The giant elephant in the room at Apple’s iPhone launch event on Tuesday starts with a 5 and ends with a G.
This year, telecom companies, federal officials and tech execs have talked up 5G, the next-generation of wireless networks, with the promise of internet connections so fast they’ll support an entirely new way of life. At the event Tuesday, however, Apple (AAPL) executives didn’t utter the phrase “5G” once.
Instead, Apple introduced iterative smartphone upgrades, including improved battery life and better cameras. But it held off on introducing a 5G-capable phone.
The decision to delay, presumably until at least 2020, is a risk for Apple. It could give Apple’s rivals such as Samsung – with its two 5G-capable models – an edge in the market. At a time when Apple’s smartphone sales are slumping and its new models look the same as older models, a 5G iPhone might have provided a jolt to the business.
Some of the decision to hold off may have been outside the company’s control. Apple’s shift away from Qualcomm components toward Intel over the past couple of years reportedly stalled development for 5G modems in time for this year’s cycle.
But the delay may also represent a calculation that consumers are not clamoring for 5G just yet.
“There is definitely a subset of customers who will wait for 5G and want to future proof their device,” said Ben Stanton, a senior analyst at Canalys. “But this will not apply to everyone. The mass market currently has no idea what to use 5G for, so for many, a lack of 5G on the newest iPhone may not be a problem.”
5G: The promise vs the reality
The introduction of 4G phones paved the way for on-demand apps such as Uber (UBER) as well as mobile video consumption on Netflix (NFLX) and Facebook (FB). These services, in turn, served as selling points for buying newer smartphones.
The shift to 5G could be even more striking. If 3G is a two-lane highway and 4G is six lanes, 5G will turn it into 12 lanes. Data transfers will be near instant to allow self-driving cars to process all the information they need to make life-or-death decisions in the blink of an eye, or the health care industry to help power the next generation of telemedicine and robotic surgeries. (A surgeon in China recently conducted a liver transplant on an animal from a location 30 miles away by controlling a robotic arm running on 5G.)
For now, however, 5G networks continue to pop up across the US, largely with inconsistent, unreliable service. The 5G phones currently on the market are expensive – such as the $1,300 Samsung Galaxy S10 5G and $999 LG V50 5G – and being connected to a network can easily drain batteries. With the exception of 5G at AT&T Park (home of the Dallas Cowboys), there aren’t many meaningful experiences available now for customers.
Smartphone manufacturers and mobile carriers have yet to reveal how many people are currently using a 5G phone to access 5G networks, but those numbers likely make up a sliver of the smartphone market.
’Our objective has never been to be first. It’s to be the best’
Apple CEO Tim Cook has repeatedly said over the years that he is not concerned about the company being first to a new technology. “Our objective has never been to be first,” he said in one interview in 2014. “It’s to be the best.”
The company appears to be staying true to that playbook here.
“I applaud Apple’s decision to say it won’t be the first and will stand on the shoulders of the giants before it,” said Ramon Llamas, search director at IDC Research. “Eventually we’ll all get there, but there’s a lot to still work out.”
Apple will undoubtedly need to hit the ground running when the time comes. It could very well be the last of the major manufacturers to launch a 5G-capable flagship phone. But there are advantages to waiting, including more reliable networks and customer experiences.
5G modems may also reach a mass scale by then, allowing Apple access to cheaper modems so it could sell a 5G iPhone for less than it would now, according to David McQueen, research director at ABI Research.
Another perk: The extra year to work on a 5G device behind closed doors as other players like Samsung work out the early kinks in the spotlight.