5G smartphones' market share rise even as service roll-out remains distant

While timing of 5G spectrum action is unclear, over 1 million 5G smartphones entered market in Sept quarter

The 5G telecom service may be a distant dream in India, but defying all past trends, 5G smartphones are increasingly becoming mainstream. As handset majors like Apple, Samsung, Xiaomi, and OnePlus, among others, are aggressively refreshing their portfolios with 5G smartphones, the country’s telecom market is now anticipating a robust user base well before the roll-out of services.

Since early this year, all leading brands have begun rolling out 5G handsets, starting with the premium end of their portfolio. While Samsung entered the segment with Galaxy S20 Ultra, Xiaomi launched Mi 10, OnePlus moved to 5G with the Note 8. Vivo, the third-largest player in the market, marked its presence with its sub-brand Iqoo, while Oppo began moving towards 5G with multiple devices. Realme (fourth-largest by volume) has lined up half a dozen 5G phones. Tech major Apple shifted to 5G technology with its latest iPhone 12 series.

The aggression among brands and cut-throat competition, typical of the local market, is pushing them towards faster roll-out of the 5G portfolio. While shipment of 5G devices has been steadily growing since February, according to IDC, during the July-September quarter, a record 1 million 5G smartphones were shipped here. The number was 500 per cent higher than the previous quarter shipment numbers for 5G phones in India, said analyst firm CyberMedia Research (CMR).

According to CMR, with OnePlus moving to 5G-only phones, the shipment numbers got a leg up. “OnePlus grew 104 percent year-on-year. During the September quarter, it introduced its affordable 5G smartphones, with the OnePlus Nord series doing phenomenally well. Further, the OnePlus 8 and OnePlus 8 Pro accounted for 16 per cent of its shipments,” it said.

The frenzy over 5G devices, however, defies any previous trends noticed during the transition period between two generations of telecom services in India. While the transition from 3G to 4G took over four years, when it was first introduced in 2012, none of the leading brands were selling 4G smartphones here. Likewise, during the previous transition — from 2G to 3G — local consumers did not have the option of purchasing 3G handsets, except for a handful of options like Blackberry.

According to Navkendar Singh, the dynamics of the market has gone through sea change, which is now pushing handset brands towards 5G technology. “Unlike earlier, this time the price of chipsets has begun to come down even before the service is launched. China’s transition to 5G at an early stage has helped the supply chain,” he said.

So far, all leading chipset makers — Qualcomm to MediaTek — have come out with 5G chipsets that are widely available. Moreover, in contrast to previous trends, this time the transition is driven by vendors and not demand from consumers.

Analysts now estimate that by early-2021, all smartphones in the md-segment (Rs 15,000-25,000) from major brands will be 5G-enabled. “Though the 5G network will only launch by end-2021, the ‘devices go first’ strategy led to 1 million units of 5G smartphones in July-September. We expect a gradual uptake of 5G devices in 2021, expanding into the mid-range segment, as the average selling price gap between 4G and 5G offerings narrows,” said IDC.

The financial distress that all telecom majors, except Reliance Jio, has faced in the past three years has pushed the date of 5G spectrum action multiple times. While the government is now planning to hold the auction in early next year, citing costly pricing of spectrum, Airtel has decided to stay away from the auction — raising questions over the country’s transition to 5G services.

Analysts, however, are enthusiastic over the surge in 5G handsets in the market well ahead of time. “While consumers may not need to purchase a 5G handset now, this early aggression by brands indicates a smoother transition towards 5G, compared to 4G. When finally, the telecom operators will be ready with their spectrums, a significant base of 5G devices will be in use,” said Faisal Kawoosa, lead analyst, TechArc.