Barcelona, Spain became the focus of the mobile world once again as players from every part of the mobile/wireless ecosystem converged for the world’s largest mobile communications conference. The annual Mobile World Congress (MWC) provides companies large and small the opportunity to compete for the attention of potential customers, prospective partners, and media from around the world.
With almost every player in the wireless world—with the notable exception of Apple—promoting their vision of the mobile future, it presents a valuable opportunity to assess the status of the industry and analyze the promise and problems on the path forward.
Why is the MWC so important? First, the products, components, and services presented at the event represent a major share of the world electronics, services, and media markets. Wireless communications capability is reshaping almost every category of electronics product today. If only the most obvious products with wireless capability such as smartphones, tablets, smart watches, etc. are counted, the wireless market accounted for 23% of all electronic equipment revenues in 2017.
An even larger impact is seen in the electronics components world, as semiconductors sold into wireless products drove roughly 31% of all semiconductor revenue in 2017. On the services and content side of the equation, as wireless offerings are reshaping consumer purchasing patterns, service provider and content/media generator strategies are driven by their vision of the wireless future.
The Mobile World Congress organizers had defined eight core event themes that illustrate the comprehensive reach and impact of wireless technology and products:
- The Fourth Industrial Revolution
- Future Services Provider
- The Network
- The Digital Consumer
- Tech in Society
- Content & Media
- Applied AI
The 2018 MWC presented some critical, high-profile issues for participants in the electronics components industry to follow as they develop future strategies for product development and supply chain management.
Smartphone Introductions—Can They Drive Future Growth?
The headlines leading up to MWC 2018 were dominated, as always, by the latest smartphone introductions. The world’s smartphone market share leader, Samsung, illustrated most of the key technology trends at the conference this year with the introduction of its Galaxy S9 and S9 Plus smartphones. The S9 has a very similar look to the S8, with the most notable improvements coming in its new dual aperture camera that allows improved images in low-light settings and slo-mo video recording at 960 frames per second.
In addition, the S9 unveils Samsung’s form of augmented reality (AR), AR Emoji, to compete with that of Apple's iPhone X. The new smartphone will receive a boost from Qualcomm’s Snapdragon 845 chipset in the U.S. and the Samsung Exynos 9810 in other markets. Other changes are found in the positioning of the fingerprint sensor and the bezel size. Interestingly, a great deal of attention was devoted to the fact that it still includes an audio jack when many other phones are eliminating the audio jack to achieve size reductions in the phone. Finally, the phone will boost the latest Android OS, Oreo.
Stepping back from the details in Samsung’s latest smartphone announcement, an overall assessment yields the impression that this phone is an incremental step forward rather than a significant innovation in the company’s platform. Most smartphone players seem to be in a similar mode, with modest enhancements mainly focused around cameras, artificial intelligence, augmented reality, and additional processing power.
Some companies have chosen to not compete with Samsung in the same venue and will hold off on major new product announcements until later in the year. A list of some of the most notable smartphone introductions are below. However, the primary question that presents itself after reviewing the latest smartphone products is, “Are these smartphones able to drive future growth in the market?”
- Samsung Galaxy S9 and S9 Plus
- Nokia 8 Sirocco
- Nokia 8110
- LG V30S ThinQ
- Sony Xperia X72 and X72 Compact
- ZTE Tempo Go
- Vivo Apex
The concern over market growth emerged when Gartner Group announced that smartphone sales declined year-over-year in Q4 2017 by 5.6% for the first time. THose sales fell from 432 million units in Q4 2016 to 408 million units in Q4 2017. Gartner Group attributed the decline in sales to the fact that upgrades from feature phones to smartphones have slowed dramatically while the upgrade cycle for smartphone owners has been extended.
Prior to the era of the smartphone, the mobile industry experienced its first-ever decline in mobile handset sales in 2001. After years of high double-digit growth, sales of mobile phones declined by 1.6% between 2000 and 2001. While many reasons were given for this decline, the hard truth is that mobile phone products in 2001 did not offer compelling features to consumers that would motivate them to upgrade to a new phone. This same issue now confronts smartphone suppliers.
Will product enhancements that appear to be incremental in nature motivate consumers to purchase new phones, or will they choose to extend the use of their current phone until more innovative, “must-have” features are introduced? All participants in the supply chain for smartphones will need to carefully monitor the balance between market sell-through and production run-rates and inventories of phones and components.
5G Technologies, Standards and Products—The Bright Hope for the Future
Events leading up to MWC 2018 and the conference itself provided evidence of encouraging momentum in the creation of a 5G future. 5G technology forms one of the three key pillars in the technology triumvirate, including the Cloud and the Internet of Things, that will drive a revolutionary wave of products that will reshape the world of electronics. The timelines for the development of these technologies continues to show these technologies reaching mutual maturation for enabling new products/markets between 2020 and 2022.
The recently-concluded Winter Olympics in Pyeongchang, South Korea presented an opportunity for many carriers and equipment vendors to showcase their 5G technologies. Some of the notable participants in this showcase were KT Corp and Intel. These “pre-commercial” 5G products provided an exciting proof of concept for 5G technology and were also exhibited at MWC 2018. In addition, other important players introduced the latest incarnations of their 5G products.
While Intel is preparing to capitalize on the market transition to 5G to try to capture opportunities missed in the wireless chipset market to date, Qualcomm and Huawei are also pushing their chipset solutions forward. In November, Intel announced its 5G modem, the XMM 8060. Also, prior to MWC, Qualcomm introduced the Snapdragon X24 chip designed to work with its X50 modem.
Huawei introduced its first 5G chip at MWC, the Balong 5G01. The size of the Huawei chip would seem to indicate it will be used in mobile hotspots instead of phones. Huawei states that it has invested $600 million in the network technology, which will likely be used by everything from self-driving cars to mobile devices to smart homes. All three players are creating partnerships and developing ecosystems designed to give them a competitive advantage in 5G.
Qualcomm test modeled real-world conditions in San Francisco and Frankfurt to set expectations for the speeds that could be achieved with 5G NR (New Radio) networks. The basic network test in the Frankfurt trial compared speeds between a gigabit-LTE network and 5G. In this case, browsing jumped from 56 Mbps for the median 4G user to more than 490 Mbps for the median 5G user, with roughly seven times faster response rates for browsing. Download speeds also improved dramatically, with more than 90% of users seeing at least 100 Mbps download speeds on 5G, vs. 8 Mbps on LTE. The results from the San Francisco trial were even more impressive.
All players are working to push 5G forward as fast as they can. Networking companies like Huawei, Cisco, Ericsson, and Nokia are aggressively developing their product portfolios and partnerships. Meanwhile, major telecom operators are accelerating their timelines for introducing 5G networks. However, all players will see their race to a true commercial market paced by the development of the required standards.
The 3GPP organization is driving the 5G standard. Release 15 of the standard provides specifications for the radios for 5G and was recently approved. However, it is not due for completion until September 2018. Release 16 is the final standard for 5G and is scheduled for finalization in December 2019. Prior to the finalization of these standards, any products introduced to the market would be considered “pre-commercial.”
Other critical issues being addressed at MWC related to enabling 5G include the creation of a friendly investment environment; regulatory issues; licensing terms and spectrum costs; possible public shared networks; net neutrality; potential societal benefits contrasted with possible social pushback due to technophobia; and the “digital dominance” of tech giants Facebook, Amazon, Apple, Netflix, and Google.