T-Mobile lures new customers to 5G with free smartphones

T-Mobile also said that it will introduce 15 new 5G-compatible phones in 2020. (T-Mobile)

T-Mobile’s debut of its nationwide 5G network yesterday included a special enticement for non-T-Mobile customers. Switch to T-Mobile and you can get a OnePlus 7T Pro 5G McLaren, which retails for $899.99, for free with 24 bill credits and a smartphone trade-in. Or, get a Samsung Note10+ 5G, which retails for $1,299.99, for free with 36 bill credits when you buy another device and add a line.

Both devices are also offered to existing T-Mobile customers via the company’s equipment installment plans, and will be available starting December 6.

While Sprint and Verizon have already launched 5G in a handful of markets nationwide and are also selling 5G smartphones, T-Mobile appears to be the first to offer a free 5G smartphone to new customers that switch from another operator. Bill Ho, principal analyst with 556 Ventures, thinks this strategy will be a hit with early adopters. “This is in [T-Mobile’s] playbook,” Ho said. “It’s the early adopters that they want, and those early adopters might be high value customers from Verizon and AT&T.”

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Plus, Ho noted that T-Mobile is also using this launch as an opportunity to “seed” its customer  base with devices that will work on the company’s 600 MHz spectrum and on Sprint’s 2.5 GHz spectrum should the proposed merger with Sprint happen. Both the OnePlus 7T Pro 5G McLaren and the Samsung Note10+ 5G will work on T-Mobile’s 600 MHz network where available and T-Mobile’s LTE network elsewhere, but are also equipped to work on Sprint’s 2.5 GHz spectrum.

Interestingly, T-Mobile also said that it will introduce 15 new 5G-compatible phones in 2020, making it likely that some of those 15 devices will have lower price points that will be appealing to more customers. “Early adopters are always going to adopt —they are price insensitive,” Ho said. “Those are the ones you want to grab early.”

Pricey 5G devices

According to the latest Strategy Analytics PriceTRAX 5G smartphone pricing report, almost all 5G devices that have launched so far are in the ultra-premium price tier, meaning that they retail for close to $1,000 and cost about 150% more than 4G smartphones. When 4G devices launched they cost only about 75% more than 3G devices.

And not only are early 5G devices pricey, they are also 36% heavier, have bigger displays and more battery capacity than early 4G smartphones, Strategy Analytics says.

The analyst firm also found that there have been more 5G devices announced in a shorter time period than there were with 4G devices. For example, Strategy Analytics said that nine months after the first 4G LTE device was announced there were just 10 LTE devices available and it took 16 months for 50 4G LTE devices to be announced. By comparison with 5G, there were 16 5G devices announced in the first month, and after nine months there have been 56 5G devices announced.

Strategy Analytics notes that almost all 5G devices that have launched so far are in the ultra-premium price tier, meaning that they retail for close to $1,000, and cost about 150% more than 4G smartphones. When 4G devices launched they cost only about 75% more than 3G devices.

Samsung is currently the leading manufacturer when it comes to number of 5G smartphones. The OEM has announced 20 5G devices.

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