Deloitte predicts 50k 5G smartphone in the UK by 2019-end

While the vast majority will have to wait some time before experiencing the euphoria of an extra ‘G’ Deloitte is predicting there will 50,000 early adopters in the UK.

After several years of slugging, the glorious 5G world is upon us. First in the US and South Korea, though pockets are starting to emerge everywhere else as well. San Marino is live while it won’t be long before countries like China and Japan start hitting the green button.

“The introduction of 5G handsets expected this year will look a lot like 2010, when 4G phones first entered the market,” said Dan Adams, Head of Telecommunications at Deloitte.

“There will be a lot of noise in the first year from vendors vying to be first to market, and relatively little action from consumers. We’re not talking about an overnight switch to faster connectivity with lower latency, we will see 5G used by consumers in hotspot locations in the next two to three years, with mass adoption by 2025.”

The first devices are likely to be with us in Q2, though this year’s Mobile World Congress will almost certainly be a shouting contest between the main smartphone manufacturers. It’s already rumoured Samsung will be launching a foldable-phone (albeit not 5G) prior to the event, while LG and Motorola are also in the running to produce a 5G compatible phone.

In total, Deloitte predicts roughly 20 handset brands will launch 5G-ready handsets across 2019, with shipments totalling one million. This is still a tiny fraction of the 1.5 billion smartphones which will be sold through the year, though 50,000 of them could be heading to the UK.

Looking at the networks, there might not be much to choose from across the UK. EE has confirmed it will launch 5G across 16 cities in 2019, though these will only be in the busiest locations. Vodafone will also launch this year, though it is being coy as to when. Three is telling the same story, while O2 has confirmed its customers will have to wait until 2020. One thing is clear, these will be incredibly limited deployments and it will be years until coverage reaches what the demanding user would consider adequate.

Whether this justifies the hype, or the extortionate amount handset manufacturers will inevitably charge the glory-seekers for the new devices, we’ll leave you to decide, but it will take years for the devices to be considered mainstream. Deloitte expects worldwide 5G smartphone sales to represent 1% of the total smartphone sales by the end of 2020, with 2-3 million Brits getting their hands on the devices. As Adams points out above, 2025 is when the team expect 5G devices to hit mass adoption.

Another interesting growth area the Deloitte team is keeping an eye on is the smart speakers segment.

“Smart speaker adoption has seen phenomenal growth in recent years,” said Paul Lee, Global Head of Research for TMT at Deloitte

“With improvements continuing to be made, demand for smart speakers could be in the many billions of units, possibly even higher than for smartphones. In the future, smart speakers have the potential to be installed in every room in a house, hotel, office, school and even beside every hospital bed.”

Smart speakers are the flashy product which will attract a lot of the consumer market, but the power of the virtual assistants is what could take the segment to the next level. We’ve long anticipated the breakthrough of artificial intelligence in the workplace, but perhaps the slightly sluggish resistance has been down to the delivery model of the applications.

Should smart speakers be adopted in hotel rooms, hospitals and offices in the way which Deloitte anticipates, the world is opened up for industry specific applications of virtual assistants. One area which might help this adoption is the price point.

While smart speakers were initially an expensive appliance for the home, the normalisation of the product in the eyes of the consumer has peaked the interest of traditional consumer electronics manufacturers. With more manufacturers, including those with the ability to produce goods at greater scale, entering the fray competition will increase, bringing prices down, while advertising will also grow, fuelling interest in the bellies of the consumer.

Deloitte anticipates the marker for internet-connected speakers with integrated digital assistants will be increase to £5.6 billion in 2019, selling 164 million units at an average selling price of £34. This would represent a 63% growth rate, making smart speakers the fastest-growing connected device category worldwide, leading to an installation base of more than 250 million units by the end of the year.

This is a price point which would make enterprise adoption of the devices more interesting, and as time moves on, it will get cheaper. The increased introduction of industry-specific virtual assistant and AI applications will certainly help this segment also.

After years of promises and false-dawns, 2019 might prove to be a blockbuster year after all. There’s still a lot which could go wrong, but here’s to hoping.

What adds up to $95 billion? Q3 for Google, Microsoft and Amazon

$43.7 billion for Amazon, $27.7 billion for Google and $24.5 billion for Microsoft. And it hasn’t even hit the Christmas sales period yet.

Admittedly the final quarter of the year won’t be as significant for largely B2B Microsoft, but with Google set to capitalize on internet searches and Amazon hording the lion’s share of online last minute shoppers, the tidal wave of cash is only going to get bigger. And looking beyond the next quarter, it is getting very tasty.

Starting with Amazon, net sales increased 34% to $43.7 billion in the third quarter, compared with $32.7 billion a year ago. This included $1.3 billion from Whole Foods Market and $124 million due to foreign exchange working out favourably. Net income was $256 million, a couple of million better off than 2016, but we’re pretty sure there wasn’t too many complaints.

Amazon is in one of the most enviable positions in the business world. The largest eCommerce business globally, the most prominent public cloud offering and a successful venture into video content subscriptions. These are the established businesses, when you throw in an assault on the traditional grocery industry, ventures into home entertainment hardware, dabbles in music and books, sports broadcasting projects, and, perhaps most significantly, the growing significance of Alexa in the home, this is a company which is set to take over.

The smart home is an interesting one, as this could define the next boom in the tech industry. We’re not necessarily talking about connecting your lights or asking Alexa to turn on your kettle, but the commercial relationships in the background. Asking Alexa to order you more toothpaste, or book a suitable restaurant for your anniversary.

During the 00’s the battle was to become to default search engine. Google won and made a huge amount of cash. The next fight was to be the primarily social media account for the user. Facebook won and made a huge amount of cash. The next clash will be for the living room. Controlling the gateway to an users smart home will allow an organization to facilitate the flow of cash between that user and the connected economy.

Alexa is looking like a pretty strong contender to win the clash of the living room, but we have a good feeling about Google. This is another company which, funnily enough, had a successful Q3. $27.772 billion in total revenues for the quarter, an increase of 24% year-on-year, with net income at $6.732 billion. Just an extra $1.5 billion on top of the net income it brought in for Q3 2016, not a bad years work.

Google’s business is still primarily built around its search advertising dominance, supplemented superbly by its Android supremacy, both which could aid it in the clash of the living room. We believe the fortunes in the smart home will be made through monetizing the relationship between the user and third parties. As mentioned before, when you order toothpaste from Tesco’s or book a table at a restaurant, a business model will be built around referrals, featured spots and promotions, similar to advertising revenues in a search engine.

Amazon might have stolen top spot in the living room royale for the moment, but Google already has the existing relationships with every type of business, in almost every market in the world, through its traditional search business. Google is arguably in the best position to establish relationships on the commercial side of the smart home, as it is a case of up-selling or cross-selling.

The winner of this battle will be the one who becomes the default virtual assistant for the most people. Just like the social media race, initially it will be a pure numbers game, and the monetization will come further down the line.

Soon enough, all home entertainment devices will be enabled for virtual assistants, the Amazon and Google push right now is probably nothing more than a demonstration to traditional hardware players that there is the appetite for connected devices, they probably don’t harbour long-term ambitions in the hardware game. But once connected speakers are the standard, users will be able to decide which virtual assistant they want to use. Whoever wins the hearts and minds of the user will start to collect some serious cash.

It will be a gory battle, but we have a sneaking suspicion Google mind have the upper hand. Why? Because of Android. It is the dominant OS, meaning Google apps are preloaded on phones as the default, and the ‘do no eviler’s’ are collecting serious amounts of data for personalization. In theory, the virtual assistant should be more accurate, because of this training information, and the idea Google’s assistant will be the default on the majority of phones worldwide also gives it an upper hand. Amazon might have snuck in front right now, but Google has a better foundation to roll out its virtual assistant.

The final tech giant we are going to have a look at is Microsoft. The smallest of the trio in terms of quarterly revenue (but not profit or market cap), but considering it collected revenues of $24.5 billion, a 12% year-on-year increase for the quarter, and net income of $6.6 billion, a 16% boost, we don’t think it will be too disappointed.

Revenues at the Productivity and Business Processes unit was $8.2 billion and increased 28% year-on-year, while its Intelligent Cloud stood at $6.9 billion and increased 14% for the quarter. Virtual assistants are a focus for the team here also, but in a slightly different way.

Cortana is going to tie into the part of people’s lives which they don’t really like talking about (although some people can’t talk about anything else); work. It might not have as much of a focus on voice, but it will for productivity. With Outlook, Microsoft is already heavily in twined in the working lives of most people, so adding an intelligence layer which could be your assistant could be an interesting twist. Assuming of course Microsoft gets it right.

Another curious development is a partnership with Amazon. Before too long, Cortana and Alexa will working conjunction to marry your personal life with your work one. Allowing your virtual work assistant and your virtual personal assistant to work alongside could be a good angle which would benefit both companies and the consumer in the long-run.

Overall, Q3 has been very kind to the three major players in the technology world. We think virtual assistants could be the next major boom in the consumer technology space, and all three are gearing themselves up to harvest the fortunes available, admittedly in slightly different ways. $95 billion might look like a small number in a couple of years.