5G May Boost Lagging Smartphone Sales

by Ruth Seeley

The overall decline in smartphone sales has been most noticeable in the high end of the market, as consumers don’t perceive the benefits of incremental upgrades and are waiting to replace their phones. 5G may be the solution to lagging smartphone sales, according to a recent survey from Deloitte.

With U.S. households now supporting an average of 11 connected devices including seven smart screens to view and interact with content, the consumer has never had more desire for faster, safer connectivity. And with 5G getting closer to reality, this “connectivity craving” can be satisfied if smartphone manufacturers and telecommunication carriers are ready to deliver.

According to Deloitte’s inaugural U.S. edition of the “Connectivity and Mobile Trends” (CMT) survey, 67% of consumers said that when 5G is available they would be more likely to upgrade to a 5G-compatible smartphone. Sixty-two percent of consumers say they will likely replace their home internet with 5G Wi-Fi service, if it delivers speeds equivalent to those of fiber. Added to that, consumers are bolstering their home internet networks to handle and support the increasing number of internet-connected devices and home automation devices in the household. Thirty-five percent of home internet consumers employ either a multi-point router, a range extender or mesh router for their home Wi-Fi network.

Smartphone refresh cycle could be hastened by 5G

The smartphone refresh cycle is lengthening. Nearly 1 in 3 consumers have a smartphone that is two years or older. Moreover, fewer than 60% of consumers plan to buy a new smartphone in the next two years. The survey indicates two major factors contributing to consumers delaying a smartphone refresh:

  • More than half (52%) believe their current phone has the capabilities they need, or that the functionality of new phones is not advanced enough to warrant an upgrade.
  • In fact, Boomers (ages 54-72), who account for 30% of all smartphone users, lag behind and 43% haven’t changed their phones in the last two years.
  • Moreover, 58% of boomers do not plan to buy a smartphone within the next two years.
  • More than 40% of consumers cited economic factors as the main reason they’re not planning to upgrade.
  • 20% of consumers noted that new phones are too expensive, 12% responded they can’t afford to buy a new phone, and 11% mentioned they are still paying off their current phone.

5G could spark next-generation entertainment

As carriers invest in 5G and roll it out in the United States, the survey indicates a significant percentage of consumers will adopt the service quickly — if it delivers on its promise of faster speeds and better coverage.

  • 43% of consumers face issues when watching videos on their smartphone, while 41% feel their mobile data speeds are not fast enough.
  • More than 40% of Gen Z consumers say they will play more mobile video games once they have 5G.
  • Nearly 35% of Gen Z and millennials say that access to 5G will change how they use augmented reality and virtual reality (AR/VR).

“As carriers roll out 5G in the United States, a significant number of consumers will adopt the service quickly — if it delivers on its promise of faster speeds and better coverage,” said Kevin Westcott, vice chairman, Deloitte LLP. “Major networks and studios will continue to launch their own streaming and other data-heavy entertainment services like online multiplayer games, augmented reality, and virtual reality, accelerating the race to attract and retain customers. Providers that can satisfy the ‘connectivity plus content’ equation first will likely be the most successful.”

Smart homes in the fast lane

Smartphones aren’t the only devices 5G can boost. After a slow climb, home automation and control devices are poised to ‘cross the chasm’ into mass adoption, and 5G could provide the push they need.

  • Today, 28% of consumers use at least one device for home automation and control such as a thermostat, security camera or lighting system connected to the internet, and 40% of these consumers use at least three home automation devices.
  • Around a quarter of home automation users spend extra to augment their home Wi-Fi or mobile speed and bandwidth, and consumers who have more home automation devices are more likely to pay for additional speed and bandwidth to support their setup.
  • 62% of home automation users rank 5G’s potential to offer better connectivity in the home as one of the top three capabilities likely to drive them to use 5G.

Privacy is paramount

While consumers are ready for better when it comes to devices and how they connect them, they also expect better when it comes to their privacy and security.

  • 72% of consumers surveyed agree with the statement, “I’m more aware now of how my data is collected and used than a year ago.”
  • Yet just more than half (52%) agree the value they get from online services outweighs their privacy and security concerns.
  • 59% of consumers are “very” or “extremely” concerned about the privacy of their smartphone data; 58% feel the same about its security.
  • 73% are “very” or “extremely” concerned about the privacy and security of smart speakers; 72% worry about the security and privacy of home automation devices.
  • More than ever, consumers want more control over how their personal data is used and who gets to monetize it. The vast majority (91%) believe they should be able to control, edit and delete their personal data, and 84% said they should get paid by companies that monetize their data.

“Consumers tell us they are ‘ready for better’ — better connectivity, better smartphones, and perhaps more importantly, better online services that are both private and secure, said Dr. Jeff Loucks, executive director, Deloitte Center for Technology, Media and Telecommunications. “More than ever, consumers feel they should have more control over how their personal data is used, and who gets to monetize it. If ‘data is the new oil,’ consumers are the oil wells: They want to regulate what is pumped out and they want royalty checks.”Source: Deloitte

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