This is the second time in the last few months Ericsson has delivered less than exciting data about 5G. I do, however, have to give them kudos for taking the reality bull by the horns and telling it like it is.
A couple of months ago they made the news with their position that Europe better get it together or they will be years behind in the development and deployment of 5G. And there have been other insights from them as well.
While there is still much hype being broadcast about the greatness of 5G, cooler heads are starting to prevail. Especially since much of what 5G was supposed to be, has yet to emerge.
The latest is a ConsumerLab report from Ericsson that supports the chatter by some in the industry about 5G uptake among consumers. We will drill down on that a bit further on.
I have received a smattering of reports and surveys since, the first of the year, about both sales and user perspective. Nearly all of the reports spin that the uptake in Q1 of this year is some magical resurgence of the smartphone segment. Those reports tell us that smartphone sales are up anywhere from 2.5 percent to 25 percent. But again, the analysis is subjective and such numbers can be massaged to favor a particular market, market segment, geographic area, platform, population, or some other metric.
I read one report presenting Q1 of 2021 as having a “marked” uptake in handset sales. That report included both 5G and 4G. That report painted a relatively healthy overall market from a global high-level perspective. But drilling down on the numbers shows great disparities among product sales if one breaks out regions and platforms. So while the global number is respectable, individual vector numbers are not as rosy.
Nevertheless, the industry is hoping for a rocket boost in sales this year as we come out of the pandemic. I believe 2021 will be a decent year for smartphone sales. But not because of 5G. More because the world is coming out of a deep period of doom where little moment occurred and 2021 is the year it may catch up a bit.
One would have thought 2020 might have seen an uptake in smartphone sales because of the need for upping one’s digital presence. Being stuck at home would seem to be a good reason to upgrade hardware to meet the digital demands of work at home, and online learning, for example. The same holds true for the shift to eHealth.
However, that did not occur for several reasons. The biggest being the unknown future of how the pandemic will shake out and the massive loss of jobs and security. This had people frightened.
Many of the analysts’ prognostications were off for 2020 – the biggest one being the supercycle they projected after Apple announced its entry into the 5G market. When Apple announced its 5G phone many of the analysts rallied the supercycle cry. That this was heralded as the starting gun for the next upgrade cycle, not just pen-up demand upgrade, but bursting at the seams, upgrade. But it did not happen. The event came and went with little change in smartphone sales.
Will 2021 turn out the same? Interesting question. I suspect the market will turn around this year. But I am going to err on the conservative side. There will certainly be a 2021 upgrade cycle. How charged it will be will have to be seen.
But there is more to this than just time to upgrade. Sure, many users held off in upgrading due to the pandemic and its effects. But there are also a couple of other metrics at play.
One being that upgrading just to get a few new features on 5G has been met with some reticence. In other words, many 4G smartphones are doing the job and with a somewhat unsure financial picture for many, they are quite happy to hang onto the old Samsung, or Apple, or whatever, for a bit longer.
The other is the poor, overhyped performance of 5G. I have penned many columns around that and data support that. But in the end, it is the satisfaction of 5G that will make or break the next supercycle, whenever one is going to occur.
Let us circle back to that Ericsson survey. This particular survey is more of a satisfaction survey and a bit dated (from data mined at the end of last year), and it drills down on what users think of 5G. It is quite telling and the data in this survey support, IMHO, the lackluster uptake of 5G by the consumer because it just does not deliver in most cases. Sure there are islands where 5G is delivering on its promises. But those are few and far in-between for now.
So now we are nearly halfway through 2021 and smartphone sales continue to be sluggish. Some clues can be found in much of what the Ericsson survey uncovered. And it is not the only such data that has supported similar findings.
The survey noted that many 5G phone owners do not have a 5G subscription. Many indicate that the cost (which is being addressed by some of the MNOs) is a consideration, but others simply indicate that innovative services and apps being offered are not making the grade.
Ericsson found that global consumer 5G upgrade intent has improved by only two percentage points from its last survey two years ago. In fact, one of Ericsson’s findings shows that fewer people in many countries intend to upgrade to 5G than earlier surveys.
Numbers indicate that getting on a 5G network is challenging. Perhaps the hype has been dispelled or the network is just not greenfield, or fully SA 5G, stiffening performance. Of the few 5G networks that are fully functional few are delivering promised performance.
But the real telling metric is that the survey showed that at least 70 percent of respondents are dissatisfied with the availability of innovative services and disappointed in apps that are supposed to take advantage of 5G – that is the real wakeup call!
It also made obvious something I have been drilling down on for some time – it is the use case, stupid and not speeds-and-feeds.
This year is going to be a bit of a watershed. While the government’s numbers and propaganda want us to believe we are out of the woods, more knowledgeable sources are not quite as enthusiastic. There are multiple issues still hanging around and some profound changes have occurred in the pre-pandemic daily living route of many people that will continue, even once the pandemic is under control.
For 5G, that means the industry will have to adapt to the new normal, not people adapting to 5G.
We all know that 5G will happen and its performance will meet the hype one day. The industry went on the premise that if you build it, they will come. They did not and now they are realizing that they had better start offering value, measurable performance, and new functionally or it will be a slow and costly process for the supply side.
Ernest Worthman is an executive editor with AGL Media Group and a senior member of IEEE.