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OnePlus' 5G phone is going to cost you much more than its predecessors

CEO Pete Lau's prediction of a price tag that's $200 to $300 more than the OnePlus 6T confirms that 5G phones won't come cheap.

Angela Lang/CNET

If you want a 5G phone next year, you're going to pay much more for it. 

How much more? In the case of OnePlus, it could be $200 to $300 higher than this year's flagship OnePlus 6T, CEO Pete Lau said in an interview with CNET. That's a whopping 36 percent to 55 percent increase.

The Chinese handset maker has made waves by delivering a premium phone experience for close to half the cost of many premium device. Its latest flagship device, launched in October, is sold by T-Mobile in the US and also works on Verizon's network. The OnePlus 6T costs only $549 (about £499 or AU$774) for the 128GB model with 6GB of RAM, or $30 more for the 8GB model. That compares with $1,000 -- and up -- for the latest phones from Apple and Samsung

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When it comes to a 5G OnePlus phone, though, the price is going to rise, possibly as high as $849.

"The new technology and the amount of R&D and new development that goes into 5G will inevitably mean the cost of the device is, to a significant degree, more expensive," Lau said Wednesday through a translator at the Qualcomm Snapdragon Tech Summit in Maui, Hawaii. He attended the conference to unveil plans to release a 5G phone early next year in Europe.

"We hope to not be forced to have a huge increase in price," Lau said. "It's not what we want to do in terms of product differentiation going forward."

OnePlus hasn't yet determined pricing for its upcoming 5G phone, which will launch first in the UK on EE's network, but a rise between $200 to $300 is "feasible," Lau said. He said the device should be available before the end of May.

The transition to 5G is considered one of the biggest advancements in technology in the past decade. It promises download speeds that are exponentially higher than today's 4G LTE technology. It'll take seconds to download a full TV season, and doctors will be able to perform remote surgeries in real time. But that speed is going to cost you.

An extra $200 to $300 seems "like a bigger increase than I would have expected, particularly when you throw in the fact that 5G data plans will probably also be more expensive," Technalysis Research analyst Bob O'Donnell said. Other handset makers likely will also boost their prices, he said, but he predicts "more like a $100 premium or so."

Boosting prices

Handset makers and operators tend to get quiet when talking about pricing for 5G phones and service plans. But it's all but certain they'll use the new technology as an opportunity to boost prices. We've already seen phone makers raise their prices over the past couple of years.

When Apple launched its iPhone X a year ago, some wondered if the $999 price tag -- $300 more than the iPhone 8 -- would scare away consumers. Instead, the iPhone X became the best-selling device from the time it hit stores through the end of the June quarter, even though it was the most expensive phone Apple had ever sold.

Android handset makers have followed suit with higher prices. The cost for Samsung's flagship Galaxy phone for US buyers has risen 15.1 percent from the Galaxy S7 in 2016 to this year's Galaxy S9. The Huawei P series has climbed 33 percent since 2016 -- and that doesn't even account for the existence of a Pro model.

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OnePlus CEO Pete Lau talks up just how expensive 5G phones may be. 

James Martin/CNET

OnePlus prices too have been rising. In the US, OnePlus phone prices have ballooned 37.6 percent since 2016.

OnePlus isn't well known in the US, but it's long attracted diehard Android fans for its mix of high-end specs and affordable prices. It has steadily built its own cult following in the US by selling directly to customers online, often through "flash sales" where the product sells out quickly.

Thanks to its partnership with T-Mobile and its rising popularity, OnePlus sold 249 percent more units of the OnePlus 6T in the US in its first 30 days of availability than last year's flagship phone, the OnePlus 6, the company said Wednesday.

The phone has sold out of many T-Mobile stores in the US, which Lau attributed to much stronger-than-expected demand despite OnePlus' "aggressive" product launch plans.

A measured rollout

For OnePlus, next year's move into 5G will be measured. It'll first launch a phone in the UK with carrier EE before expanding to other wireless networks around the world.

"The 5G product is not expected to equate to huge sales," Lau said.

OnePlus' initial 5G phone will tap into sub-6 Ghz spectrum, not the faster millimeter wave technology, Lau said. That's partly because of the complexity of the radios needed for millimeter wave.

Sub-6 Ghz airwaves are more reliable than millimeter wave, traveling longer distances and avoiding other problems with the shorter-range technology. Along with the distance limitations, millimeter wave signals bounce off hard surfaces and they have trouble moving around corners or past things like trees. Simply holding your hand over the antennas on the phone blocks the signal.

On the flip side, though, sub-6 Ghz also is slower than millimeter wave. The potential peak download speed for sub-6 Ghz is 400 to 500 megabits per second, Qualcomm has said. That's much faster than today's 4G, which is about 70Mbps, but it's a fraction of the peak speeds, 5 gigabits per second, millimeter wave could reach.

In the US, T-Mobile plans to launch 5G using sub-6 GHz airwaves, while Verizon and AT&T are introducing 5G with millimeter wave.

Qualcomm has created a chip to solve the problems faced by millimeter wave, but it adds weight, thickness and complexity to the phone. It's also unclear how much the Qualcomm X50 5G modem could affect a device's battery life, particularly because vendors have to fit more chips inside the phone.

"We don't expect we could create a millimeter wave-capable device [early next year] that we're satisfied with in terms of design," Lau said. The phones could look bulky, he said, which isn't what OnePlus wants to give its customers. He noted that long battery life is important to users, as is the device's overall design, thickness and how it feels in the hand.

"For OnePlus, we have an expectation of what the device experience should be like and what the device should offer," Lau said. "If we can't match that, we won't release it in the market."

But things could change in the coming year, he said. "We have better hope for [millimeter wave] in the second half of next year," Lau said. "We believe next year the improvements on the antenna front will be significant."

In 2020, most flagship phones in the US will be 5G-capable, Lau predicted. Qualcomm President Cristiano Amon on Tuesday told CNET that by the holidays next year every Android handset maker that uses the Snapdragon processor will have a 5G phone.

Right now, OnePlus doesn't have plans to launch a 5G phone in the US. It's "in more of an exploratory discussion phase" with carriers to understand what they and their customers want from 5G, Lau said.

Unlike 4G LTE phones, which can work at multiple carriers, 5G phones at first are going to be specific to certain network providers. A phone designed for T-Mobile's 5G network won't work at Verizon, for instance. That means there won't be unlocked 5G phones in 2019. 

"We would very much hope there [soon will be] a solution that would cover multiple carriers," Lau said. "For now, it's a problem."

CNET's Jessica Dolcourt contributed to this report.

Originally published Dec. 5, 7:35 p.m. PT
Updated, 9 a.m. PT with analyst comment. 

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