5G as a ‘Silver Bullet’ for Smartphones will Necessitate Refreshed Vendor Strategies to Arrest Declining Market Growth, ABI Research Says

Despite the smartphone market’s slowing growth due to saturating addressable markets, ballooning Average Selling Prices (ASPs), prevailing consumer price fatigue, and lengthening replacement cycles, all is not lost. In fact, the market will witness a 4.1 percent rise in shipments in 2019, growing to just under 1.6 billion for the year, according to ABI Research.

The analysts expect the use of 5G and flexible displays will be the catalysts to galvanize the industry, creating improved user experiences (UXs), while stimulating smartphone replacement rates.

“For too long, major vendors have been lambasted for upgraded devices looking far too similar to their predecessors, with iteration rather than design innovation becoming the norm,” says David McQueen, Research Director at ABI Research. “In fairness, it has become increasingly difficult for vendors to differentiate on features, with price being one of the very few competitive factors left, but new technology innovation and features are just around the corner to help arrest this decline.”

It is expected that 5G will be used initially as a point of differentiation, but it could actually be the “silver bullet” that smartphone vendors are pinning their hopes on. Through the launch of 5G with its enhanced mobile broadband speeds, plus the inclusion of flexible displays, users will be introduced to new innovative ways to interact with their devices.

Taking full advantage of these new functionalities, users will see improvements in the UX, including upgrades to voice assistance, AI, and smart biometrics.

With 5G acting as the fulcrum, the market is also set to witness the introduction of new device form factors that leverage a host of new and improved technologies, activated by cues taken from the users’ surroundings, applications, or circumstances.

However, vendors will need to ensure that these latest innovations provide a clear purpose to consumers, offering strong reasons for purchase, or else they run the risk of becoming low-volume niche products.

Expectations are that 5G smartphones will start to become available during the first half of 2019 and by the end of 2020, all major vendors will have at least one high-end model that is 5G ready. ABI Research forecasts that 5G smartphone shipments will reach 49 million in 2019 (around 3 percent of global smartphone shipments) and will rise steadily to account for 43 percent of the total by 2023.

“It is incumbent on major smartphone vendors from Apple to ZTE, to ensure that they remain competitive in the next 18 months as these new technologies are introduced, continually providing a set of captivating and effective innovations in their portfolios,” concludes McQueen. “If the established vendors are to take full advantage, they will need to modernize and refresh their strategies to strengthen their business competitiveness and technological leadership in the mid- to long-term. Failure to do so could result in a dramatic collapse in business, which would not be the first time in the smartphone industry where a prominent vendor has been caught out and fallen quickly from a position of market strength.”.

(For more information visit www.abiresearch.com).