With IoT (Internet of Things), the cloud, smart cities, virtual/augmented reality, and self-driving cars grabbing all the media attention, it is easy to forget that voice and data services using either a mobile phone or a computer/tablet controlled by a human being accounted for 98% of worldwide carrier revenues in 2015. And with currency adjusted worldwide mobile operator revenues growing at a CAGR of 0% to 1% between 2012 and 2015 despite smartphone shipments growing at a double-digit rate over the same period (Dell’Oro Group 2H15 Carrier Economics Report), carriers are well aware what impact a maturing smartphone market will have on their topline. So it is perhaps no surprise that with the smartphone approaching its 10-year anniversary, carriers and vendors feel a tremendous sense of urgency to identify the next growth engine.
Fortunately the first phase of the 5G standard is scheduled to be complete by 2019 and there is no shortage of suggestions for the potential use cases or applications that will define the next phase in this on-going digital transformation – which ideally will be about so much more than an improved smartphone experience for today’s use cases.
While there are some high level definitions about potential 5G drivers beyond the smartphone – it is extremely difficult today to identify the winners and losers of tomorrow. This is why we disagree with the notion that use cases/applications/services need to be defined first in order for 5G to be successful. Even if the use cases are identified at this point, there is no guarantee they will turn out to be a success for the masses, as illustrated by a host of botched smartwatch launches. The urge to introduce new products before they are ready for primetime or the customers are ready could end up impacting the launch and delay any mass-market appeal. Just as it was extremely challenging in 1996 to forecast that a successful smartphone for the masses would not be launched until 2007, when the vision for a smartphone was already a reality and there were multiple smartphone products on the market, it is equally challenging today to separate the next winner from the next smartwatch.
As a result, we don’t believe it is realistic or necessary to determine the final destination at this point. But if we are headed in the right direction and regulators provide an environment that stimulates competition and innovation, then the final destination will eventually be identified.