Yahoo Finance Why Apple's new iPhones might be worth the upgrade — even without 5G
Apple (AAPL) launched its iPhone 11, iPhone 11 Pro, and iPhone 11 Pro Max on Tuesday. The smartphones feature a variety of improvements, including three all-new cameras on the 11 Pro and 11 Pro Max.
But one element missing from the announcement was something carriers and governments around the world have been talking about for years: 5G. Fifth-generation cellular technology, or 5G, is a far faster version of wireless data connectivity than the 4G LTE we currently have. We’re talking websites loading in the blink of an eye, and movies and music downloading faster than ever before.
Apple’s iPhone will likely get that next year, which some analysts believe could hurt sales of the newly-unveiled iPhone 11 lineup.
“We continue to expect iPhone revenue to decline 1% y/y in FY20 as a result of few compelling updates to this year’s devices and increasing awareness related to 5G that may result in consumers waiting to buy a new device,” Piper Jaffray analyst Michael Olson wrote in his research note following Apple’s event.
But even if you currently have a 5G smartphone, the major U.S. carriers still don’t have their 5G networks built out. So you won’t be able to take advantage of those super-fast speeds. Instead you’ll likely end up using current 4G LTE networks. And it’s still unclear when 5G connections will be as ubiquitous as 4G LTE. Which means even without the high-speed connectivity of 5G, Apple’s iPhone 11 line might still be worth the upgrade for many users.
The future is 5G
Remember when 4G LTE technology was still rolling out in 2010? The world was still largely dependent on 3G, with web speeds that bordered on frustrating at best. 4G LTE, though, ushered in a new age of connectivity, drastically changing how we do everything from ordering food, getting a cab, and paying for goods. It sent shockwaves through the global economy that are still reverberating today.
5G is expected to do that and more. We’re talking about near-instantaneous connectivity. The fear for Apple, according to Olson, is that as more users become aware of 5G, they’ll hold off on buying this year, and instead purchase what is expected to be next year’s 5G iPhone. That could be especially troubling for Apple in China, where homegrown competitors like Huawei are already launching 5G-capable devices.
That all, however, assumes consumers understand what 5G has to offer.
“Consumers tend to have vague ideas about how tech benefits them,” explained Gartner Research’s Tuong Nguyen.
“For 5G, I assume it’s in the realm of ‘more, better, faster’ without knowing specific details or applications. While everyone wants more, better, faster, I think the most important point question is, are consumers willing to pay for whatever they will be getting, and how much?”
According to a Piper Jaffray survey the vast majority of 1,050 current iPhone owners, 77%, say they would pay a premium for a 5G-capable iPhone.
Apple likely had its reasons for leaving out 5G
When Apple rolled out its first 3G and 4G iPhones, it was months, if not years, behind the launch of 3G and 4G phones by the company’s competitors, explained Nguyen.
“When you look across their device portfolio, they’re selling an experience, rather than the newest technology or feature. In other words, it’s about how you use the tech, not the tech per se,” Nguyen said.
Apple likely took into account how much of an impact a lack of 5G would have on this generation of iPhones and, according to Nguyen, may have left out features that would benefit from 5G.
“I speculate that there are other features and functionalities that Apple could have introduced with iPhone 11, but will leverage it in a way that will be more impactful with the next device launch,” he explained. “Remember, it’s not about 5G, but rather what you can do with it; and Apple is a clear leader when it comes to maximizing and appealing to this aspect of consumers’ sensibilities.”
The current crop of 5G smartphones, at least in the U.S., are fairly limited. Samsung now offers two 5G devices, the Galaxy S10 5G and Galaxy Note10 5G, but both of those devices cost more than their 4G LTE counterparts. What’s more, early testing of the S10 5G showed that it would heat up under certain conditions to the point where it would fall back to 4G LTE.
As of now, 5G is only available in an incredibly small number of cities across the U.S. And even in those cities, depending on the carrier you use, you may only be able to access a 5G connection in a very specific spot. Walk a block from a 5G node, and you’ll fall right back down to 4G LTE.
Don’t forget, it took years to reach the level of 4G LTE saturation we have today, which means we’re still a long way off from 5G being as ubiquitous as 4G LTE currently is.
Apple might have reasoned that putting out a 5G iPhone at this time wouldn’t draw enough interest from consumers due to the added price and lack of 5G availability.
Of course, part of Apple’s reason for leaving 5G out of the iPhone 11, 11 Pro and 11 Pro Max, was likely out of the company’s control. Apple has had an acrimonious relationship with its previous modem supplier Qualcomm (QCOM), and tried to turn to Intel (INTC) for its current and future smartphone modems. But Intel wasn’t nearly as ready to launch a 5G modem as Qualcomm, leaving Apple without an option for getting 5G in its latest phones.
What should you do?
If I were in the market for a smartphone right now, I’d hold off on buying a first-generation 5G device. The additional price, and incredibly small 5G network footprint in the U.S., and around the world for that matter, makes it an unnecessary expense at this point.
So what does that mean for the iPhone 11 line? Well, if you’re the type of person who upgrades their phone every year or two, then the newest iPhones certainly seem like they’re worth grabbing. I’ve only been able to use them for a short period of time, but the advances that Apple has made to its phones’ cameras look truly compelling.
If, however, you’re the type of person who holds on to their phone for years before finally making the leap, it might be worth holding out for another year for that 5G iPhone. It all comes down to your own needs.
More from Dan:
The Apple Watch Series 5 and iPad updates were small, but should still win over consumers
Google and Amazon use smart speakers for ‘surveillance,’ top tech investor says
Email Daniel Howley at [email protected]; follow him on Twitter at @DanielHowley.
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn,YouTube, and reddit.