When Huawei and Xiaomi showed off their first 5G phones at Mobile World Congress, the crowds at both press conferences gasped. What caused the reaction was the price -- but for very different reasons.
Huawei said its will cost a jaw-dropping 2,300 euros ($2,600) when it goes on sale in the middle of the year. That's pricier than feared, even though it's one of the world's first foldable phones. By contrast, Xiaomi said its Mi Mix 3 5G will retail for 599 euros ($679) when it hits the market in May, much lower than what seemed possible for the first 5G phones.
The devices may end up being on extreme ends of the pricing scale, but there's really no way to know right now. While nearly every major Android handset maker has, Huawei and Xiaomi are the only companies that have actually detailed how much they're going to cost.
But we do know this much: 5G won't be cheap. The networking technology has long been hailed as a game-changer that will serve as a foundation for everything from telemedicine to self-driving cars to augmented reality. Carriers are spending billions of dollars to build out 5G networks. Device makers need to use pricier components like 5G radios and bigger batteries. Those higher costs will likely flow down to you through more expensive service and phones.
The shift to 5G gives carriers and phone makers the chance to charge more for those top speeds at a time they're not selling as many devices. Last year, smartphone shipments fell for the first time ever in history, according to Strategy Analytics. Globally, they dropped 5 percent to 376 million units, something the research firm called "a landmark event."
The trick is to figure out how much more to charge without scaring consumers off.
"I do believe it should be priced at a small premium to 4G," said Marc Allera, chief executve of UK carrier EE, during a 5G panel at MWC. "But not so much that it slows adoption down."
The first 5G wave
5G promises to significantly boost the speed, coverage and responsiveness of wireless networks. It can run between 10 and 100 times faster than your typical cellular connection today, and even quicker than anything you can get with a physical fiber-optic cable going into your house.
MWC this week in Barcelona marked the debut of the first crop of 5G smartphones. The faster network -- OK, foldables too -- was all anyone talked about at the mobile trade show. Except for Apple, every major handset maker plans to launch a 5G phone early this year.
Samsung, the world's biggest smartphone vendor, unveiled its first 5G phone just days before MWC during its Unpacked event in San Francisco. Oppo on Saturday at MWC talked up its first, not-yet-named 5G phone. Huawei showed off its Mate X foldable on Sunday, while Xiaomi detailed its Mi Mix 3 5G that same day. The Barcelona gathering also marked the debut of LG's V50 and ZTE's Axon 10 Pro, while Sony and OnePlus showed off prototypes for devices they'll launch this year.
OnePlus aims to keep the cost of its first 5G phone "within $1,000," CEO Pete Lau said during an interview on Monday. In December, he had said OnePlus' first 5G phone could be $200 to $300 higher than the OnePlus 6T, which starts at $549 (about £499 or AU$774) for the 128GB model with 6GB of RAM.
"From the perspective of OnePlus devices, the [higher] cost is [because] the cost of technology has also risen this year," Lau said Monday. "From our perspective, there's no better value proposition in the market than a OnePlus device."
Samsung, which is on the other end of the spectrum with premium pricing, hasn't said what it will charge for its Galaxy S10 5G or the version of its Galaxy Fold that runs on the faster network. The 4G versions of those devices start at $749 for the Galaxy S10E and $1,980 for the Galaxy Fold.
Drew Blackard, Samsung's senior director of product marketing, told CNET after Unpacked that the Galaxy S10 5G will be more of an "incremental step-up" from the $1,000 S10 Plus, not a huge jump like the $1,980 Galaxy Fold. He noted it will be over $100 more expensive but declined to give any further specifics.
"That's natural because it has a bigger battery, more cameras and also has 5G," Blackard said last week.
Motorola President Sergio Buniac, meanwhile, believes that while 5G devices may be more expensive, they won't be excessively so. Motorola soon will release a 5G "Mod," or module, that attaches to the back of the Moto Z3 to let it run on the faster wireless network.
"It's more what 5G can bring to you than whether it's more expensive or not," Buniac said in an interview on Monday.
Ultimately, more of the 5G phone price increase could come from what other features are added. There are higher costs overall for the 5G devices, from the chipset to the antennas, batteries and other components.
"Initially, the price of 5G phones will be higher than 4G phones, that's for sure," said Yenchi Lee, senior director of product marketing for MediaTek's wireless communications business, in an interview Monday. The company this week unveiled its first 5G modem, which will be in smartphones in early 2020.
Soaring service plans?
Along with not knowing device prices, we also still don't know what most mobile 5G plans will cost -- or, in many cases, when service will actually be turned on.
Dan Hays, a consultant for PWC, said he sees the potential for an 8 percent to 10 percent premium on 5G service, similar to early 4G deployments. But he doesn't think carriers will be able to get away with higher increases because the initial deployments are so small.
Operators will first launch 5G in just a handful of cities, including Atlanta and Dallas, while a broader rollout across the US will likely take years.
"If you can only use it 10 percent of the time, would I pay for it?" Hays said.
In the US, AT&T and Verizon each pledged to launch 5G in 2018, and each made its deadline, in a way. Verizon launched its home broadband service with 5G technology in October, but it doesn't work for mobile customers and doesn't use the actual 5G industry standard itself. And while AT&T turned on its service in December, it was to only a limited number of people.
T-Mobile, meanwhile, won't formally launch its 5G service in its first 30 cities until the second half of 2019, Chief Technology Officer Neville Ray said in an interview on Monday. Until Qualcomm introduces its second-generation modem, the X55, later this year, there won't be any phones available that can tap into the critical low-band 600MHz spectrum that will power much of T-Mobile's early broad 5G coverage.
5G at a discount, maybe
When Donovan Sung, director of product management for Xiaomi's global team, asked attendees of his launch event what they thought was fair for a 5G phone, the lowest price shouted from the crowd was 699 euros.
The actual price: 599 euros, or around $679.
So there's reason to believe that you're not going to get completely fleeced with 5G. But the Mi Mix 3's price tag may be an anomaly, given that Apple, Samsung and others already price their 4G LTE phones at about $1,000.
"We think this is one of the most competitive prices for a 5G smartphone today," Sung said.
Even Qualcomm President Cristiano Amon -- whose company will provide the chips to power most 5G phones this year -- said he didn't expect 5G phones to be as cheap as Xiaomi's device.
"I'm surprised and optimistic about the impact that will have on the 5G transition," Amon said in an interview Monday. He added that once Qualcomm releases its Snapdragon chip that integrates the modem with the brains of the phone, more 5G phones should be available at lower prices.
"We're trying to get to 5G not just to that flagship tier but to other tiers as fast as we can," he said. The integrated chip will be in phones in the first half of 2020.
While 5G service plans are likely to be more expensive, there could be benefits. Data plan sizes are likely to be higher and carriers could encourage more data sharing across devices instead of charging for each device we have, Creative Strategies analyst Carolina Milanesi said.
"It's fair to say that data plans of the future will be different," AT&T Chief Technology Officer Andre Fuetsch said in an interview on Tuesday. "It'll be based on how that data is consumed."
And 5G also could mean the end of throttling, the practice of slowing down our network speeds when we've hit our data caps.
"5G allows us to look at it different because we have more capacity," Sprint Chief Technology Officer John Saw said Monday.
T-Mobile's Ray agreed that throttling could go away with in a 5G world. His company has already vowed to freeze prices after completing its acquisition of Sprint. But Ray said the cost savings of running of a bigger network with more customers means potential savings for you.
"The level of performance, quality, capability is all a magnitude better," he said.
Still, in the early days, there's no doubt we'll be paying more. Now we just have to wait for these phones and services to launch to find out if what we're getting is worth the higher price.
CNET's Roger Cheng contributed to this report.