Four predictions for the telco industry in 2021
- From changes to smartphone vendors’ landscape to telco hyper-scalers and 5G and its implications, here are the top telecom trends to watch for next year
From the power of new AI-enabled smartphones to Huawei bans and the ongoing race for 5G supremacy, despite the obvious challenges, the telco industry has plowed onward in 2020.
That’s no surprise, given how connectivity has enabled businesses to stay online while offices were forced to close. ABI Research’s chief research officer, Stuart Carlaw said that, in this period of uncertainty and change, there is one polestar of unflinching truth: technology will be the most powerful tool in ensuring corporate health.
As we head toward a more hopeful 2021, ABI laid out several predictions for how goings-on in the telco industry could continue to unfold next year.
“A resilient company that is well set to grow once this pandemic ends will be characterized by its digital agility as much as anything else,” he added. In a recent report, ABI Research stated predictions of things that will and will not happen in 2021.
Supply chains, buyer behavior, and demand have been returning to some level of normality as countries started to emerge from the pandemic lockdown, coupled with a quick expansion of 5G availability.
While it is not clear what the full extent or lasting ramifications of Covid-19 will be on the mobile device ecosystem, the pandemic will once again be overshadowed by geopolitics, posing a continued and major impediment to the future development of the mobile devices market.
At the center of the storm is Huawei, and according to ABI’s research director David McQueen, the phone maker’s anticipated descent at the hands of a restrictive US trade ban will reach a tipping point that could see a fundamental reshaping of the supply chain and chipset market, while having a significant bearing on the global smartphone vendor landscape.
David highlighted that it may spell good news to many of its competitors, with Chinese compatriots, such as Xiaomi, OPPO, Vivo, and OnePlus, not forgetting Samsung, Apple, and Google, all waiting to fill market share left across the price tiers at Huawei’s expense.
“In a more unexpected turn of events, Huawei’s possible demise may also see the resurrection of some once-notable vendors looking to fill the void, with brands like Motorola, LG, Nokia-HMD, and Sony all potentially stepping up volume shipments and share in 2021, giving the global smartphone market a new vendor landscape, but one with a distinctly retro feel,” he added.
Geopolitics and Covid-19 have and will continue to cause a slow down in the global market, highlighting the importance of telco networks. ABI’s senior research director Dimitris Mavraki expects this will translate to outstanding government support for telco operators in both Western and Eastern markets, but at a time when the telco consumer business will continue to face competition and market-related pressure.
ABI Research expects several high-profile mergers and acquisitions to happen in 2021, especially in the open network domain. They also expect hyper-scalers to start addressing private cellular and 5G networks more aggressively, which may lead to even more high-profile acquisitions.
Affordable 5G smartphones
The 5G smartphone market is now outperforming its predecessor generations on nearly every metric. Between the number of mobile devices, subscribers, and networks available at launch, 5G is the most accelerated mobile technology generation ever launched, ABI Research claims.
“Many leading original equipment manufacturers (OEMs) are expected to push deeper into the lower-priced 5G smartphone segment. This will be the main growth driver for accelerating adoption in 2021 and beyond, aided by the continuing availability of more affordable 5G chipsets, notably those from Qualcomm, MediaTek, and UNISOC. This seismic shift to lower price tiers means that 5G at the high end will be squeezed, witnessing rapid saturation, and room at the top will quickly evaporate.
The accelerated migration of 5G to lower-tier smartphones will have a knock-on effect on Average Selling Prices (ASPs) and the market’s overall profitability. Indeed, with such a relatively shortened time for those across the value chain to extract decent margins from the market, it is expected that many will start to follow an aggressive pricing strategy to avoid possible declines in overall profits, David said.
Furthermore, with the expected frantic pace of plunging 5G smartphone prices, he estimates 5G smartphones may just fall below the US$200 mark, driven by the availability of cheaper components and pricing policies of chipset vendors.
5G — bad for the environment?
With larger amounts of data now being transferred at much higher speeds, the synergy between 5G and technologies like artificial intelligence (AI) and the internet of things (IoT) could lead to lower energy consumption and increased efficiencies in operations. However, research analyst Jun Wei Ee said this may not be true in the near term.
According to ABI Research’s Network Technology and Market Tracker (MD-NWMT-104), global 5G subscriptions are forecast to grow from 234 million in 2020 to 347 million in 2021 at a rate of 48.4%. This accelerated growth in 5G adoption will likely strain the environment as a growing number of consumers will be switching over to 5G devices to take advantage of the high speeds and low latency.
The transition will potentially create large amounts of electronic waste and it is crucial that operators and manufacturers do more to encourage recycling and the use of recycled materials in their 5G operations and developments. In addition, energy consumption could increase tremendously as the higher speeds encourage more usage among consumers and applications. It is prudent that Research and Development (R&D) is directed at reducing energy consumption and carbon footprints in the telecommunications industry.