When Huawei and Xiaomi introduced their first 5G phones at the Mobile World Congress, the crowd at both press conferences was turned upside down. The reaction of their customers was caused by prices, but for very different reasons.
Huawei said hisIt will cost € 2,300 ($ 2,600) when it goes on sale in the middle of the year. It's more expensive than expected, even though it's one of the first folding phones in the world. On the other hand, Xiaomi's Mi Mix 3 5G will cost 599 euros ($ 679) when it hits the market in May, which is well below what seemed possible for the first 5G phones.
The devices may end up at the ends of the pricing, but there is really no way to know it at the moment. Almost all major Android phone manufacturers haveHuawei and Xiaomi are the only companies to have specified in detail how much they will cost us.
But we know it a lot: 5G is probably not cheap. Network technology has long been praised as a game changer that will serve as the basis for everything from telemedicine to autonomous cars to augmented reality. Operators are spending billions of dollars to build 5G networks. Device manufacturers need to use more expensive components, such as 5G radios and larger batteries. These higher costs will probably be transferred to you through more expensive services and phones.
The move to 5G offers telephone operators and phone manufacturers the ability to charge higher speeds at a time when they do not sell as many devices. Last year, smartphone shipments fell for the first time in history, according to Strategy Analytics. Globally, they fell 5% to 376 million units, which the research company termed "historical event".
The trick is to determine the additional amount to bill without scaring the consumers.
"I think the price should be slightly higher than that of 4G," said Marc Allera, executive director of the British company EE, at a 5G panel hosted at the MWC. "But not so much that it slows the adoption."
The first wave 5G
The 5G promises to significantly increase the speed, coverage and responsiveness of wireless networks. It can run 10 to 100 times faster than your current conventional cellular connection, and even faster than anything you can get with a fiber optic cable entering your home.
The MWC this week in Barcelona marked the beginning of the first crop of 5G smartphones. The fastest network – OK, collapsible items too – was all we talked about at the mobile phone trade show. With the exception of Apple, all major handset manufacturers plan to launch a 5G phone earlier this year.
Samsung, the world's largest smartphone maker, unveiled its first 5G phone a few days before the MWC at its Unpacked event in San Francisco, and Oppo unveiled its first-ever 5G phone on Saturday. Huawei unveiled its foldable Mate X on Sunday, while Xiaomi detailed its Mi Mix 3 5G the same day. The Barcelona rally also marked the launch of LG's V50 and ZTE's Axon 10 Pro, while Sony and OnePlus introduced prototypes for the devices they will launch this year.
OnePlus aims to keep the cost of its first 5G phone "under $ 1,000," said general manager Pete Lau during an interview Monday. In December, he said that the first OnePlus 5G phone could cost between $ 200 and $ 300 more than the OnePlus 6T, whose price starts at $ 549 (about £ 499 or AU 774) for the 128GB model with 6GB of RAM.
"From the point of view of OnePlus devices, the [higher] the cost is [because] the cost of technology has also increased this year, "Lau said Monday. From our point of view, there is no better value proposition in the market than a OnePlus device. "
Samsung, which is at the other end of the spectrum with higher prices, has not indicated what it will charge for its Galaxy S10 5G or the version of its Galaxy Fold that runs on the fastest network. The 4G versions of these devices start at $ 749 for the Galaxy S10E and $ 1,980 for the Galaxy Fold.
Drew Blackard, senior director of product marketing at Samsung, told CNET after Unpacked that the Galaxy S10 5G would be more of a "progressive increase" of the S10 Max to $ 1,000, not a huge leap like the $ 1,980 Galaxy Fold . He noted that it would cost more than $ 100 more, but declined to give more details.
"It's natural because it has a bigger battery, more cameras and 5G," said Blackard last week.
For its part, Motorola president Sergio Buniac believes that if 5G devices are more expensive, they will not be too expensive. Motorola will soon release a 5G "Mod" module or module that connects to the back of the Moto Z3 to let it run on the wireless network, faster.
"It's more what the 5G can bring you than the fact that it's more expensive or not," Buniac said in an interview Monday.
In the end, the price increase of the 5G phone could come from the other added features. The overall costs of 5G devices are higher, from chipsets to antennas, batteries and other components.
"At first, the price of 5G phones will be higher than that of 4G phones," said Yenchi Lee, senior director of product marketing for MediaTek's wireless communications business on Monday. The company unveiled this week its first 5G modem, which will be available on smartphones in early 2020.
Service plans skyrocketing?
In addition to not knowing the price of the devices, we still do not know what most 5G mobile plans will cost – or, in many cases, when the service will actually be activated.
Dan Hays, a consultant for PWC, said he saw the potential for a premium of 8% to 10% on 5G service, similar to the first 4G deployments. But he does not think that carriers will be able to afford higher increases because the initial deployments are so small.
Operators will first launch 5G in only a few cities, including Atlanta and Dallas, while a broader deployment in the United States will likely take years.
"If you can only use it 10% of the time, would I pay for it?" Hays said.
In the United States, AT & T and Verizon have committed to launch 5G in 2018 and have met their deadline, in a way. Verizon launched its domestic broadband service with 5G technology in October, but it does not work for mobile customers and does not use the industry standard 5G itself. And although AT & T put its service into service in December, it only concerned a limited number of people.
T-Mobile, meanwhile, will not officially launch its 5G service in its first 30 cities before the second half of 2019, said Monday the chief technology officer, Neville Ray, in an interview. Until Qualcomm introduces its second generation modem, the X55, later this year, there will be no more phones available that can exploit the critical spectrum of the 600 MHz low band that will power a great deal. Part of the broad early 5G coverage of T-Mobile.
5G at a discount, maybe
When Donovan Sung, product management director of Xiaomi's global team, asked attendees for his launch event what they thought was right for a 5G phone, the lowest price announced by the crowd was 699 €.
The current price: 599 €.
There is reason to believe that you will not be completely wrecked by the 5G. But the price of the Mi Mix 3 may be an anomaly, since Apple, Samsung and others are already offering a price of about $ 1,000 to their 4G LTE phones.
"We think it's one of the most competitive prices for a 5G smartphone today," Sung said.
Even Qualcomm President Cristiano Amon – whose company will supply the power chips for most 5G phones this year – said he did not expect 5G phones to be as cheap as Xiaomi device.
"I am surprised and optimistic about the impact this will have on the transition of 5G," Amon said in an interview on Monday. He added that once Qualcomm releases its Snapdragon chip that integrates the modem into the phone's brain, more 5G phones should be available at lower prices.
"We are trying to reach 5G not only towards this lighthouse level, but to other levels as quickly as possible," he said. The integrated chip will be in the phones in the first half of 2020.
Although 5G service plans are likely to cost more, they may have benefits. According to Caroline Milanesi, an analyst at Creative Strategies, the size of the data plans may be larger and operators could encourage sharing of data between devices instead of charging each device.
"It's fair to say that the data plans of the future will be different," said Andre Fuetsch, chief technology officer at AT & T, in an interview. "It will be based on how these data are consumed."
And 5G could also mean the end of the limitation, the practice of slowing the speed of our network when we exceed our data limits.
"5G allows us to see things differently because we have more capacity," Sprint Chief Technology Officer John Saw said Monday.
T-Mobile Ray agreed that the limitation could disappear in a 5G world. His company has already promised to freeze prices after the acquisition of Sprint. But Ray said the cost savings of running a larger network with more customers are potential savings for you.
"The level of performance, quality and capabilities are all of a greater magnitude," he said.
Nevertheless, in the early days, there is no doubt that we will pay more. All that remains is for these phones and services to launch to find out if what we are getting is worth the higher price.
Roger Cheng of CNET contributed to this report.