The beginning of 2020 was quite challenging for the smartphone market after the COVID-19 outbreak, which resulted in lockdowns across several countries. However, things eased in the second half with pent-up demand driving smartphone sales. The momentum continued through Q1 2021, with the iPhone 12 and Samsung Galaxy S21 series doing well in the premium segment. Even the telecom operators offered great deals and trade-in offers that helped in ensuring better sales.
Prices of prepaid 5G smartphones in the US have come down in just under two years. With promotional offers from operators, we are even seeing these devices available under $150. So, operators are going all out with their marketing budget to push sales. Talking about this mid-range segment, LG has announced its formal exit from the smartphone market, which will leave a void to be filled in. It creates an opportunity for other smartphone makers such as Samsung, Motorola, Alcatel and TCL to increase their share.
In the latest episode of ‘The Counterpoint Podcast’, host Maurice Klaehne is joined by Research Director Jeff Fieldhack to talk about the US smartphone market, refurb channel, smartphone spec upgrades and more. The discussion highlights how the smartphone market is recovering after the COVID-19 impact, and touches upon the ongoing semiconductor chip shortage and its implications. Jeff also offers insights on how the prepaid and postpaid channels are performing, how 5G mobile broadband and home broadband are shaping up to ease work-from-home, and much more.
LATAM smartphone shipments in Q4 2020 decreased 10.3% YoY.
Xiaomi shipments increased 98% compared to 2019, and for the first time, the company reached the third spot in Q4 2020.
Huawei, although still holding the third position in 2020, fell off the top five brands chart in Q4 2020.
Boston, Toronto, London, New Delhi, Hong Kong, Beijing, Taipei, Seoul – February 26, 2020
LATAM smartphone shipments dropped 10.3% YoY in Q4 2020 but increased 9.7% QoQ driven by a recovery from the pandemic and partly due to seasonality, according to the latest Market Monitor research from Counterpoint Research. The drop in shipments was the least in Brazil and Peru. For the first time, Xiaomi emerged as the third biggest player in the region in Q4 2020. The average selling price (ASP) in the region decreased by 6.4% during the quarter.
Commenting on the market dynamics, Principal Analyst Tina Lu said, “Smartphone shipments in 2020 dropped 19.6%. The market suffered from a supply shortage in Q1 2020, especially in Brazil, where local manufacturers also experienced parts shortages. From the end of March and through May, most of the regional demand was halted due to broad lockdowns in most LATAM countries. The market started to recover slowly after June.”
Lu added, “During H2 2020, there was a surge in online promotion events, like Cyber Week and Black Friday. Such events increased further in the first part of Q4 2020. However, by the end of the quarter, promotions shifted toward the offline mode to tap the potential there. Samsung was among the most aggressive in promoting its online channel and expanding its presence in the region.”
Exhibit 1: Smartphone Shipment Market Share, 2020
Commenting on brand performance, Research Associate Monika Sharma said, “Samsung remained the region’s absolute leader in 2020 with 40.5% share. In fact, it was leading in all LATAM countries during the year. Its share in Brazil, the biggest market in LATAM, reached almost 50%. Motorola, which is a comfortable second in the LATAM market, increased its share by 3% points helped by its assembling operations in Brazil and Argentina, and its strong brand recognition in Mexico and Colombia.”
Sharma added, “Xiaomi experienced the biggest growth in participation. The company more than doubled its market share to become the third biggest player in Q4 2020. This is the first time Xiaomi has emerged as the third biggest player in the region. Looking at the trend, it will surely remain the third player in LATAM in 2021. Samsung, Motorola and Xiaomi all took advantage of Huawei’s weakening position due to the US ban.”
Samsung is the absolute leader in all LATAM markets. Its share reached 40.5% in 2020, an increase of 2.5% points from 2019. Motorola, its nearest competitor, had less than half of this share. Samsung’s market leadership was driven by the success of its entry-level A series. The company is expected to retain this huge share until a serious contender emerges in the region. But this needs some time to happen.
However, Samsung’s share reached 36.9%, its lowest point in 2020, in Q4 2020, impacted by product constraint at the end of the year.
Motorola is a comfortable number two in the region. Its share was 18.5% in 2020, which is the highest in the last 10 years. In 2021, it is expected to focus on growing its ASP, as it is unlikely to have any other brand shadowing it in the short term.
Xiaomi, which has been in the LATAM market for a few years now, grew exponentially compared to the previous year. It benefited from Huawei’s decline. Many LATAM users perceive it as an affordable but reliable brand. It was number two in Peru and number three in Chile during Q4 2020. But it still failed to reach the top three brands chart in other markets of the region.
Apple grew both MoM and YoY. It launched the new iPhones in the whole of LATAM except Mexico in November. The late launch pushed the sales of the iPhone 12 in December.
Apple leads the sales of 5G enabled phones in the region, capturing more than 66% share.
LG managed to maintain its share YoY and grow MoM. Driven by its K series, the company has been growing slowly in volume across the region.
Other brands continued to decline. Recent entrants like OPPO, vivo, realme and Tecno will need one year or so to build their brand in the market, the key to success in LATAM.
The comprehensive and in-depth Q4 2020 Market Monitor is available for subscribing clients. Feel free to contact us at press(at)counterpointresearch.com for further questions regarding our in-depth research and insights, or for press enquiries.
Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.
The global smartphone market is undergoing a major change as we transition from 4G to 5G. And despite the slowdown due to COVID-19, 5G smartphone sales are growing as they penetrate the mature markets like China, South Korea, Europe and the US. Typically, when a new generation of cellular technology comes in, it is more expensive in the beginning. This has happened with 4G, where the initial smartphones were expensive. But with the economies of scale and penetration in emerging markets, 4G smartphones and 4G smart feature phones are now affordable. We expect the same to happen with 5G smartphones.
There are various factors that drive the cost of 5G smartphones. As the technology is still in its nascent stage, smartphone makers need to add a separate baseband, RF antennas and passive filters for 5G to work. But there are other factors, such as high refresh rate displays, bigger batteries and multiple camera setups, which drive the cost of 5G smartphones.
5G has been in the works for over a decade now, and with OEMs releasing their 5G phones, cellular operators have started deploying their networks too. The USA, in particular, is one of the early adopters of 5G. The service is now offered by all major carriers in select cities and regions. When talking about the growth, we expect 5G to grow faster than 4G. This is something that we also discussed in our previous podcast.
In the latest episode of “The Counterpoint Podcast”, host Ritesh Bendre and Research Director Jeff Fieldhack discuss the current state of 5G in the USA. We have covered a wide range of topics from operators to average download speeds, and carrier dynamics. In addition, we also share our views on sales of current 5G phones, and our shipment expectations for 2020, especially in light of the impact of the COVID-19 pandemic.
Hit the play button below to listen to our podcast
With China issuing 5G licenses to telecom and broadcast companies just days before MWC Asia 2019, it was no surprise that the big theme at Shanghai was the next generation of cellular connectivity. The event saw demonstrations of the latest 5G-enabled technologies and applications from the likes of smart device OEMs, telecom operators, infrastructure and components providers.
For China, 5G is an essential element for national development. Over the years, China has recognized the importance of 5G to drive scientific and technological innovation, to upgrade industries, to stimulate investments, and to transform society and economy for the better. Below are the key takeaways from MWC Asia 2019 to give a better idea of how close we are to the official commercialization of 5G in China.
5G Network Deployment Status
Unlike the US, where operators focused on building a 5G Non-Standalone (NSA) network in the early deployment stage, Chinese operators have pursued a hybrid network strategy with NSA and Standalone (SA) coexisting. We expect that it will take at least five years for Chinese operators to have a nationwide coverage of 5G core (5GC), and new radio (5GC+NR) based network. Exhibit 1 below shows the current coverage of the 5G test network in China. Only selected Tier I cities in China will have complete 5G network coverage by the end of 2019.
Exhibit 1: 2019 5G network deployment in China by operators
Source: Public information, Counterpoint collects
Operators will accelerate the construction of 5G NR and gradually migrate to separate solutions using a central unit (CU), distribution unit (DU) or active antenna unit (AAU) architecture to optimize video and gaming services further. Operators will also deploy multi-access edge computing (MEC) platforms to provide local computing, storage, and other services, to help to save the backhaul bandwidth.
In terms of network equipment, both Huawei and ZTE have won the largest share of network equipment contracts from China Mobile and China Telecom. Besides Huawei and ZTE, Ericsson has won 12% of China Mobile’s network equipment contracts, while Nokia has won around 6%. Ericsson has also won a big contract from China Unicom valued RMB 20 billion (roughly US$2.9 billion).
For 5G baseband and solutions, Qualcomm has won contracts from over 75 5G devices and modules OEMs/ODMs globally.
5G Devices Development Update
For consumers, 5G smartphones, customer-premises equipment (CPEs), and AR/VR glasses were the major devices showcased at MWC. China Mobile announced support for multi-modes, multi-devices, multi-choices for users, and to develop a“New Industrial Ecosystem”, will be the guideline for the company to develop its 5G device business. Key points of the operator’s 5G device strategy are as follows:
Multi-modes: China Mobile requires smartphone models, that apply to access to its 5G network, tosupport both SA and NSA network standards from January 1, 2020. In 2019, prioritized access to its 5G network will also be offered to models supporting both SA and NSA.
Multi-devices: Apart from smartphones, China Mobile is betting on the growth potential of 5G CPE and Always-Connected-PC (ACPC) from 2019-2020. Further, from 2020-2022, China Mobile will extend its 5G product portfolio to cover a wider range of accessories such as AR glasses, VR helmet, digital media streamers, and more.
Multi-choices for users: China Mobile will work with industrial partners to bring down prices of 5G smartphones to satisfy the budgets of users in different tiers of the market. We expect the prices of 5G smartphones in 2019 to be above RMB 5,000 (roughly US$720) in China. From mid-2020, China Mobile targets to bring down prices to RMB 3,000 (roughly US$430), and further to RMB 1,000 – 2,000 (roughly US$145-US$290) by the end of 2020.
Exhibit 2: Prices of 5G smartphones in China under operator’s target
Source: China Mobile Device Strategy 2019
New Industrial Ecosystem: In the B2B market, China Mobile is positive on the growth potential of 5G applications in four core industries namely IoV (Internet of Vehicle), Electricity and Energy, Industrial IoT, and New Media Streaming. Key hardware that will empower the digital transformation of these industries, according to China Mobile, will be 5G connectivity hardware (for example CPEs, 5G modules), platform hardware (for example system integration, software development, 5G AI boxes), and industry-customized hardware (for example industrial robots). To accelerate industrial applications in China, the company will build an industrial products library, and try to develop generic solutions for different industries.
With 5G smartphones launching in Q3 2019, China Mobile’s new policy, which requires smartphone models to support both 5G SA and NSA standards since 2020, could hurt sales of smartphones powered by platforms supporting 5G NSA only. Huawei and its dual-brand HONOR could be the beneficiary of this policy. For marketing and consumer education, we’ve seen Huawei trying to convince the public about the benefits of smartphones supporting 5G SA network, with slogans such as “SA network is the only real 5G network”. OPPO and Vivo emphasize on cloud gaming experiences of 5G phones. They promoted technologies that can optimize users’ gaming and video streaming experiences during MWC. Such features include a 120W fast charging technology from Vivo and under-screen camera solution from OPPO.
5G Applications and Use-Cases
During MWC Asia 2019, we saw Chinese telecom operators and solutions providers showcase innovative solutions for industrial application scenarios, such as smart city, smart manufacturing, smart logistics, smart traffic, and more, powered by 5G. Below are the key examples and developments:
Exhibit 3: China Unicom’s Smart City platform
Comprehensive governance – Using 5G HD CCTV live streaming to monitor real-time activity.
Emergency management – Use of vehicles equipped with 5G base stations and HD cameras enables real-time situation monitoring.
Environmental protection – Employing 5G drones to collect information and monitor protected forests, etc.
Energy management-Collecting data from massive sensors in electricity/water/gas meters in the city to monitor and optimize energy consumption.
Smart transportation – Enabled by deploying semi-autonomous vehicles and using C-V2X for passenger/ride safety.
Smart policing – Using low latency 5G services to monitor and respond to public requirements.
Exhibit 4: China Mobile Smart Manufacturing solution for vehicles
Smart connectivity – Using URLLC 5G service to replace wired connectivity in factories and connecting the non-connected machines to achieve higher efficiency.
Smart Assembly Process—3D camera and image recognition technologies applied to pick and send the right components to production lines under different vehicle brands and models. In quality control process, 3D camera and image recognition are also applied to tell if the components are qualified and then send the qualified components to assembly lines. Finally, robot arms and image recognition technology can automatically assemble the vehicle. The entire procedure will require a network with significant bandwidth throughput capability to continuously upload high-definition images to the cloud, as well as ultra-low latency of the network to feedback image recognition results in real time.
Smart Healthcare – Remote surgery and health monitoring of patients via 5G network and robot arms.
Smart Education – Use of 5G HD video to monitor students for attentiveness and send instant reports to parents.
Smart Entertainment – The low latency of 5G technology can provide reliable AR/VR experience.
Smart Logistics – Deploying drones and autonomous vehicles to transport goods efficiently. Use of these services can also be for analyzing the health of asset and predictive maintenance.
We expect China to officially launch 5G commercial services in Q3 2019, together with the release of 5G smartphones by key OEMs, including Huawei, OPPO, Vivo, Xiaomi, ZTE, and OnePlus. However, only selected tier-I cities can have access to the 5G network in 2019. Therefore, sales of 5G smartphones in 2019 will be limited, and it will take years for China to achieve nationwide 5G coverage. 5G will bring a more transformative impact on industrial and public sectors. Although, the complexities of 5G industrial applications mean that only highly integrated, customized, secure, and cost-for-value 5G solutions will entice industrial clients. Thus, we expect it will also take years for 5G-powered industrial solutions to mature and scale in China.
5G smartphone availability has been limited. More device launches and carrier competition in H2 2019 will drive sales.
San Diego, Buenos Aires, London, New Delhi, Hong Kong, Beijing, Seoul
July 3, 2019
Counterpoint Research estimates that US 5G smartphone sales will cross five million units in H2 2019 as carriers ramp up their 5G network and device portfolios. Global 5G smartphone sales will reach 22 million units in 2019, according to our estimates. Overall, the US will lead the market in terms of 5G smartphone sales, followed closely by China.
Speaking about US 5G smartphone sales, Jeff Fieldhack, Research Director at Counterpoint Research said, “Current sales of 5G smartphones are limited as there are only two devices available, the LG V50 and the Samsung S10 5G. The mmWave supporting Samsung S10 5G was exclusive to Verizon until the end of June, but all major carriers have launched it now. We believe that H2 2019 will see a sharp increase in 5G smartphone sales as carriers expand their coverage and even more 5G devices launch. Expansion in mmWave capable devices will be key for growth as consumers will be able to see the dramatic speed increases over LTE.”
Except for Apple, all major OEMs such as Samsung, LG, Motorola, ZTE, and OnePlus will sell 5G smartphones in H2 2019. This will increase 5G smartphone penetration drastically as compared to H1 2019. Fieldhack added, “We believe Apple will not have a 5G capable iPhone available till 2020. If Apple had launched a 5G device this year, we believe that the US market size for 5G would have been at least 60% higher than the current estimate. In 2020, there will be an even greater acceleration in 5G smartphone sales due to 5G iPhones becoming available.”
Research Analyst, Maurice Klaehne said, “Initially it was thought that there would be a high concentration of 5G smartphone sales in areas where there is 5G coverage. However, our research indicates that 5G smartphones are being bought all over the country. This trend will likely increase as consumers want to buy the newest devices, future-proofing their purchase for the next several years. Promotions and marketing for these devices will also likely ramp up in H2 2019.”
Klaehne continued, “We saw this trend initially in Korea where sales of 5G smartphones crossed 1 million in just 70 days. It all started when every carrier had a 5G smartphone in their portfolio, and an all-out marketing war ensued. Subsidies for 5G devices went from ~US$250 to ~US$500 in a month, creating a hyper-subsidy environment. Consumers often chose to purchase a 5G device over 4G alternatives because they got it at a lower price point with better specs. We believe a similar trend will develop in the US.”
Elaborating on global 5G roll-out, Tom Kang, Research Director, added, “We are cautious on our forecast, but we think 5G will eventually have a faster roll-out than 4G LTE. Looking back at LTE, the network was split between FDD-LTE and TD-LTE, which resulted in a slower roll-out over two years. Only the US and Korea deployed LTE in the first six months. Europe and China started one year later. Globally, the ramp up will be faster because there is now a universal standard for 5G. Operators in the US, China, Europe, and Korea will all be launching within the same 12-month period. It is an unprecedented network deployment. This will drive global sales to 22 million by the end of 2019.”
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