This post is a modified excerpt from our monthly newsletter. Our latest issue covered all the things we saw at Mobile World Congress. Drop us a line if you would like to subscribe.
The biggest question at this year’s show, after “When will 5G be real?”, was “When will Apple have a 5G iPhone?”. At this stage no one really knows, but it is pretty clear that it will not be this year. So really the question is will Apple have a 5G iPhone in 2020? And right now it does not look likely.
Why does this matter? For most consumers labels like 4G and 5G are meaningless. Cell coverage and data rates matter and those vary considerably by geography and other factors. Having a phone that says 5G up in the status bar is hard to understand, but having Apple tell users that it matters carries far more weight.
For Apple the stakes are considerably higher. Our assessment is that in most markets 5G is not coming soon with two notable exceptions – the US and China. US operators are showing a high degree of activity in promoting 5G Their reasons for doings so are not all that clear, but the big operators have all said they are going to roll out 5G this year. In China, the government has put a big push on 5G, in part for political (as opposed to strictly commercial) needs. It looks likely that the Chinese operators will have sizable 5G networks in a few major cities this year, with many more cities coming online next year. These are Apple’s two largest markets.
In the US, consumers probably will not gain much from 5G for many years. The standard really just proposes modest speed improvements over current 4G service. However, in China the operators have not fully deployed all of the 4G standard. So as 5G networks go live it will likely result in a mobile speed boost noticeable to the average consumer – video streaming will work much better, for example.
Most of the major Android handset makers – including HTC, LG, Samsung,, Sony, Vivo/Oppo and Xiaomi among many others – were proudly displaying their 5G handsets at MWC last month. These phones will be for sale this year. For Apple, this is a marketing problem. Others have 4G, they won’t. But it is a small problem. The original iPhone was 2G-only several years into 3G roll-outs. History has shown that consumers care about others things more than telecom standards, like software apps and ecosystem lock-in. So Apple can probably weather not having a 5G iPhone in 2020 with minimal impact. However, by 2020, a full 18 months from now, their lack of 5G will start to be noticeable, and by 2021 it would be glaring.
This is especially true in China. As we said above, consumers there may care a lot more about 5G because it will be meaningfully faster than 4G. And of course, Apple is already struggling in China. At some point, the lack of 5G will hurt sales. Maybe 5G deployments will take longer than expected. And maybe consumers in China won’t care. But those are some big risks for Apple to take.
Apple is really good at marketing and this is a solvable problem for a period. That being said, if they do not have a 5G iPhone until 2021, they may face a real problem that hurts sales.
And unfortunately for them, it looks like that is what is going to happen.
In our next post, we will explore what the hold-up is and what (limited) options Apple has.