The global smartphone market is continuing to make steady progress following the COVID induced slowdown of 2020, even showing positive signs of buoyancy. As the new ‘Roaring Twenties’ gathers pace, there are many reasons for optimism: two years on from the start of the pandemic, we are now more prepared for, as well as familiar with, online life and a connected ecosystem. We are also witnessing the further rollout of 5G and adoption in both smartphones and other products. Such developments are fueling demand for devices, old and new, and their related services, says Biju Nair, EVP and president, global connected living, Assurant.
However, we must also take into consideration other dampening factors currently at play. The shortage of chipsets and other components continues to impede a number of sectors. While the smartphone sector is far from being the worst affected, this will remain a major disadvantage for the industry, as the shortage continues to exert a negative impact on the production of new devices, at least for the time being.
These are the key dynamics likely to affect the market in the immediate years ahead, but what are the other critical factors at play decisively shaping the global smartphone market?
Apple’s concession on the right to repair will give the circular economy a boost
In an apparent U-turn from their previous stance, a change in direction that will positively impact the environment, Apple will allow user self-repairs for their devices: from early 2022 onwards, Apple will make some parts, tools, and manuals starting with the iPhone 12 and iPhone 13 available to individual consumers in the U.S. It is then expected to be rolled out across Europe later in the year.
Many see this move as a positive development and a move in the right direction, recognising that consumers must have more repair options. Apple has even indicated that it plans to incorporate “increased repairability” into its product design, presumably to make self-repairs more accessible. It is a welcome change in attitude and reflects consumer’s increased awareness of sustainability issues.
Top-tier manufacturers are now making sustainability a priority
As the recent COP26 summit highlighted, there is now an urgent need to find more radical solutions to the threat of climate breakdown. As a result, manufacturers, including the device OEMs, are getting serious about reducing their greenhouse gas emissions. In fact, many asset-intensive industries have pledged to take meaningful steps toward reducing (not simply offsetting) their impact, with better energy and resource management and more purposeful attempts to start influencing customer behavior and changing expectations.
Simultaneously, consumers also wish to align themselves with more sustainable and socially responsible brands. A study by Capgemini revealed 66% of consumers choose to purchase products and services based on their ‘environmental friendliness’. The eco ratings of smartphones, of which we are seeing in Europe and South America, are providing consumers with the knowledge and awareness of the brands embracing sustainable, ethical and transparent practices across their supply chains, from raw materials to manufacturing to fulfillment.
This in turn gives OEMs, carriers, and retailers the opportunity to collaborate with consumers in the name of positive action. Going forward, the successful organisations will be the ones that put social responsibility and environmental sustainability at the heart of what they do. With the rise of conscious consumerism, companies are actively striving to step up their investment in sustainable, transparent supply chains to reduce their impact on the environment.
Consumers around the world are embracing connected lifestyles (and this trend is set to stay)
The COVID-19 pandemic has had a profound influence on the connected consumer experience more and more people are acquainted with an environment that is permanently online and always connected. Consumers’ relationships with their homes have changed more rapidly in the last 24 months than ever before. And looking ahead, many consumers will continue to explore new smart product categories that they hadn’t considered in pre-pandemic times. In fact, the role connected technology is playing in their lives is now central to the way many individuals communicate, learn, work, receive their services such as healthcare and banking, and play.
The last two years have forced homes to transform into on-demand work and education centres, entertainment hubs and fitness spaces. Technology is evolving to support innovations in the gamification of sports, entertainment, and work. AI, augmented and virtual reality (AR/VR), the metaverse, and edge computing are already playing a major role in this transformation and is likely to continue well into the future. When we combine that with an aging global population, the need for support is further exacerbated.
As we move forward into a more connected and automated future, there will be a huge opportunity for product and service companies to deliver the advanced support and protection offerings that are expected by a broader consumer base.
Monetisation of 5G
In the U.S., where 5G coverage blankets most of the region, carriers are launching C-band 5G which will noticeably improve data network speeds and provide for an increase in traffic. However, carriers have hit some roadblocks with the FAA over whether C-band poses a safety risk for planes approaching airports to land. After much back and forth between carriers, the FAA and airlines, there is an agreement to hold off for the next six months, turning on the C-band spectrum within 2 miles of many of the country’s major airports.
The good news is that C-band is continuing to be rolled out and will cover most major metro cities in the U.S. This is critical for carriers as they seek to recoup their investment in 5G, with the faster networks providing a compelling reason for consumers to upgrade to 5G-enabled devices. 5G devices are making better gaming experiences a reality, and we anticipate that carriers will soon be partnering with cloud-gaming providers to deliver the latest games on a subscription basis or per minute.
Network slicing will be another avenue for service providers to increase revenue. Different use cases will have different requirements of the network. For instance, stadiums will want to provide an enhanced customer experience by delivering enriched video streaming, while public safety agencies will require prioritised access to the network for their first responders, and real-time data processing will be essential for driverless cars. This can all be made possible by carving out the capabilities of the network to fit the specific needs of different industries.
The telecoms industry is finally leveraging the potential of digital twins
As operators around the world are rolling out their 5G infrastructure, there is a real opportunity to explore digital twin technology as a means to optimise the network. The technology allows carriers to test a host of planning scenarios such as signal interference, device traffic and security threats. Remote troubleshooting and maintenance are easier to perform as near real-time data provides the ability to be more proactive rather than reactive. And of course, digital twin technology itself is enhanced through the use of 5G and the ability to gather more data, quickly and with low latency. Adoption of such Connected Intelligence is also happening in the consumer world, where digital twins are being leveraged to offer better support and improve consumer experience across their connected world.
Because of the advantage that 5G brings to digital twin technology, we can expect to see more 5G sensors added to a vast number of products to provide near real-time data to a digital twin. We see this being used for Intelligent Transport Systems, aircraft maintenance, medical devices and in smart factories to name just a few.
As digital twin technology becomes more prevalent, 5G will be a key enabler.
Semiconductor shortage will support growth in the secondary market
Supply chains continue to struggle. The arrival of the Omicron variant added to an already complicated landscape and the semiconductor shortage in its own right is expected to last well beyond 2022. There are several reasons for this shortage. The demand for semiconductors; already pushed by innovation in several industry verticals such as automotive, connected appliances, and video gaming; accelerated during the COVID-driven lockdowns, as consumers increasingly relied on devices to work, study, and keep up with friends and family. In addition, supply chain disruptions have kept materials from reaching manufacturers, preventing them from increasing output. Manufacturers have also been dealing with staff shortages and production bottlenecks as a consequence of COVID restrictions and disruptions.
As the semiconductor shortage continues to impede a number of key industries, OEMs are struggling to acquire the materials and components needed to keep up production for new devices. The chip shortage is pushing up prices in the primary market. However, with strong demand for pre-owned devices in the secondary market, trade-ins continue to be a key component in keeping new devices more affordable for consumers as they upgrade to 5G.
Today’s global smartphone market in focus
Despite the ongoing pandemic, there is much to be hopeful for within the smartphone industry. 5G continues its rollout utilising and enabling the latest technologies; there is a strong focus on sustainability by OEMs, carriers and consumers; and trade-in programs will continue to fuel upgrades while providing much needed, affordable, pre-owned devices to those that would otherwise not have access to new ones.
The author is Biju Nair, EVP and president, global connected living, Assurant.
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