Apple/5G: speed freaks
Smartphone makers will need to raise prices to really benefit from the 5G revolution
This is supposed to be a banner year for fifth-generation wireless technology. At the annual Consumer Electronics Show in Las Vegas this week, 5G overtook blockchain as the transformative technology mentioned by companies most often.
Tech visionaries are promising smart cities, remote services and interconnected everything. Speed, capacity and connectivity will jump. Download whatever you like in seconds. Home systems will analyse data from your fridge, radiator and door camera in real time. In the next 15 years, 5G will drive an extra $12tn in annual sales, IHS Markit estimates.
Roll it out and they will come? In China, 5G installation has already begun in earnest. In the US, the process is patchier. AT&T has switched on 5G services in a few cities and Motorola has released a 5G phone. Apple has yet to show its hand — including its handset.
When Apple releases a 5G iPhone, demand will be a litmus test for the uptake of ultrafast broadband by consumers. With mobile data speeds up to 100 times quicker than 4G, the hope is that users will finally upgrade their old handsets and put an end to the smartphone sales slump. If they succumb to temptation, a gaggle of businesses would benefit. They include Verizon, AT&T, Samsung, Qualcomm and Applied Materials.
The shift will take a few years. Yet even if 5G devices replace 4G forerunners, they will not reverse the long-term trend in slowing smartphone sales, according to estimates from the Consumer Technology Association.
This year, 20m 5G-enabled handsets are expected to be shipped in the US. By 2023, this figure should rise to 133m, completely outstripping 4G handset sales. Even so, total sales growth will be slower. The CTA estimates that 164m phones will be sold in 2023. This is 1m fewer phones than in 2018. To really benefit from the 5G revolution, smartphone makers will still need to raise prices. Expect phones costing more than $1,000 to be the norm. Apple will, once again, test the elasticity of demand for its products.