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Will 5G Kick Off A Smartphone Upgrade Supercycle?

Originally posted on forbes.

For the last three years, the telecom industry has been touting the virtues of 5G. They believe that this ultra-high-speed wireless network would spawn one of the largest smartphone upgrade cycles we have ever seen. Their promise of speeds up to 1 gig per second and even higher over time is the draw that forces people to buy new smartphones that support 5G.

During these last three years, telecom suppliers have been feverishly building out their 5G networks. As you can see from the Statista chart below, some countries, such as Saudi Arabia, South Korea, and Australia, have moved fast to build their 5G networks.

Average 4G and 5G download speeds in selected countries

Average 4G and 5G download speeds in selected countries

STATISTA

 

If a user in Saudi Arabia has a 5G smartphone, they can get up to 377 MBPS today. In South Korea, they get 336 MBPS.

As for the US, if 5G is available, users can get about 52 MBPS, although, in prime 5G spots in the Bay Area, I have gotten up to 75 MBPS if the conditions are just right.

When the telecom industry talks about a supercycle for smartphones, it means there will be an inflection point that will drive people to upgrade from current 4G networks. They believe 5G is that inflection point and will push their customers to get new smartphones that support a 5G network with radically higher speeds.

The last inflection point that drove a three to four year supercycle was 2009 through 2013 when millions of people began buying smartphones with 4G wireless radios on board. In this case, the iPhone was only two years old, and 4G was one of the reasons Apple’s iPhone began to take off.

During this period, Apple introduced the iPhone App store, and 4G was crucial for making even the first generation apps work well on this Apple device.

Given this historical perspective of the 4G impact on smartphones’ growth, history suggests that a new supercycle for refreshing smartphones, only this time driven by 5G, should start gaining momentum soon.

Currently, in other parts of the world where 5G networks have already deployed, we see increasing demand for smartphones that support and take advantage of 5G.

However, given the sparsity of available 5G networks in the US that support true 5G speeds today, demand for 5G phones is weak at the moment. I believe Apple’s support of 5G in the new iPhone 12 models could be a catalyst for starting the next supercycle of smartphone upgrades, as it did during the early launch days of 4G.

The telecom carriers still have a lot of work to do to roll out 5G networks to all of the US, but they are making progress. Many of the larger metropolitan areas around the US have the first generation of 5G available to date. And the telecom vendors hope to have all of the US wired for 5G by the end of 2021.

So, if the US will not have 5G fully rolled out nationwide until the end of 2021, do you need to buy a 5G phone now?

You should consider at least these two data points when you are looking at upgrading your smartphone to support 5G.

The first is that 4G is not going away. Any smartphone you buy now will still work on 4G networks in countries all over the world. If you think your smartphone will last at least another year, there is not a good reason to upgrade now or in early 2021.

The second consideration is that if you buy a smartphone today, you most likely will have it for at least three years. During that time, you will probably find a need for faster speeds to use new apps, services, and streaming video on your smartphone.

I mention new apps because this is what happened with 4G. When 4G was rolled out, the draw was for faster speeds for using apps and streaming videos. At that time, most people could not see why they needed faster speeds, given what they were used to in the past on their older smartphones with 3G speeds.

However, 4G brought a new canvas for developers to create new apps that took advantage of 4G’s speed bump.

Apps and services such as Uber, Lyft, Airbnb, TaskRabbit, YouTube, Door Dash, and anything related to the gig economy were not possible on older, slower wireless networks.

With 5G and more advanced smartphones, who knows what new and exciting apps and services developers will create? They now have another new canvas to work with that uses an even faster wireless network.

With 5G networks still not available broadly, especially in the US, it is not clear when this next smartphone 5G supercycle will begin in earnest. I estimate that by the end of 2021, when broader 5G networks are available, we could see the first big surge in smartphone replacements that have 5G radios included.

If you have a smartphone now that is over three years old and not meeting your needs, you should seriously consider replacing it with one that supports 5G if you plan to keep it for at least several more years.

Since we don’t know what new apps and services will need 5G to work, it could be wise to move to a 5G phone during any short term upgrade needs. A 5G smartphone would assure you that, when developers’ genius minds create great new apps that need 5G to work, you would be ready for them.

Source: forbes

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