The mobile phone industry has witnessed some of the most disruptive technologies in the ICT sector to date. In less than four decades, we have gone from very basic mobile technology encased in bulky hardware to having the equivalent of a computer in our back pockets 24/7.
And now with the advent of 5G, the mobile sector is going to experience a quantum leap. Again. Incredibly low latency, huge coverage density and mercurially fast speeds is widely expected to have a dramatic effect on mobile broadband, enabling and empowering, among other trends, the IoT (Internet of Things) with enhanced connectivity to billions of devices. With download speeds of up to 100 gigabits per second, it is set to be as much as 100 times faster than 4G.
On paper, it sounds prodigious, but will 5G herald such a step-change in the sector and what should Mobile Network Operators (MNOs) be doing to capitalise on it?
Steve Mollenkopf, CEO of technology giant Qualcomm, says 5G will have an impact similar to the “introduction of electricity or the car, affecting entire economies and benefiting entire societies”.
Fifth-generation cellular wireless technology will engender a host of new areas of applications. It will provide an environment for uninterrupted coverage for roads and railways, by 2025, and will shepherd in new services, network operations and customer services for both MNOs and Mobile Virtual Network Operators (MVNOs). The initiative will change the role of the telecoms provider, which will no longer be purely a technology distributor but a service provider. This, in turn, will necessitate engagement with governments and enterprise-grade customers to assist them in leveraging the power of the new network.
OPPORTUNITIES ABOUND FOR HARDWARE MANUFACTURERS
Indeed, there are several technology areas where suppliers will be presented with significant opportunities. Mobile device manufacturers like Samsung and HTC have a whole new market to pursue with 5G enabled phones, as do modem suppliers, to power the new devices. There is expected to be a good deal of activity in the data centre market with large numbers being commissioned to cope with the setup and configuration of 5G deployments. Cloud and telecom service providers will be particularly keen on creating automated 5G data centres to cope with the expected demand.
Setting up 5G infrastructures is expected to be expensive and there will be major opportunities for the semiconductor industry and for chips that can easily handle exponential data growth, fast computing and high storage demands. Network transformation providers such as Nokia are already paving the way and Edge suppliers like HP, which has been building its hardware specifically for the demands of 5G, can also expect a shot in the arm.
DEMAND FOR SERVICES AND APPS SET TO SKY-ROCKET
All of the aforementioned companies are hardware manufacturers; when you include the latent demand for services and applications the list of opportunities grows longer. When 5G achieves enterprise status, it will be boom-time for a myriad of small service providers and software specialists. Remote surgery, self-driving cars (and drones) and artificial intelligence are mooted to deliver exciting times for numerous suppliers, who will be able to rapidly deliver new concepts with the next generation of wireless networks.
HOW OTHER SECTORS WILL BENEFIT
The advantages of 5G are not limited to the TMT sector. Healthcare, transport, manufacturing and retail businesses of all sizes are expected to reap the benefits of 5G. According to a recent study by Qualcomm (The 5G Economy, January 17th 2019), the new technology could underpin $12.3 trillion of goods and services in these industries. In a report by PSB Research, which interviewed 3,500 business leaders, analysts and technologists on their expectations of 5G, 87% of respondents anticipated that new industries will emerge while 91% expected new services and products that have not even been invented yet.
Tom Carroll, founder of managed services provider Our It, says: “5G means new business models for suppliers and multiple user benefits for consumers. Although it has been primarily influenced by the need for faster mobile download speeds, it also offers major potential in private and public managed networks. There will also be huge opportunities created for innovative service providers who be able to prototype premium pricing for mission-critical applications and new charging models for enterprise connectivity. B2B providers can expect a host of new opportunities.”
FOUR VERY SHORT DECADES
How times have changed. It’s incredible to think the first ever mobile phone was launched less than four decades ago. The Mobira Senator (produced by Nokia) was released in 1982 and weighed in at a hefty 10kg. 2G, enabling voice calls and low-speed data, was introduced to the market in 1991.
A year later, the first-ever text message was sent. Neil Papworth, a former developer for the Sema Group, sent the first text message to the mobile phone of Vodafone director Richard Jarvis. He had to use his PC to send the message as mobiles did not have a keyboard – the message simply read “Merry Christmas”.
A few years later still, 1996 ushered in the advent of several groundbreaking new phones. It also marked the genesis of non-contract agreements with the launch of Vodafone Prepaid. At the time, just 16% of households in the UK owned mobiles. This number shot up to 80% a decade later, a phenomenon often attributed to the accessibility of the pay-as-you-go model. Last year, the global smartphone market reached US$522 billion and the percentage of UK households with a mobile phone peaked at 95% (source: Statista, 2019).
THE APPLE IMPACT
No discussion about the mobile market would be complete without pausing to consider the impact of Apple and the revolution it wrought in 2007 with the introduction of the highly affordable iPhone 3G. Its upgraded battery life, support for 3G networks and a new and improved operating system took the market by storm. Launched in the same year as the Android device, it was the first phone to prioritise ‘apps’ from the newly launched App Store, with over 500 from inception, which later snowballed to millions.
Although apps were available on the first smartphone, IBM’s Simon, as early as 1994, Apple eventually stole an early march on its rivals by 2007. However, Google followed Apple’s lead and launched Google Play in 2008 and by the first quarter of 2019 Android users had a choice of 2.1 million apps surpassing the App Store’s 1.8 million.
5G – A TRANSFORMATIVE TECH
The expectations of 5G are clearly stratospheric, with many analysts predicting it will deliver the ultimate transformative landscape and a vastly enhanced end-user experience. The expectation is that there will be new vertical applications, new business models and new services delivered through high gigabit speeds, improved network performance and outstanding reliability. Network forerunners 2G, 3G and 4G all delivered significant economic gains: there is certainly a strong precedent upon which to forecast a bullish outcome for 5G.
Interested in how to take your business to the next level, perhaps using 5G? A strategic review can often determine missed opportunities and help entrepreneurs establish a clear path towards a profitable exit. Contact Gary Smith, our senior M&A adviser, for an informal chat about where your business is heading.