Excitement for 5G is building, and that’s a good thing
One of the big themes from this year’s CES event was 5G, and this is also expected to grab the headlines at MWC 2020. But although there’s industry as well as political enthusiasm for 5G, the market is still missing a spark of excitement from most consumers. We believe that this will change as prices drop and Apple joins the fray with its first 5G smartphone.
Other smartphone makers such as Samsung and LG introduced solid 5G devices in 2019. And in some countries, namely South Korea, sales have been stronger than expected. We note Samsung’s announcement that it shipped more than 6 million 5G devices during 2019. This is a good start.
Similarly, at CES, Qualcomm underlined momentum for 5G, pointing out that more than 45 operators have deployed 5G commercially, more than 340 are investing in the technology and that it now believes its forecast of 200 million 5G smartphones to ship in 2020 is “conservative”. The company also revealed that demand for its Snapdragon 765 and 765G platforms is two and a half times higher than that for the previous-generation platform. Add to this a lower-cost platform from MediaTek in the Dimensity 800 and the market should see prices fall steeply in 2020, to well below $500 (see CES 2020: Major Themes).
However, it’s inescapable that the absence of Apple is still a large missing ingredient in the 5G market. This goes beyond the sales volumes that Apple accounts for. Its dominance of the high tier means that the company defines consumer expectations and, for many Apple loyalists, validates new technologies. When Apple unveils a 5G-capable version of the iPhone as is widely expected, the whole industry will benefit from the energy it generates.
Given the status of 5G deployments, Apple has been able to bide its time, but with China building out network infrastructure at pace and South Korea seeing encouraging adoption, it’s critical that Apple joins the market by the end of 2020. This, of course, was the driving force for its decision to settle its lawsuit with Qualcomm and acquire Intel’s modem business (see Instant Insight: Apple and Qualcomm Settle, Intel Exits 5G Modem Development).
We’ve consistently said that the market is overly obsessed with the uses for 5G. These are undoubtedly important in the medium and long term, but in the more immediate future, it is economics and competition that will lower prices and push 5G smartphones into the hands of users.
Apple won’t be the manufacturer to bring down prices, but it has a “halo” effect on the broader market and validates the technology. It’s a central part of the ecosystem, and if it can help highlight new applications tied to its services, it will play a considerable role as 5G offerings become more sophisticated.
This year will see 5G take-off and for that to happen, the market needs broad participation. Success of 5G isn’t dependent on Apple, but without the company’s support it will take considerably longer.
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