sales of 5G-enabled handsets in Canada quadrupled in Q4 2020 from the quarter before, according to new data from Counterpoint Research. Experts say this is expected as Canadian carriers push for sales of 5G handsets, which are becoming more common from manufacturers.
Counterpoint's data revealed that in Canada, 5G-enabled handsets made up 57 per cent of total handset sales in Q4 2020, compared to 14 per cent in Q3 2020. In Q2 2020, sales of 5G-enabled phones in Canada were only 8 per cent, while 92 per cent of sales were for LTE-enabled handsets.
Hanish Bhatia, a senior analyst at Counterpoint, said in an email that sales were driven mostly by premium smartphone devices, but that moving forward growth will be driven by devices in the mid-range price tier.
He says the rise in 5G smartphone sales is due to carriers aggressively marketing 5G as their "competitive edge to grab more consumer mindshare," or consumer awareness.
"Although the churn rate for the Big Three Canadian carriers touched a record low in 2020, 5G continues to remain a big opportunity for carriers to grab more premium users," Bhatia said.
Because 5G offers higher data limits, he said it's very appealing for customers to switch over to a more expensive plan.
"Apart from speed and data limits, 5G plans are also enticing these customers with device financing and device return options which lower the cost of entry to purchase a premium smartphone," he said. "Consumers will have to shell out significantly higher upfront and/or a monthly device cost if they chose to opt for a low-cost 4G plan from low-cost carriers like Fido, Koodo, or Virgin."
Bhatia added that the end of the year is an opportunity for upgrading for many people who are drawn to promotional deals.
"Canadians tend to upgrade their smartphone device towards the end of each year, especially with Black Friday and Boxing Day promotions. These promotional events also happen to be immediately after the annual Apple iPhone launch cycle," he said. "This year, Apple launched [an] all-5G portfolio which led to exponential growth in penetration of 5G devices."
5G is not yet fully available in Canada. As of now, Rogers, Bell, and Telus have each launched initial 5G wireless networks in various markets across the country.
The Canadian government has also delayed the 3,500MHz spectrum auction by six months. The spectrum is critical for 5G deployment, specifically in cities where thousands of small cells will be deployed for self-driving cars and other consumer applications.
Duncan Stewart, director of technology, media and telecommunications research at Deloitte Canada, says that the increase in the number of people buying 5G phones is not because of a strong interest in 5G technology, but that there are now more 5G-enabled phones available from manufacturers. Stewart also says in 2021, more than 50 per cent of phones in Canada and the U.S. that are for sale will be 5G-enabled.
"A lot of the more desirable phones happen to have 5G. I bought a phone and it happens to have 5G here in Canada," he said in an interview. "It's not like people are developing apps or finding new applications. People are buying 5G phones because a lot of good phones have come with 5G."
Stewart also notes that carriers pushing for consumers to get a 5G phone with a higher-tiered plan is not native to Canada but is something that's happening globally.
"One of the things that is not generally understood about 5G by the average person is that 5G, in addition to providing much faster speeds for consumers, from a carrier's perspective it is significantly cheaper to provide a gigabit of data on 5G than it is on 4G," he said. "So in terms of reducing their cost of data transmission, they have incentives to get people to use 5G and that is not a Canadian thing, that is a global thing."
Stewart notes that for some time, there were many conspiracy theories floating globally that 5G spectrum waves caused coronavirus or cancer. But because those theories have been debunked, he said, people are starting to feel less afraid to buy a 5G-enabled phone.
"People have said maybe I should ignore the guy with the tinfoil hat and worry more about whether or not I can get a [COVID-19] vaccine," he said. "I would say the whole health effect around 5G is one of those things that was kind of an issue in early 2020, but by the end of the year almost gone."
