Consumer interest in 5G technology has declined due to the cost and quality concerns. Now, the new coronavirus pandemic has further cooled this enthusiasm. These factors make it difficult for South Korea to maintain its leading edge in the world’s next-generation 5G telecommunications services. A year ago, South Korean telecom operators led by SK Telecom and Korea Telecom launched the world’s first 5G services. South Korean smartphone giant Samsung Electronics was also one step ahead of other device makers in the world. We mean it released the first 5G phone at almost the same time – the Samsung Galaxy S20.
However, after generous subsidies drove the early growth of 5G smartphones, the hype was almost gone. Consumers have questioned the value of this more expensive phone and the advantages of 5G services.
Samsung Galaxy S20 has poor sales
Samsung’s new 5G phone, the Samsung Galaxy S20, went on sale at the end of February and sold for up to 1,595,000 won (about $1309). A South Korean operator’s executive said that compared to the early sales of the previous generation S10, South Korean sales of the S20 have fallen by about 30%. Under normal circumstances, the sales of new phones tend to soar in the early stages of listing.
The slowdown of 5G technology deployment in South Korea shows that the new coronavirus pneumonia epidemic is hindering the global rise of 5G smartphone makers. Many of them, including Apple, are currently planning to launch 5G phones this fall. After two years of industry shrinkage, they hope to use 5G to boost sales.
Delays in 5G deployment may also affect future service plans such as autonomous vehicles, fully automated factories and cities. By the way, affected by the epidemic, Spain, Italy, France, and Australia have postponed auctions of 5G spectrum.
Counterpoint analyst Tom Kang believes that, in contrast, China’s 5G smartphone sales are expected to recover in the second quarter.
Xiaomi has just released a new flagship 5G smartphone. The company said that as the Chinese social order began to return to normal. Samsung has a limited share of the Chinese smartphone market, and most high-end 5G phones are sold in other markets.
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South Korea’s 5G user growth is sluggish
According to the South Korean government data, South Korean operators’ new 5G subscribers increased by about 400,000 in February, up from 290,000 in the previous month. However, analysts point out that this figure is not high considering that Samsung has already launched the S20 (which can drive 5G user growth).
As telecom operators cut their marketing and pointed out that customers are increasingly dissatisfied with 5G network connections and the lack of differentiated content, the development of the 5G market in South Korea began to slow in November last year. Analysts said operators and handset makers must rely on new subsidies to revive market demand.
Last year, Samsung placed South Korea’s hope of seizing the first-mover advantage of the 5G smartphone market. Analysts believe that Samsung is expected to expand 5G sales in other major markets such as the United States and Europe before the release of Apple’s 5G iPhone.
U.S. retailers have already offered about 20% off S20’s online sales. It had landed in the US market a month ago. The unlocked Samsung Galaxy S20 is currently priced at $799.99 at Best Buy and Amazon. It is $200 cheaper than the original price of $999.99. However, Samsung declined to comment. A Samsung co-CEO told shareholders in mid-March that demand for 5G smartphones is expected to increase this year.
Samsung plans to launch low-cost 5G phones
In order to boost sales of 5G smartphones, Samsung plans to launch cheaper 5G models in South Korea in the first half of this year, such as the A71 series.
‘Consumers are cautious about buying new phones, because of little perceived differences between 4G and 5G phones and price hike from 4G phones, especially with the virus dampening consumer sentiment,’ said Securities analyst Kim Hoi-jae. ‘Therefore, handset makers are expected to launch budget 5G phones faster.’