We’ve already seen indications that American consumers are holding onto their smartphones longer than before, posing challenges for companies like Apple and Samsung for whom mobile phone sales are important to the bottom line. A new NPD report reiterates that point but adds that fewer than 10 percent of American smartphone buyers spend more than $1,000, effectively ruling out flagship phones like the iPhone 11 Pro and the Samsung Galaxy Note10 that gather most of the marketer and media attention.
The main point of concern raised by the NPD report, though, is 5G adoption. 5G phones will likely be unaffordable for many consumers at first, with the first wave of mainstream 5G phones in 2020 likely to cost at least $1,000 in most cases. On the other hand, consumer awareness of the imminent rollout of 5G is high, and many consumers cited that coming change as a reason they’re holding out on spending big on new phones. It could be that some consumers who can afford $1,000 handsets but haven’t made the plunge will do so when 5G arrives, provided that it offers all the benefits marketers have claimed. (That will likely vary quite significantly by city and region, though.)
And speaking of cities and regions, the report also found notable differences in smartphone buying habits across different designated market areas (DMAs). For example, the NPD claims that Americans in major urban centers like New York City or Los Angeles are more likely to spend $1,000 or more on a smartphone. It’s unclear from the data whether this is a result of comparatively high average incomes in those areas or other factors.
In any case, the NPD therefore recommends to smartphone manufacturers that marketing budgets be focused on those DMAs for those types of phones, especially as the 5G era approaches.