Apple’s secret weapon for iPhone 13 deployment isn’t such a big secret: It’s 5G. More specifically, it’s the accelerating adoption and deployment of 5G services and infrastructure that will stimulate demand for Apple’s smartphones. Here’s why:
- Infrastructure for 5G is still being deployed. In the US, not every region has equal access to the tech, though many urban areas do.
- Outside the US you see similar disparities across nations, with pockets of availability. That means there is plenty of room for growth.
- As those unserved areas become served areas, more people may be interested in a 5G iPhone.
But even in areas in which 5G is already available, there’s still a huge upside.
A report today from Omdia claims that just 14% of 5G networks have reached 10% subscriber penetration. Across the planet, 147 carriers had launched 5G networks by the end of June, but only 21 of those (14%) have managed to persuade 10% of their users to subscribe to these services, Omdia said.
Why does 10% matter?
Omdia explains that it is when more than 10% network penetration is achieved that 5G appears to “begin to have a positive impact on mobile revenues.”
This is great news for most smartphone users. It’s also great news for Apple. Why? In two words: “Carrier deals.”
Carriers are offering a range of tempting sounding (but do check the small print) deals to persuade customers to move to 5G smartphones. These deals are particularly evident with the iPhone 13, which you can pick up for a song from carriers across the planet.
Verizon is all in on pushing people to 5G. And it’s not the only firm — look at these US iPhone 13 carrier deals for some idea of what’s going down. The networks are aggressively working to achieve that magical 10% share.
Why? Omdia cites data from the world’s leading 5G market, which happens to be South Korea. That data shows what the analysts describe as a “clear revenue uplift” once 10% penetration is achieved.
In China, where 5G adoption hit 11% in June, mobile services revenue grew 4.7% and 3.7% year on year in Q1 and Q2 — a level that hasn’t been seen since early 2018.
“We can only speculate about the impact of 5G on service providers until the technology reaches a certain critical mass beyond early adopters. Only South Korea has reached this point, and the story there is a positive one,” said Ronan De Renesse, senior research director, Omdia. “Another 24 markets are due to reach 10% 5G population penetration by the end of 2021, 37 in 2022, and over 100 in 2026.”
Carriers can’t wait and are investing intensively to make it so.
This benefits Apple, because as those carrier deals make its devices more accessible to more people, it grabs new converts. The introduction of the 5G iPhone SE in spring 2022 will do nothing to dampen that attempt.
That’s the carrier piece.
What about the services?
The service provision piece is also evolving. Services span the really high-end solutions, such as access to private 5G networks across unused portions of existing 5G deployment to hybrid solutions designed to help manage everything from smart ports to smart farming. Consumers are also being offered services that will inevitably become more bandwidth-intensive — music, movies, games will soon be joined by increasingly high-bandwidth augmented reality and video collaboration services.
Many consumer-focused enterprises will explore B2C app development (particularly in-store and remote shopping experiences) and sponsorship of potentially viral digital experiences.
In the early days of the App Store, an app called iPint, which let users turn their iPhone display into a virtual pint glass of beverage to be (also virtually) guzzled down, became so popular that Carlsberg eventually purchased it to use as a viral marketing tool. You can expect more such viral experiences to appear, but their potential is growing with the tech that supports it, with 5G lending that missing mobile bandwidth piece required to create truly immersive experiences.
And probably many deeply disappointing ones.
Why would you care about that?
Because as we see increasing levels of investment in the 5G space, we’ll also see more adoption. And on a planet in which perhaps most smartphone users don’t yet have a 5G device, that’s a few billion potential purchases Apple can reach for today, even as close competitor Samsung hits slow waters and former champion Huawei continues swimming toward the lifeboats.
Of course, it’s in that kind of context that Morgan Stanley’s recent claim that iPhone 13 sales are setting new records in China becomes even more important. Think about it: Short-sighted jingoism aside, Apple’s success across the APAC region should rightly be seen as a bellwether for 5G sales and services everywhere.
All these factors appear to be coalescing to become one of those virtuous cycles for Cupertino: mobile carriers are offering up 5G iPhones to tempt people to adopt 5G services, while in nations in which 5G deployment is already mature, you’re seeing increasing numbers of consumers flock to Apple at the expense of other device brands because they like the experience more.
While the supply chain crisis might defer some sales, once we do eventually begin to emerge from this merciless pandemic, you will truly be in a different world than we were before. In the tech industry, at least, that world seems set to be one in which the fastest computers you can get run chips made by Apple, while the best performing mobile devices you can get come from that same source.
And it won’t hurt the company’s brand messaging (particularly as we wait for politicians to prove Greta Thunberg’s point when they fail to take action at COP26) that one of the strategies of its environmental focus is to build devices that last longer, with experts from its recycling teams involved in product development from early on as the company continues working toward closed loop and carbon-zero manufacturing chains.
A brave new world? Perhaps. But one in which creative people now have better tools to create better things.