Mobility Week in Review

5G just got real

The long wait for the new iPhones is over as Apple (in conjuction with Verizon!) has finally revealed the new iPhone 12, the most anticipated iPhone series to date. Considering almost half of the nation is using an iPhone, we assume that our readers have already been informed about the device specs, pricing and availability details, thus let’s jump straight into our impact analysis:

The NPD Take:

• “5G just got real” is, in fact, Apple’s marketing motto for the new iPhone series, but with all due respect, it is still tough to say whether 5G has truly gotten real or not with these new iPhones. There had been somewhat of a consensus in the market that Apple would offer consumers a tangible reason to upgrade to a 5G iPhone. However, in reality, Apple’s 5G show did not stretch far beyond the classic “rich gaming experience” spin. Does that matter? Not really. The new iPhone will sell with or without a 5G use case and will help drive the adoption of 5G almost as an aside.

• U.S. carriers are highly motivated to subsidize the new iPhones as it’s the fastest avenue to migrate customers to their 5G networks. AT&T, which has the highest concentration of iPhone customers in its base, seems to be the most aggressive of all as it offers all new and existing customers a free iPhone 12 (after trade-in and service credits). Similarly attractive offers from T-Mobile and Verizon, coupled with the muted demand from the earlier days of the pandemic, will make Q4 2020 an active period for device upgrades and carrier switching.

• Xfinity Mobile and Spectrum Mobile, which will benefit greatly from Verizon’s new 5G network expansions (including the recent nationwide 5G coverage announcement based on the Dynamic Spectrum Sharing technology), are relatively subdued with their iPhone 12 promotions ($250 gift card at Xfinity and a $100 extra discount with trade-in at Spectrum). While there is little evidence of this in the US, global 5G smartphone owners significantly over-index in cellular data consumption. Given the cable MVNOs’ business model of wholesale data distribution, a sudden boost in 5G adoption can have an adverse impact on their bottom line due to the expected increase in cellular consumption amounts.

• An important highlight of the announcement is the tremendous amount of exposure Apple gave to Verizon Wireless. This is a major marketing win for Verizon, which has lately been getting a lot of heat due to its mmWave 5G network’s limited reach. While the limited 5G mmWave coverage will continue to haunt Verizon for the time being, Apple vouching for the Verizon 5G network should clear some of the clouds from a consumer perception standpoint.

• The new Smart Data feature (which, according to Apple, extends battery life by intelligently assessing 5G needs and balancing data usage, speed, and power) has the potential to diminish the 5G value proposition as the phone will not be tapping into 5G networks when not “necessary”. It should also be noted that the feature will also allow Apple to fully control the 5G experience on its phones, and this may not be something U.S. carriers will be thrilled about.

• Apple’s exclusion of the charging brick and the headphones for environmental reasons (to reduce carbon emission rates etc.) is certainly welcome, but it’s important to point out the financial scenario behind this move. The aforementioned accessories were sacrificed to offset the incremental cost of adding 5G, while maintain the MSRP the same as the predecessor series.