Wondering Why 5G Smartphones would be much more expensive than 4G?

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The newest technology trend is already upon us. 5G looks set to take the world by storm with all the major OEMs configuring their upcoming devices to be compatible with new age network technology. However, one aspect of 5G which can prove to be bothersome to a lot of people is the pricing devices, especially smartphones, carrying 5G chipsets under the hood.

Most of the smartphones already announced to be compatible with 5G technology are way more expensive than those with 4G technology. In fact, one of the leading US investment banker, JP Morgan, through a recently released report, has made a statement that the average chips powering the 5G smartphones are expected to be about 1.85 times expensive than the chips powering 4G smartphones.

The report published by JP Morgan in 2018, titled “5G Smartphone: The Next Big Thing? 101 for Supply Chain Beneficiaries”, points out the fact that a normal chip powering a 4G based smartphone costs around $59. But, a normal chip powering a 5G based smartphone would cost around $85.40 on an average. Even the baseband and application processors are going to cost around $33.40 and $55.60, respectively. This makes it twice as expensive as those of 4G.

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Future Belongs To 5G devices

The aforementioned report provides some valuable insight as to why the upcoming 5G smartphones will supposedly be price tagged quite a lot. With a number of 5G devices on track to be released already, it is even estimated that the number of 5G smartphones estimated to be shipped in 2019 will be 5 million. Regarding the devices already announced, the most definitive one seems to be that of Samsung. It has planned to integrate 5G into a model of its flagship Galaxy S10 series. However, it is estimated to cost a massive $1,300. There are also companies like Huawei that are trying to release 5G smartphones this year itself at about half the price of the Galaxy S10 5G.

It is normal for smartphone companies to try and cut down the prices to make their products more attractive and affordable to a larger number of people. However, considering a sizeable share of smartphone users are willing to upgrade themselves, it can’t be expected to be too much of sales hurdle in today’s scenario. It is the premium and luxury smartphones which are growing faster than any other segment of smartphones at this point in time. In fact, it was the premium segment of smartphones which grew over 18% in 2018, despite an overall slowdown of the global smartphone industry. The Average Selling Price (ASP) of smartphones is rapidly on the rise globally. With Apple leading the way in luxury smartphones, most of the other OEMs are following suit by increasing the average price of their smartphones. Thus, smartphones priced at $1000 or above are no longer in danger of remaining unsold.

5G to be as successful as 4G?

It is hard to predict whether it will be as successful as its predecessor. The expensive pricing behind its devices may leave people a little hesitant to ditch their reliable 4G handsets in their favour. However, the prices are bound to increase with time, and along with that, adoption is set to increase. In a world full of fast-moving technological trends, a sizeable share of people doesn’t want to stay hooked to obsolete technology anymore. Thus, it should turn out to be just as successful in due time. Indeed, the future belongs to 5G and 5G smartphones.

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