While flagship smartphones that carry a hefty price tag are often at the forefront of technology news, data from The NPD Group’s new Mobile Phone Tracking service reveals that just under 10 per cent of consumers are spending over $1,000 (€900) on their smartphones. Since these consumers will be the target audience for 5G devices, which typically hit the market around the $1,200 price point, this may bring into question how quickly consumers will chose to upgrade to 5G.
“Consumers are holding onto their smartphones for longer periods, which has presented a challenge for the smartphone market,” advises Brad Akyuz, executive director, industry analyst, NPD Connected Intelligence. “Manufacturers and carriers are expecting 5G to help reinvigorate the upgrade cycle, but pricing could present another hurdle.”
Though the majority of consumers have not fully embraced devices at these high-end price points, those in the top 10 DMAs account for more than one-third (39 per cent) of $1,000+ active smartphones. NPD’s Mobile Phone Tracking service, which uses advertising technology to capture active devices, shows that consumers in New York City and Los Angeles are most likely to purchase smartphones at the $1,000 price point. Since consumers in the top 10 DMAs make up 29 per cent of the US population, consumers in these areas over index in $1,000+ devices by 25 per cent compared to the rest of the country. As such, these markets should be a primary target for manufacturers, as well as where carriers should focus on developing or advancing 5G networks and educating consumers.
The good news is, 5G awareness and purchase potential is strong, based on NPD’s Mobile Connectivity Report. In fact, awareness has reached nearly three out of four consumers, totalling 73 per cent, at the end of the first half of 2019. This is up from 44 per cent at the end of the first half of 2018. Alongside increasing awareness, 33 per cent of smartphone owners report interest in purchasing a 5G-enabled smartphone.
“Overall awareness and purchase intent reported by consumers is high, but only a small segment of the market can afford these $1,000+ devices,” notes Akyuz. “This provides an opportunity for both carriers and manufacturers to focus on diversifying their 5G portfolios by introducing more affordable mid-tier 5G models to enjoy faster adoption rates.”