5G has the potential to dramatically realign smartphone market share and threatens the dominance of major manufacturers in this market, according to Strategy Analytics. Indeed, the firm has created new nomenclature for two groups of companies it sees challenging traditional providers: adaptive local players and global-scale players.
“Smartphone vendors face a complex transition to 5G and to new foldable, rollable designs simultaneously at a time when consumers are increasingly reluctant to spend $800-$1000+ for incremental improvements,” Ken Hyers, the Director of Emerging Device Technologies, said in a press release. “Competition on the basis of technology advantage will be extremely challenging and inevitably short-lived without a healthy portfolio of intellectual property holdings. 5G represents opportunities for new vendors to emerge and for long time industry strugglers to reinvent themselves while current market leaders face reinvigorated competition.”
Adaptive local players, which includes vendors such as Sharp, ZTE and Sony, have a “consolidated cost basis and a smaller, localized market presence,” said Strategy Analytics Director of Consulting Chris Ambrosio. Conversely, global scale players, such as Xiaomi, Vivo and OPPO, “have expanded their presence beyond local or domestic markets by establishing sales, marketing and distribution resources in enough markets to scale above 80M units and have established profit centers,” said Director of Consulting Cliff Rasking.
The firm predicts that the current top three vendors – Samsung, Huawei and Apple – will lose smartphone market share. As evidence, it points to examples of how previous transitions have roiled “design language and use cases”:
- Nokia peaked in 2G and lost 1/3 of its share in 3G and disappeared in the 4G world. Motorola lost four-fifths of its global handset market share in the transition from 2G peak to 3G peak.
- Samsung grabbed opportunity in the transition to 3G, doubled its share, and expanded to be a global leader with a “first with tech” brand claim.
- Chinese vendors burst onto the global stage in 4G with Huawei surging to #2 globally with its fast follower, affordable tech mantra.
Strategy Analytics previously noted vendor plans for costly feature-packed 5G smartphones in research that said 5G handsets will sell for more than $1,000 when introduced next year and that the decline in prices will be more gradual than previous generations. This, the report says, will require a return to subsidy-based sales.
