Even 2G phones will outsell 5G handsets for next five years: report

2G phones
Image credit: Trum Ronnarong / Shutterstock.com

While the first 5G commercial handsets will go on sale from early 2019, sales will not begin to scale up until 2021 – in fact, says Strategy Analytics, even 2G phones will be more popular than 5G phones well into the next decade.

Few large-scale 5G networks, only a handful of 5G handset models from phone makers available, along with high-prices for 5G smartphones and lack of compelling use cases will limit sales of the next-generation devices in their first few years, according to Strategy Analytics’ latest handset forecast report.

“5G smartphone sales will begin in China, Japan, South Korea and the USA from 2019” says senior analyst Ville-Petteri Ukonaho. “But volumes in 2019 will be in just the millions, and only barely in the tens of millions in 2020.”

Volumes of 5G handsets are expected to approach 5% of global handset sales by 2021, adds Ken Hyers, director at Strategy Analytics.

“By 2021, 5G networks in key countries in Asia and North America will cover many urban centers, giving customers a reason to purchase 5G smartphones” he said. “By 2023, as 5G smartphone prices continue to fall and next-generation wireless networks are built out across much of the developed world, 5G handset sales will number in the hundreds of millions.”

Strategy Analytics says that 5G subscriptions boosted by device economies of scale coming from China’s early involvement in network deployments will ramp to almost 600 million in a moderate case scenario by 2023.

In the meantime, older generation wireless technologies will continue to flourish. Specifically, “2G and 4G handsets will continue to have long lifespans, with both carrying on into the next decade, even as 3G devices fade away,” says senior VP David Kerr.

Even as 5G smartphone sales are rapidly ramping up in 2023, 2G feature phones will account for nearly one in ten handsets sold that year, as new-to-mobile customers in emerging markets, particularly in Africa, purchase their first mobile phones.

4G LTE, currently the dominant handset technology worldwide, will remain a mainstay for mobile phones through 2023 and beyond. 4G handset sales volumes continue to grow and will do so through 2020, when they will account for four out of five handsets sold. Well into the next decade, 4G LTE will be the mainstay technology powering most of the world’s handsets.

The report also offers good news for OEMs and operators alike – despite recent slowing growth in global handset sales, there are still many pockets of opportunity, including hundreds of millions of potential first-time mobile customers in emerging markets, particularly in Africa and parts of Asia, who are looking for reliable and inexpensive means of communication, making feature phones of particular interest to this segment.

Meanwhile, in mature developed markets like China, much of Europe, Japan, South Korea and the US, growth is stagnating and handset replacement cycles are lengthening. 5G, while still several years off for most potential customers, represents a way to kickstart stagnating smartphone sales as customers discover new use cases powered by ultra-high-speed data rates and super-low latency.

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