Anticipation is building for a 5G iPhone to be unveiled at Apple Inc.'s Oct. 13 press event. However, analysts urge investors to temper their expectations.
Apple is expected to debut four new iPhone 12 models — each equipped with variations of 5G capability, along with speedier processors and better displays — at its virtual hardware event. Production of the next iPhone has had delays resulting from factory closures and global travel restrictions amid the COVID-19 pandemic. Beyond iPhones, the company could also launch a refreshed HomePod smart speaker and its first pair of over-the-ear headphones.
Investors hope the 5G iPhone will fuel a new growth phase for Apple, which saw a decline in smartphone sales as the industry matures and consumers hold onto their phones for longer.
Analysts warned that it could take a year or more for the devices to spur a bump in phone upgrades that Wall Street is hoping for, given the lack of available networks to facilitate the use of 5G and current economic pressures.
Bob O'Donnell, president and chief analyst at TECHnalysis Research, expects the new iPhones to be priced based on which bands of 5G spectrum they support. For instance, the higher-priced models will likely operate on a wider range of spectrum — including sub-6 GHz, which includes a mix of mid-band and low-band spectrum, and millimeter-wave spectrum. The cheaper models will likely just support sub-6 GHz spectrum.
Low-band spectrum can travel long distances and penetrate walls but has limited bandwidth. High-frequency spectrum, meanwhile, can carry massive amounts of data at high speeds, but its shorter wavelengths mean it has trouble traveling long distances and penetrating certain surfaces.
"It's a classic engineering trade-off — distance, less speed. Or almost no distance, super-fast speed," O'Donnell said.
The iPhone 11 lineup that debuted in 2019 ranges between $699 and $1,099. Pointing to the likely hefty price tags of the 5G iPhones, O'Donnell noted pandemic-fueled economic uncertainties could be a hurdle in how many consumers decide to upgrade initially.
Mike Paxton, an analyst with Kagan, a media research group within S&P Global Market Intelligence, also expects the new iPhones to include improved displays, longer battery life, and better cameras.
Notably, Paxton expects the new phones to use advanced OLED, or organic light-emitting diode, technology, compared to LCD, or liquid-crystal display. OLED displays typically use less battery than LCD panels and provide users with clearer viewing experiences for things like virtual reality and 3D objects.
Wedbush Securities analyst Daniel Ives expects the following prices for the four iPhone 12 models: 5.4-inch OLED display starting at $699; 6.1-inch OLED display starting at $799; 6.1-inch iPhone Pro OLED display starting at $999; 6.7-inch OLED display iPhone Pro Max starting at $1,099.
When fully implemented, 5G promises to offer download speeds several times faster than LTE wireless networks and significantly lower latency, or the amount of time between data leaving a source and arriving at its desired destination.
A key selling point for the technology is the ability to enable a new era of the internet of things — a network of interconnected electronics, vehicles and home appliances that interact and exchange data. Many of these applications are considered several years away as they rely on 5G specifications that have yet to be finalized.
U.S. network operator Verizon Communications Inc. is focusing its 5G efforts on high-frequency or millimeter-wave spectrum, while AT&T Inc. and T-Mobile US Inc. are relying on their low-band spectrum for their nationwide rollouts.
T-Mobile in December 2019 began offering what it described as a nationwide 5G service that covers over 200 million U.S. users in more than 5,000 cities and towns. AT&T delivered nationwide 5G coverage in July, and Verizon said it plans to do the same later this year.
But Loup Ventures managing partner Gene Munster noted that most 5G services currently operate on low-band spectrum, which he estimates offers download speeds only 40% faster on average than current 4G networks and may not offer consumers a "compelling reason" to upgrade this fall.
"With that in mind, we have advocated for investors to keep modest expectations for iPhone 12 in 2021," Munster wrote in a report.
2021 and beyond
Many industry observers expect a 5G iPhone to lead to a bump in phone upgrades as consumers' knowledge about the technology improves and more 5G networks go live.
For his part, Ives predicts that approximately 350 million to 950 million global iPhone users are in a window of upgrade opportunity, and is bullish that a 5G iPhone launch will spur a "supercycle" of device upgrades later this year and into 2021.
Other analysts, however, think the upgrade cycle could extend beyond 2021.
"The world is moving to 5G, Apple has to move to 5G, there's no question," TECHnalysis Research's O'Donnell said. "So, does it pay off? Yeah, they have to, because that's where everybody's going and that's what people expect them to do. Does that mean they're necessarily going to sell a ton of this one initially? We'll see."
The event comes one month after Apple released its latest smartwatch with a new blood oxygen level detection capability and updates to its iPad product line.