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Could the Economic Crisis Accelerate 5G Adoption?

Recent technology spending (and economic forecasts in general) for 2020 have been bleak.

But couched in IDC's latest forecast for smartphone spending is an interesting side effect, the current pandemic-induced economic crisis could mean 5G technology arrives faster than previous forecast models indicated.

First, the predictable near-term bad news for anyone in the business of smartphone shipments. IDC predicts a 2020 year-over-year decline in smartphone shipments of nearly 12% to 1.2 billion units. That's a drop in the forecast from earlier this year as a supply-side problem due to the supply chain shutting down as China fought to contain the coronavirus morphed into a demand-side problem due to economic effects as the pandemic spread around the world.

Now IDC is looking for 5G technology to lead the way back to smartphone growth in 2021.

"On the brighter side, 5G is expected to be a catalyst throughout the forecast period, which will play a vital role in worldwide smartphone market recovery in 2021," Sangeetika Srivastava, senior research analyst with IDC, said in a statement.

Another IDC analyst, Ryan Reith, laid out IDC's case for a 5G surge. "The surge in consumer spending around devices that are less mobile than smartphones (PCs, monitors, video game consoles, etc.) will undoubtedly take a share of the consumer wallet that would have been put towards smartphone upgrades and 5G. We believe this will result in even more aggressively priced 5G smartphones than expected prior to the pandemic. This could result in some share wins for the vendors that position their portfolios to capitalize on this change," Reith said.

If this scenario plays out, the industry could  bypass the usual cycle of a price premium on a hot new feature that slows down initial adoption. In short, cheaper 5G phones could mean 5G technology in more hands sooner than originally expected.

Posted by Scott Bekker on June 03, 2020 at 9:21 AM


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