It's been a good year for 5G in the phone business. Despite the continuing drag of the coronavirus crisis and the growing impact of component shortages 5G is now the heart of the smartphone market.
Shipments in the first three quarters of 2021 came in a 379 million, up from the 135 million in the first three quarters of 2020, according to IDC's Worldwide Quarterly Mobile Phone Tracker.
The figure has been boosted by 5G iPhones since Q4 last year, but if we compare like-with-like and not with Apples, we get a 2021 first nine months total of 271 million, so the Android total has doubled between the two years.
I wrote previously that the takeup of 5G would come in stages like moving up a car's gearbox – South Korea was first gear, China was second, the launch of 5G by Apple was third, with a broadening of the market bringing the market into cruise and towards maturity.
The market is now in cruise.
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Market stages have been distinct
I used this comparison because the stages in the rollout of 5G have been quite distinct.
South Korea as the 'first gear' of 5G back in 2019 ramped up within two quarters, but then plateaued.
5G in China grew very fast at the end of 2019 and then flattened off quickly in a similar manner.
The launch of the iPhone 12 late last year took 5G to nearly two-thirds of iPhones shipped in a single quarter. But thereafter the 5G proportion has grown slowly to just over three-quarters of iPhones shipped now.
With the arrival of the 5G iPhones and this year's increase in Android the geographical polarity of 5G has become much less stark.
China represented 87% of global 5G shipments at its peak in Q2 of 2020. That dropped to 46% in Q3 this year.
The US now makes up 16% of the market, with Europe at a similar level.
From now on 5G will be more evenly spread between markets
There won't be rapid changes in the balance from now on.
China has dropped from being such a clear frontrunner. As well as the proportion of 5G in its smartphone model mix stabilizing at toward three-quarters, the Chinese smartphone market in general has not been showing its old vigor of late.
While Hong Kong with a 5G share within smartphones of 88% leads the rankings in the IDC research, Canada is also a frontrunner, and Nordic countries are prominent in the list, which goes to show that 5G can be popular in sparsely populated countries whose rural expanses will not be covered by 5G signals anytime soon.
The U.S. incidentally was a notch lower in the third quarter at 60% 5G.
There remain some definite laggards. Africa was not expected to have much of a drive to 5G outside South Africa for a number of years. More surprising is Latin America, where 5G only accounted for 6% of smartphone shipments in the third quarter.
Eastern Europe on the other hand is further ahead, with the Central European countries seeing increasing uptake, helped by the roll-out plans of pan-European cellular operators.
5G already dominates smartphone revenues
From a smartphone manufacturer's point of view, 5G has to now be the focus. In value terms, it already accounts for more than two-thirds of the smartphone market. For Apple the figure is 85%, and for Android the figure is more than half.
There will continue to be big important markets where a slower deployment of 5G means that such models would appear to be superfluous for the time being, but in these days of launching global models an upmarket smartphone without 5G is a struggle, as Huawei, hamstrung with U.S. sanctions, well knows at the moment.
The other big new Chinese players are happy to go with the flow, as their 5G production volumes at home are helping them launch a broadening 5G portfolio in export markets. Samsung is increasing the number of budget models with 5G connectivity to match these rivals.
5G has made a more rapid impact than 4G achieved
If we compare the progress of 5G to date with the early years of 4G, the quick start of the new generation is very evident. 4G got going at the end of 2010. In the fourth quarter of 2011 it had mustered a bit more than 5% of the smartphone market, which was of course much smaller in total then. In the last three months of the following year the share had risen to close to a quarter, and even by the third year, at the end of 2013, it was still under a third. In value terms 4G was two-fifths of the smartphone market in Q4 2012, and three-fifths in Q4 2013.
It is true that the 5G market has received a short-term boost this year from smartphone makers during the current components shortage prioritizing more expensive models, and hence 5G ones. However without this boost 5G growth would still have been very substantial, and it would still have way outperformed the 4G curve.
Though all this sounds impressive for 5G, from the operator's point of view the spread of 5G is much slower. It always takes what seems like an inordinate amount of time for product sales to significantly affect installed base, as environmentalists know with electric cars and emissions.
IDC tracks the impact of 5G on the smartphone installed base through its Telecom Services Tracker. Its latest figures from the middle of this year suggest that 5G-capable devices then made up about 5% of the 5.8 billion global smartphone installed base. China had 160 million 5G smartphones in use, and the U.S. had 35 million. The rest of the world accounted for 90 million.
Here the dominance of China, with its early start as the first big country to go over to 5G, is very clear, and its sheer demographic size will mean that in user base terms it will only slip back slowly from towering over other individual markets.
Simon Baker is program director for mobile phones and consumer devices at IDC EMEA and a coordinator of IDC global forecasting for the 5G smartphone market. He is a long-time analyst in the mobile phone arena. Please contact him at [email protected]
Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceWireless staff. They do not represent the opinions of FierceWireless.