Simon Baker (Program Director)

A rule of thumb for mobile operators in Europe for 2021: if you want to know where to market 5G services, just follow the sales of the iPhone 12.

Apple sold approaching 56 million iPhone 12s globally in 4Q20, according to the IDC Worldwide Quarterly Mobile Phone Tracker, at a retail value of $58 billion before taxes.

Around one in six of these, or close to 10 million, were sold in Europe.

That total is not much short of all the Android 5G devices sold in Europe to date, including in the fourth quarter.

The iPhone in Europe Has Peaks and Troughs

Apple shares are not distributed evenly around Europe. The U.K., Germany, and France account for close to a half of all iPhone sales in the region.

When you look at the iPhone share of the smartphone market, in addition to the three main Apple countries above, the Netherlands, Belgium, Ireland, Austria, Switzerland, and the four Nordic countries also figure prominently.

The highest Apple share in Europe in the fourth quarter was in Norway, at 61.5%, with several countries above 50%. Its lowest market share in Western Europe, in Greece, was less than a quarter of that in Norway. Richer countries normally did better than poor ones, with some exceptions.

In the peak-Apple markets, the iPhone 12 accounted for more than half the Apple phone mix. Again, in the weaker ones, the iPhone 12 share was normally lower.

So, it is the northern half of Europe where operators should take their iPhone 12 cue and ramp up their 5G marketing.

How do Sales Translate into User Base?

Is there another rule of thumb here on 5G for mobile operators, on how quickly the impact of the iPhone 12 will build up the 5G smartphone installed base?

Installed base calculations need to be pretty complex, but working them out starts off quite easily for the first quarter of the iPhone 12.

Let us take the Netherlands, a country where Apple is very popular, and with a population of 17 million and an installed base of around 15 million smartphones. The smartphone market amounted to 1.4 million in the fourth quarter, of which Apple took half, and of these iPhones, approaching 400,000 were the new 12 models.

Like most countries in Western Europe, smartphone lifespan in the Netherlands is around two and a half years. So, in 4Q the arrival of the iPhone 12 equated to about 2.7% of the smartphone installed base.

Diminishing Returns

That number sounds underwhelming against Apple’s shipment share, and, moreover, there will be diminishing returns against sales thereafter.

First, sales of the new iPhone are at their peak in the launch quarter, with this proportion around 40% in Holland. So at the end of its first year, the iPhone 12 will account for a bit less than 7% of the local installed base there.

Lots of iPhone 12 owners will move on to the new model come autumn next year. Many of their iPhone 12s which are traded in to mobile operators will end up being exported to other markets after being refurbished, so we can’t count on them all going two and a half years in the local market.

On the other hand, we can assume with some certainty that next year’s iPhone range will again be all 5G.

Last year’s iPhone 11 continues to sell well In the Netherlands and made up 30% of the Apple market share in the fourth quarter. So in the last three months of 2021, with the launch of the next iPhone, we can expect that around four out of five iPhones sold there will be 5G.

Thereafter, the growth in the iPhone 5G installed base may tail off, with a lot depending on how long Apple keeps older 4G models in production and whether it launches a new budget SE model, and if it comes, it is 5G.

It is clear that the transition from one generation of technology to another is not a sprint, it is a marathon.

For Android — A Price Point Rule of Thumb

But that’s leaving out the impact of Android of course. Android 5G volumes were much lower in Europe in 4Q than those of Apple, but the Android market started earlier, and the cumulative total tends to be similar in countries where the iPhone is strong.

Are there any rules of thumb there with Android?

IDC is expecting Android 5G phones to outsell iPhone 5G models well this year, by as much as four to one.

In the fourth quarter there were few 5G Android models on sale in Europe at prices below $300 retail before tax. Nearly three-quarters of Android sales in Europe are at prices below this threshold.

If there is another rule of thumb for operators on the take-up of 5G on Android — it is watching how quickly the price of Android 5G phones comes down below this price barrier — the entry point to the mass market.

 

IDC will include country by country five-year forecasts of the installed base of 5G smartphones in all countries in its Worldwide Semiannual Telecom Services Tracker from the next issue, available in early summer.

 

If you want to learn more about this topic or have any questions, please contact Simon Baker, or head over to https://uk.idc.com and drop your details in the form on the top right.

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