Why 5G smartphones are not finding too many buyers in Southeast Asian countries – Times of India
5G is the technology that telecom companies and smartphone brands are betting big on in India. However, in some Asian countries 5G tech seems to be losing its sheen. The demand for 5G-compatible devices has nosedived in Southeast Asia, according to a report by research firm Canalys. “The demand for 5G devices has come to a standstill,” said Canalys research analyst Chiew Le Xuan. The report is based on smartphone shipments for the second quarter of the year 2022. Overall the Southeast Asian smartphone shipments reached 24.5 million units, a 7% drop from the previous quarter. Indonesia, Malaysia, Vietnam, Thailand and Philippines are the five largest smartphone markets in this region.
The five largest markets in the region stalled this quarter as a result of the industry experiencing significant macroeconomic headwinds and the resulting strain on local consumer demand. Despite Ramadan season festivities for Malaysia and Indonesia, both the countries saw smaller-than-expected sequential growth of 6% and 2% respectively. The Philippines market grew 4% versus the previous quarter due to increased spending during its elections. Thailand was hit by severe forex depreciation against the dollar and thus saw a 14% quarter-on-quarter decline. Meanwhile, Vietnam saw a 20% decline due to growing consumer uncertainty.
Demand for 5G has fallen as rollout is poor
The report says that the demand for 5G smartphones has dipped as the 5G network rollout has been abysmal in these countries. Buyers are now looking for features like battery life, processor speed, and camera quality while making their purchases. “5G devices experienced their first sequential decline to 18% of overall smartphone shipments. 5G deployment in developing Southeast Asian markets has been abysmal, ensuring the hype for 5G has dwindled, and demand has shifted to more practical aspects of smartphones such as battery life, storage, processor speed, and camera quality. Growing inflation has resulted in consumers looking for longer-lasting devices over less practical qualities such as 5G. Practical uses of 5G have yet to be seen, and is especially unnecessary for low-mid devices when 4G speeds are sufficient in day-to-day usage,” says the report.
The report adds that maintaining device affordability while boosting profitability is the greatest challenge for vendors. “Competition in the entry-level segment has intensified with the introduction of many new products by Android smartphone vendors. It is vital for vendors to optimize product portfolios to improve their branding and outreach. At the same time, vendors should be mindful of product cannibalization within the same price segment,” adds the report.
The report forecast the remainder of the year 2022 to be challenging for smartphone vendors. The companies need to tackle rising costs, forex volatility, and shrinking consumer demand. “Vendors will have to keep a close eye on margins while competing aggressively to capture market share in price-sensitive Southeast Asia,” says the report.
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