Apple leads 5G transition, reports say

Perhaps more than any company, Apple is translating the 5G upgrade cycle into a license to print money. But the truth is that at this stage of the rollout, the real importance of faster mobile broadband has yet to really kick in.

Apple takes the biggest slice of the 5G pie

Device rollout, at least, seems to be accelerating. Counterpoint claims that sales of 5G-enabled smartphones have exceeded those of 4G devices for the first time in January 2022, reaching 51%. At the same time, recent data from Gartner and Canalys confirms that Apple devices accounted for a significant share of smartphone sales over the same period.

This means that Apple is encouraging the adoption of 5G. As Gartner put it, “strong demand for iPhones has been driven by 5G upgrades.”

Morgan Stanley notes that Apple’s iPhone installed base has now reached approximately 1.1 billion users. Apple should now sell 30 million 5G-enabled iPhone SE devices in 2022 as well as continued sales on its iPhone 13 5G line.

Yet, to a large extent, many people who buy a 5G iPhone can still only use 4G service. Data shows that while 62% of people in the United States have 5G-enabled phones, only 49.2% of them regularly use their 5G connection.

Millions of people still think they’re using 5G, even when they’re not using it.

Network provision now lags behind device proliferation

You see, while over 400,000 compatible towers are now in place, only 230 million people have access to these networks, Whistle complaints. It predicts that 1.08 billion people worldwide will have access to a 5G-enabled smartphone by the end of 2022.

They just won’t necessarily have access to a network. This exposes the reality of 5G deployments at this point in the hype cycle. This is not a universal scenario. Areas in which deployment is most advanced (such as China) are heavily used.

From an operator perspective, it makes sense to prioritize deployment in geographies, such as business centers, where 5G can make the most difference. For vendors, getting on the 5G gravy train early makes a lot of sense.

Apple took 44% of value of the entire $448 billion global smartphone market following its debut, for example. The next four largest providers took around 41% between them.

ABI estimates 580.3 million 5G smartphones will ship in 2021.

Of course, as more 5G devices get into people’s hands, carriers will speed up network delivery. They know that once around 10% of users are connected to 5G, they can begin to anticipate the return on their network investment.

Build in Upgrade Opportunity

Even at this early stage of adoption, we can see hardware upgrade opportunities looming.

Countries that don’t yet support mmWave (the fastest form of 5G) will likely see vendors move forward with compatible 5G handsets once they do. (ABI estimates that only 81.25 million 5G smartphones sold last year were compatible with mmWave.)

It seems likely that Apple is already looking to nurture its own upgrade cycle. We think Apple is developing its own 5G radios for future devices and the company also seems fully invested in research and development around the next fast mobile standard, 6G.

What is actually happening is an investment. Apple and all smartphone vendors are investing in a 5G broadband future. The bet is that as support for the standard proliferates, carriers and smartphone manufacturers will be able to leverage other large enterprise/consumer technology transformations underway.

All connected

It’s not just about remote and hybrid working, of course – it extends to Industry 4.0 and smart manufacturing, fully automated logistics, warehousing and distribution chains, autonomous vehicles and all sorts of additional smart machines, the evolution of private enterprise networks, and more.

The money to be made in these deployments completely eclipses music streaming services. For example: while Goldman Sachs thinks streaming revenue will hit $142 billion by 2030, spending on smart manufacturing alone is expected reach $950 billion by then.

Mobile connectivity – and the fast 5G broadband infrastructure that consumers buy today – will be the critical foundation for all of this digital transformation. And Apple’s strategic decision to make peace with others to enter the dawn of transition will pay big dividends, even as it creates unique services and technologies to take greater advantage of it.

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Copyright © 2022 IDG Communications, Inc.

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