Apple will on Tuesday release its results for the three months ended June, possibly revealing another quarterly decline in revenues amid slowing iPhone sales. The prospects for the full fiscal year, which ends in September, don’t seem too bright either as new hardware launches during the year failed to set the market on fire and the firm’s renewed services push is still in the early stages.
Overall, we can expect a relatively quiet time for the company even into the next fiscal year as the 2019 iPhone product announcements in September may not bring any radical improvements on its existing flagship devices. The real change will only come in 2020 when the iPhones are expected to transition to 5G.
Market focus is now increasingly on Apple’s 5G roadmap, especially after news last week that the company has entered into a deal to acquire “the majority” of Intel’s smartphone modem business. Apple said it expects the US$1 billion deal to close in the fourth quarter of 2019, putting it in a position to “expedite our development on future products.”
Once the transaction is complete, Apple, together with its existing portfolio, will control over 17,000 wireless technology patents, “ranging from protocols for cellular standards to modem architecture and modem operation,” the company said.
“This agreement enables us to focus on developing technology for the 5G network while retaining critical intellectual property and modem technology that our team has created,” Intel CEO Bob Swan said in a statement.
“We’re looking forward to putting our full effort into 5G where it most closely aligns with the needs of our global customer base, including network operators, telecommunications equipment manufacturers and cloud service providers.”
There is no doubt the 5G factor played a key role in Apple’s decision to acquire the Intel smartphone modem operations, a deal wherein about 2,200 Intel employees would be joining Apple along with intellectual property.
Apple realizes that it must launch a 5G version of the iPhone no later than next year if it is to defend its position in the highly competitive smartphone market. It would be aware of the view among industry observers that the company has been late to the battle, as rivals such as Samsung and Huawei have already unveiled their 5G handsets.
Apple has a huge fan base, but even the loyal users may turn elsewhere if the company stays with old technology while other brands offer the most advanced products.
A few days ago, China’s Huawei, which has surpassed Apple to be the world’s second biggest smartphone maker, announced its first 5G smartphone, Mate 20 X 5G, in China at the price of around HK$7,000.
Apple may not be in a position to launch any competing product this year, but it is preparing for a 5G onslaught of its own in 2020.
On Monday, prominent Apple analyst Ming-chi Kuo said in a new research report that he believes all three models of Apple’s iPhones will support 5G next year. What this means is that the 2019 devices could be the last of the series of 4G iPhones.
Given this situation, Apple users won’t have any compelling reason to upgrade their devices this year, giving rise to the possibility of another year of lackluster iPhone sales. Going by the market rumors, Apple’s 2019 iPhones may not have any big selling point, expect for a triple camera system.
Analyst Kuo noted in his report that Apple will now be in a stronger position to develop the 5G iPhone following the acquisition of Intel baseband business. That will help the firm compete better against Android 5G devices in the market, and possibly prompt the rivals to adjust their product prices.
As mobile operators start to deploy 5G networks, it is expected that they will need at least a year’s time to complete the network deployment. Hence, it is possible that Apple’s 2020 timing to join the 5G battle could actually turn out wise. Apple may be late in launching its 5G smartphone, but that doesn’t mean it has lost the battle.
While the 2019 iPhones will receive their fair share of attention, the fact is that most users are waiting for the 2020 series. iPhone fans, for the most part, can be expected to delay their purchases until next year to have a whole new device with 5G feature to enjoy a new experience, riding on ultra-fast mobile networks.
Apple has been lagging behind Samsung and Huawei in 5G development as it lacked own baseband chip capability, unlike the rivals. With their ability to develop 5G baseband chips on their own, Huawei and Samsung were able to put the latest technology into smartphone products faster than the others.
That’s the reason why Samsung and Huawei have been able to launch their 5G smartphones this year to celebrate the launch of new high-speed networks in markets such as the US, Europe and China.
Apple has been relying on external chipmakers to provide iPhone baseband chips for a long time, even though the company has a dedicated team to develop its own application processor A series chip inside its mobile device series.
In recent generations of iPhones, Apple used Intel and Qualcomm baseband chips to support the devices’ 4G mobile connectivity. However, the use of different brand chipsets in the same iPhone series had delivered different network transmission performance, analysts have noted.
Following its latest move to acquire Intel’s smartphone modem business, Apple will see its 5G plans certainly get a major boost. However, some Apple fans who are focused on network speed are worrying whether the iPhones could be dragged by the use of Intel baseband chips, given the past record where it was proven that Intel’s chips were underperforming against those from Qualcomm.
There has been talk in the industry that some Apple users had even gone to the extent of making their purchases in non-home markets as they specifically sought Qualcomm chip-enabled iPhones to enjoy the best experience.
Apple certainly has a lot to think about in terms of baseband chip development if it is to catch up with Qualcomm’s performance in the 5G era.
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