North American Mobile Handset market will surpass USD 534.84 billion by 2025

The mobile phone market revenue generated was USD 188.34 billion in 2019. Growing at a CAGR of 19%, the value will surpass USD 534.84 billion by 2025.

The US takes the dominant position in terms of mobile phone market revenue. 5G will drive the growth of the smartphone market in the region.

Definition / Scope
Market Overview
Key Metrics
Market Risks
Top Market Opportunities
Market Trends
Industry Challenges
Pricing Trends
Other Key Market Trends
Market Size and Forecast
Market Outlook
Technology Roadmap
Distribution Chain Analysis
Competitive Landscape
Competitive Factors
Key Market Players
Strategic Conclusion
References
Appendix

Definition / Scope

A mobile handset primarily functions to make and receive call over a radio frequency link with in the operator’s spectrum reach. The augmented mobile handset called smartphones now support variety of other services such as text messaging, email, Internet browsing, games, business and digital media applications.

Feature phones are those mobile handset devices that can perform only rudimentary tasks of a cell phone and sometimes augmented to support basic applications.

Today mobile phones have moved beyond their primary role of voice communications and have stepped up to become an essential entertaining device for mobile users. Mobile phones which offer greatly advanced computing capabilities are referred to as smartphones.

The specialized phones that allow VoIP calling are known as SIP phones.

Market Overview

Mobile industry contributes almost 4.3% to GDP worth USD 940 billion in 2019 and it will further accelerate to USD 1.2 trillion by 2025 representing 4.8% of the total North American (NA) GDP.

Wire-line services are in a decline owing to improvements in the quality of wireless networks and the prevalence of unlimited calling plans for mobile users over VoIP. Demand for mobile handset is continuously growing in NA.

The unique mobile subscribers hit 418 million in 2019 and are projected to reach 443.72 million, growing at a CAGR of 1%.

Revenue share contributed from North American market is 26% while the smartphone connection share stands just at 7%. The smartphone shipment to North America represented 23.63% of the total 1,371 million global shipment volume in 2019. The mobile phone penetration is likely to jump from 83% in 2019 to 85% in 2025.

Handset Users (in Millions)	2016	2017	2018	2019
US	261.65	266.99	272.44	278
Canada	25.41	26.56	27.75	29
Mexico	70	72	73	75

In the US, the total number of Handset users recorded was 261.65 million in 2016. Handset users grew at a CAGR of 2% during 2016-2019, reaching 278 million in 2019. The smartphone adoption will mount 92% by 2025 from the current 83% adoption rate and the 5G adoptions will hit 50% by 2025 in the US.

Similarly, in Canada, the Handset device subscription is rising at 4.3% annual rate in Canada. There were 25.4 million Handset users in 2016 but it went up to 29 million by the end of 2019.

Handset (Canada)	Below 30 years	30-39 years	40-54 years	55-64 years	Over 65 years
Monthly Expenditure ($/month/household)	127.92	119.42	129.50	98.17	47
Penetration	97%	93%	87%	83%	70%

The people in the age range of 40 to 54 years spend the most in mobile expenditure per month. These households spend USD 129.50 per month on mobile expenses. People aged below 30 years who spend USD 127.92 per month on average mobile expenditure follow it. Household with people aged over 64 spend the least at USD 47 per month.

Also, the mobile penetration is highest within the younger population aged below 30 years. The mobile penetration in this age group stands at 97%. The age group between 30 and 39 possesses 93% penetration rate. The age group above 40 years has mobile penetration over 70%.

In Mexico, the mobile phone users have shifted 75 million in 2019 from 70 million in 2016. Smartphone adoption reached 63% in 2018 and will surpass 76% by 2025. Mexico will add additional 16 million new subscribers by 2025.

Moreover, North America is the largest market for premium phones (phones priced over USD 400) holding 30% global market share.

North America	3G	4G	5G
2019	12%	82%	0.2%

5G adoption took place in NA in 2019, however, it holds merely 0.2% share whereas 82% of the mobile handsets are 4G enabled devices. The 3G phones are gradually fading their market visibility with just 12% share.

Smartphone constitutes 83% market share whereas feature phones hold just 17% market share in NA. Similarly, Android platform dominates the market with 87% lion’s share while iOS platform grabs just 13% share of pie.

Key Metrics

Metrics	Base Year 2019
Unique Mobile Phone Subscribers	418 Million
Smartphone Share	83%
Android Platform Share	87%
Market Size	USD 188 Billion

Market Risks

Design and manufacturing defect

Sophisticated OS and applications often seem to have issues that can unexpectedly interfere with the intended operation of hardware or software products. Such issues sometimes only get noticed once customers have bought the product and the company needs to recall the whole lot of the defected products.

Sometimes, component defects could make the company’s products unsafe and create a risk of environmental or property damage and personal injury, and regulatory bodies require mobile companies to withdraw those batches of phones from the market.

There can be no assurance the company will be able to detect and fix all issues and defects in the hardware, software and services it offers. Failure to do so could result in widespread technical and performance issues affecting the company’s products and services.

In addition, the company can be exposed to product liability claims, recalls, product replacements or modifications, write-offs of inventory, property, plant and equipment, and/or intangible assets, and significant warranty and other expenses, including litigation costs and regulatory fines.

Quality problems can also adversely affect the experience for users of the company’s products and services, and result in harm to the brand reputation, loss of competitive advantage, poor market acceptance, reduced demand for products and services, delay in new product and service introductions and lost sales.

Data Protection

The mobile companies are subject to federal, state and international laws relating to the collection, use, retention, security and transfer of personal data. In many cases, these laws apply not only to third-party transactions, but also may restrict transfers of personal data among the company and its international subsidiaries.

Complying with emerging and changing international requirements may cause the company to incur substantial costs or require the company to change its business practices.

Huawei, for instance, was banned to sell its smartphones in the US market because of the security threat it possessed for the personal data of US citizens that could be accessed and misused for surveillance by Chinese authorities.

Top Market Opportunities

5G smartphones

Although, the 5G penetration rate was less than 1% in 2019, with surging demand, its penetration is likely to reach nearly 10% by 2025.

In 2025, the subscription for 5G as a percentage of total mobile subscription is depicted in the figure.

South Korea	USA	Japan	China	Europe	GCC	Latin America
56%	50%	48%	29%	29%	16%	8%

In USA, 50% of mobile phones will be 5G enabled devices. Verizon and AT & T have started offering 5G commercial service in selected cities in the US since 2019. In 2025, the 5G technology is likely to take the mainstream in the global telecom sector.

The mobile OEM has a vast opportunity to wipe out the older generation phones like 3G and 4G devices and launch entirely new range of 5G smartphones.

North America leads the early adoption of 5G phones. Samsung takes the lead in the 5G segment with 74% share followed by LG with 11% and vivo with 5%.

Market Trends

More data consumption

In, North America, the data consumption will shift from 10GB per subscriber per month in 2019 to 50GB per subscriber per month in 2025. The preferred mode of Internet use is through smartphones.

Refurbished cell phones on priority

The worldwide refurbished and used phone market is projected to grow at a CAGR of 8.9% to reach USD 40 billion from USD 20 billion in 2019. In US, the stricter imposition for regulating e-waste has been in place since electronic waste grew 120% in the last ten years.

These factors are estimated to drive growth of the refurbished and used mobile phone market in North America. The U.S. is expected to be the most lucrative country for growth of the market in North America, with sales expanding at 7.5% CAGR through 2025.

Moreover, the slowdown in innovation has made two-year-old flagship smartphones comparable in design and features with the most recent mid-range phones.

The mid low-end market for new smartphones is being cannibalized by refurbished high-end phones. Apple and Samsung dominate the global refurbished phone market.

Longer holding period

Sales of smartphones are tumbling as buyers are holding on to their phones for longer time. The average time for using Apple phone has gone up to 3 years from the 2 years it was once few years back.

Industry Challenges

Complexity in integrating carrier bandwidth

Telecom operators require handset manufacturers to advance carrier aggregation to increase bandwidth beyond 20-MHz single carrier to deliver data rates greater than 150 Mbps. Many early OEMs aggregated only two component carriers. Now, however, they face hurdle to combine 3-4 carriers to provide more than 40-MHZ bandwidth.

In addition, spectrum allocations differ in across countries. This drives incredible complexity in the premium smartphones segment designed for global use.

Covid-19 impact

Global pandemic amid covid-19 has disrupted the global smrtphone supply chain for short term. Many smartphone manufacturers have facilities in China and rely on the country to supply components, and have therefore faced delays due to the coronavirus pandemic.

In addition, smartphone demand is decreasing as people save money for essentials. During the first quarter of 2020, global market saw a decline of 46 million smartphone shipment compared to same period in previous year.

Pricing Trends

The price of phone in North America has steadily gone up since 2015 especially for the flagship phones from Apple and Samsung. The reason for the rising cost of owning a phone is that the brands have figured out that buyers are holding their phones for more than two years and they can’t cash in money if they don’t sell at higher margin.

The cost associated with owning a phone that includes telecom charges, insurance charges have also gone up. For instance in Canada, people spend as much as USD 129 per month on mobile spending.

The average cost of buying a phone in North America has grew from USD 470 to USD 570 between 2015 and 2020.

Other Key Market Trends

Covid-19 impact

Shipments fell 13% to 272 million units in Q1 2020, compared to the previous quarter. Samsung retained its position at the apex of the worldwide market, despite shipments falling 17% to 60 million.

Huawei shipped 49 million units in Q1 2020, maintaining its second-place ranking despite seeing drops in overseas sales due to its US Entity List status.

Apple was the third-largest vendor, down 8% with 37 million shipments. Xiaomi, the best performer in the top five, managed 9% growth to hit 30 million units, while Vivo finished fifth with 24 million units, up 3%.

Market Size and Forecast

The mobile phone market revenue generated was USD 188.34 billion in 2019. Growing at a CAGR of 19%, the value will surpass USD 534.84 billion by 2025. The US takes the dominant position in terms of mobile phone market revenue.

Handset Users (in Millions)	US	Canada	Mexico
2019	278	29	75
2020	283	30	77.6
2021	289	31	80.2
2022	295	32	82.8
2023	300	33	85.4
2024	306	34	88
2025	313	35	91

Mexico will add additional 16 million users by 2025 from the current 75 million mobile handset users in 2019.

Similarly, by 2015, there will be 6 million additional mobile users in Canada. In 2019, there were 29 million mobile users in Canada. Likewise, mobile users will grow at 2% in US to surpass 313 million by 2025.

Market Outlook

North America	3G	4G	5G
2019	12%	82%	0.2%
2025	6%	45%	48%

In North America, Smartphone adoption will grew from 83% in 2019 to 91% in 2025.

There will be nearly 50 million new mobile subscribers in North America by 2025. About 205 million, 48% of the total 1.8 billion 5G phones will be in use in North America by 2025.

Technology Roadmap

The 5G Protocol

A 5G protocol adopts CUPS architecture, in which the control plane and user plane are separated. The user plane functions (UPF) are moved to the edge, which makes MEC possible.

MEC brings network capabilities closer to end users and supports distributed deployment. With MEC, telecom operators can share their network capabilities to third parties, building an ecosystem around their networks and exploring new business value chains.

MEC is also essential to many 5G applications, such as Internet of Vehicles (IoV), ultra-HD multimedia, drones-based services, video surveillance, and Internet of Things (IoT).

Till date, the 5G network is offered only in the blue ocean market by a very few market leaders worldwide. Verizon and AT & T have started offering 5G commercial service in selected cities in the US since 2019.

In 2025, the 5G technology is likely to take the mainstream in the global telecom sector. For the 5G service to be accessible, mobile handset manufacturers have to upgrade and innovate their devices to support the faster internet bandwidth.

Huawei, Samsung, and Vivo lead the 5G phones shipment in 2019. There were 18.7 million 5G phones shipped combined by all the manufacturers. The global shipment of 5G phones were near to almost zero in the previous year.

5G smartphones contributed to less than 1% of global smartphone sales in 2019. However, 2020 onwards will be the breakout years, with 5G smartphones poised to grow 1,687% with contribution rising to 18% of the total global smartphone sales volumes in just five years.

Distribution Chain Analysis

The mobile industry ecosystem comprises of telecom operators, handset manufacturers, content and service providers, and repair-maintenance service providers on the front-end.

Telecom operators are responsible for the overall quality and reliability of the network, which operates as the backbone of a mobile service.

Handset OEMs

Leading handset manufacturers are launching internet-enabled phones in the global market at affordable prices. The growth of Mobile Internet users in the coming years could ride on the back of increasing penetration of Internet-enabled devices, notably affordable smartphones and tablets. Compared to feature phones, smartphones tend to deliver a better user experience.

Technology providers

Mobile technologies form the backbone of mobile service delivery. Middleware infrastructure technology is crucial for driving the adoption of applications. For example mCommerce, mPayments applications depend on advanced technologies to deliver their true potential.

Given the variety of devices in the market, middleware technology is playing a huge role in developing and integrating compatible application interfaces.

Telecom operators

In the case of a mobile phone call, a caller’s voice is converted by the handset into digital data, transmitted via radio to the network operator’s nearest tower or base station, transferred to another base station serving the recipient’s location, and then transmitted again to the recipient’s phone, which converts the signal back into audio through the earpiece.

There are a number of standards for mobile phones and base stations, such as GSM, WCDMA and LTE, which use different methods for coding and decoding, and ensure that users can only receive voice calls and data, that are served by telecom operators across the geography.

Content and service providers

Content and services refer to the delivery of content (audio, video, etc.) and services over the Internet with telecom service providers having limited distribution control, rights and responsibilities in terms of content delivered.

The content market comprises communications, social networking, information, chat, gaming, and other entertainment-based content. Relevant content is a key driver for adoption of content services. The adoption of smartphones, which enables access to rich content, has played its part in revolutionizing data usage.

Competitive Landscape

Apple is the dominant market leader in NA that captures 40.16 lion’s share in the mobile handset segment. iPhone sales value in North America was USD 63.99 billion in 2019. Samsung grabs the second spot capturing 29.42% market share in the NA region.

Its Mobile sales value in North America was USD 28.39 billion in 2019. The third largest mobile phone vendor in NA is LG, which grabs 13.35% market share followed by Lenovo. Lenovo’s market share accounted 6.53% in the region.

In the 5G phone segment, the total 5G mobile phones shipped globally were 19 million units. Huawei is number one and shipped 6.9 million 5G smartphones worldwide capturing whooping 37% market share.

It was followed by Samsung that shipped 6.7 million units of 5G smartphones globally and it holds 36% market share. Vivo leads the global 5G market with 11% share standing third in the global 5G race.

Competitive Factors

The superior competency depends heavily on the ability to ensure a continuing and timely introduction of innovative new products, services and technologies to the marketplace.

The unique designs and entirely with solution for the products, including the hardware, operating system, numerous software applications and related services are other differentiating factors. Apple for instance comes up with the up gradation of its iPhone each year with augmented camera feature and other software features.

Key Market Players

Apple

The company was founded in 1976 and is headquartered in the USA . Apple Inc. engages in the design, manufacture, and sale of smartphones, personal computers, tablets, wearables and accessories, and other variety of related services operating throughout Europe, North America and Asia Pacific.

Its products and services include iPhone, Mac, iPad, AirPods, Apple TV, Apple Watch, Beats products, Apple Care, iCloud, digital content stores, streaming, and licensing services.

Apple generated USD 142.38 billion in net sales from iPhone in 2019. The iPhone sales accounted for 54.73% of company’s net sales in 2019. North America represented 44.94% of its USD 260.17 billion total net sales in 2019. iPhone sales value in North America was USD 63.99 billion in 2019.

Samsung

Samsung Electronics Co. Ltd. is a Korea-based company principally engaged in the manufacture and distribution of electronic products. The company operates its business through Information Technology & Mobile Communications (IM) segment, Device Solutions (DS) segment, Consumer Electronics (CE) segment and Harman segment.

Its products include electronic products,such as computers, handhold phones (HHPs), network systems, digital cameras and others, semiconductor and display parts, including dynamic random access memories (DRAMs), flashes, thin film transistor-liquid crystal displays (TFT-LCDs), color televisions (CTVs), monitors, printers, air conditioners, refrigerators, laundry machines, headunits, infotainment, telematics, speaker, among others

The net revenue from mobile segment was USD 88.58 billion in 2019 representing 46.56 % of its total net revenue fro all segment. North American market contributed 32.05% of its total net revenue of USD 190.27 billion in 2019. Mobile sales value in North America was USD 28.39 billion in 2019.

LG ELECTRONICS INC. is a Korea-based company principally engaged in the manufacturing and sale of electronic products. Along with its subsidiaries, the Company operates its business through seven segments. The Mobile Communication (MC) segment offers mobile terminal equipment.

LG made USD 53 billion in revenue in 2019. Mobile segment constituted 9.57% of the total revenue generation totaling USD 5.07 billion. The company suffered loss from communication segment including mobile phones in North America in 2019.

Lenovo

Lenovo Group Limited wad incorporated in 1993. The company develops, manufactures and markets technology products and services.

The Company’s portfolio of products and services covers personal computers (PCs), including the Think and multimode YOGA brands; workstations; servers; storage; smart televisions, and a family of mobile products, such as smartphones (including Motorola), tablets and applications.

Mobile segment generated USD 464 million in 2019. Revenue from North America were USD 90 million in the same year.

Strategic Conclusion

It is estimated that there will be nearly 50 million additional mobile subscribers that are likely to emerge in North American market. Till date, there are more than 400 million existing mobile phone users in NA.

There is a huge demand for 5G smartphones in the next few years. As telecom operators are upgrading their technology towards 5G protocol in the region, the existing 4G and 3G smartphones will be replaced by 5G phones almost to 48% by 2025 that makes nearly 192 million 5G mobile phones needed to be shipped to NA market from the current 4 million 5G mobile phones.

The market for smartphone in NA seems lucrative and even new entrants from the Asian market could enter the North American consolidated market.

References

Appendix

NA: North America
GDP: Gross Domestic Product
VoIP: Voice over Internet Protocol
OS: Operating System
CAGR: Cumulative Annual Growth Rate