Sorry, 5G is not going to save falling smartphone sales in the UK - Wired.co.uk

In 2019, analysts said 5G would stop a downward spiral in UK smartphone sales, and push customers to finally upgrade their phones. Turns out that's not going to happen.

Research released this week by analyst firm Gartner predicts that UK smartphone sales will not just fail to surge, they will flatline with zero per cent growth expected. Despite the continuing rollout of the 5G network and additional 5G-ready phones coming on the market, the UK is literally not buying into the 5G hype.

This is more bad news after a poor year for major smartphone manufacturers in 2019: in the opening quarter Apple and Samsung combined sold almost 17.5 million fewer smartphones globally compared to 2018. The reason, analysts explained at the time, was that people did not feel the urge to upgrade their devices as often as they used to, partially because smartphones are now so much more expensive.

It's true that buying a new phone can take a far greater toll on customers' wallets: in the early 2010s, an iPhone cost around £500 whereas now a top-tier phone will cost around £1,000. But that's not the whole story.

“It's a very competitive market,” says Annette Zimmerman, research vice president at Gartner. Brexit is causing uncertainty in all industries, she claims, and will probably have an effect on phone sales in the country.

But more problematic is the fact that the public has not embraced 5G as quickly as analysts thought they would. Alongside negative reports that 5G will give you cancer (which isn’t true) and that it could disrupt weather monitoring (which is true), most customers are just seeing 5G as a simple speed upgrade rather than life-changing technology.

As there are only limited places in the UK where you can currently get 5G signal, the public hasn’t been able to see its full potential yet and are unlikely to change their minds. But a lot of money has already been spent on getting 5G-ready – in 2018, the UK’s biggest mobile operators spent almost £1.4 billion to secure spectrum, while last year the UK government pledged £30 million to help rural communities access the network.

“You can only expect so much of an uptick because prices are going to be elevated,” says Peter Jarich, head of data firm GSMA Intelligence. In order to be 5G compatible, smartphones cost more to make and therefore cost more for the consumer. Jarich believes that the only reason why there hasn’t been a forecast decline in sales this year is thanks to the early adopters – and that the average consumer will still look for a more cost-effective smartphone.

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Despite the outlook for 2020, Gartner is still predicting big increases in 5G phone sales over the next three years in the UK: analysts predicted a 86 per cent year on year increase in 2021 and a 53 per cent increase in 2022.

Meanwhile, more competitors are entering the space. “We are seeing more and more Chinese vendors like Oppo, so competition is increasing,” says Zimmerman. “Usually that means that there's the price reduction and that can lead to better sales.”

The tipping point could be Apple, which is widely expected to release a 5G handset in September. This could go someway towards persuading the UK, where the iPhone has around 47 per cent of the smartphone market, compared to 25 per cent globally.

If this happens, it could cause the landslide of smartphone sales analysts were expecting.

Apple's Q4 figures, which are due to be released on Tuesday evening, are expected be up by almost five per cent to $88.1bn, but not thanks to the company's traditional devices. In fact, a drop in sales for the iPhone, iPad, Mac and MacBook are expected to be offset by faster growth in services and wearables.

This slow uptake won't necessarily affect the expansion of 5G, which has backing from commercial enterprises. Retailers are already predicting it will help to save the high street, manufacturers hope it will speed up their production lines, and energy companies hope they will be able to better control remote areas with 5G, for example. According to Altus Group's annual Commercial Real Estate Innovation Report, 66 per cent of retailers in Britain say they hope 5G technology will help them to get rid of cashiers.

“There's a tendency to talk about 5G as though it's somehow radically different from anything that we've had in the past, and will enable this transformation of society in a way that wasn't possible,” says Benedict Evans, an industry analyst. “There are a bunch of very specific industrial and business uses that are different from 4G. Normal consumers won’t be able to get that.”

Maria Mellor is a writer for WIRED. She tweets from @Maria_mellor

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Sorry, 5G is not going to save falling smartphone sales in the UK - Wired.co.uk

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