One of the oft-repeated 5G mantras is that the industry “doesn’t know what it doesn’t know” — that whatever application or device ends up making 5G a mainstream must-have is something that the industry probably won’t see coming. After all, the transition from 2G to 3G and 4G networks created substantial market disruption — for example, making Apple (via the iPhone) and Google (via Android OS) into major mobile players.
In a new report, analyst firm Strategy Analytics said that it is “highly likely that the current top three smartphone vendors globally (Samsung, Huawei, Apple) will see their share decline” in a 5G world.
“With each new generation (GSM, WCDMA, LTE) we have seen major changes in design language and use cases. Generation-led design changes have disrupted the status quo on numerous occasions,” Strategy Analytics said, going on to cite a number of examples of regime change in the handset market over the years. “Nokia peaked in 2G and lost 1/3 of its share in 3G and disappeared in the 4G world. Motorola lost four-fifths of its global handset market share in the transition from 2G peak to 3G peak. Samsung grabbed opportunity in the transition to 3G, doubled its share, [and]expanded to be a global leader with a ‘first with tech’ brand claim. Chinese vendors burst onto the global stage in 4G with Huawei surging to #2 globally with its fast-follower, affordable tech mantra.”
Strategy Analytics said that emerging vendors for 5G devices fall into two main groups, which it called “adaptive local players” and “global scale seekers.”
The first group includes companies such as ZTE, Sharp and Sony, according to Chris Ambrosio, director consulting for Strategy Ananlytics, who said that those vendors have a consolidated cost basis and a smaller and localized market presence.
“These vendors need to be more agile in how they market their brands and link features and technology to drive local brand value,” Ambrosio said in a statement. “Being able to align technology and feature choices with mobile operator needs is critical to survival, but profits are possible if [selling, general and administrative] costs are managed effectively.”
Cliff Raskind, director consulting for Strategy Analytics, described the global scale seekers as players like Xiaomi, Vivo and OPPO, who have “expanded their presence beyond local or domestic markets by establishing sales, marketing and distribution resources in enough markets to scale above 80 [million]units and have established profit centers.” In particular, he noted that Xiaomi is “cash rich, has strong presence in China and India and Europe and soon will be competing strongly in the Americas with a broad range of smart devices. Deep marketing pockets and best in class consumer insights outside of China will be critical.”
“Smartphone vendors face a complex transition to 5G and to new foldable, rollable designs simultaneously at a time when consumers are increasingly reluctant to spend $800-$1000+ for incremental improvements,” said Ken Hyers, director of emerging device technologies at Strategy Analytics. “Competition on the basis of technology advantage will be extremely challenging and inevitably short-lived without a healthy portfolio of intellectual property holdings. 5G represents opportunities for new vendors to emerge and for long time industry strugglers to reinvent themselves while current market leaders face reinvigorated competition.” – rcrwireless