Munster: How 5G will float Apple’s boat

“In our view, Apple will be one of 5G’s biggest beneficiaries.” — Gene Munster

From a note posted to Loup Ventures subscribers Wednesday:

5G Tide to Lift Apple: The 5G hype has already begun, but investors underappreciate the opportunity that it represents for most tech companies. Apple has four initiatives that will materially benefit from 5G: iPhone, augmented reality, healthcare, and autonomous vehicles. In our view, Apple will be one of 5G’s biggest beneficiaries.

The Significance of 5G for Apple: 4G seems fast enough, so why do we need 5G? It’s not just about speed, it’s also about latency. Data will be delivered instantaneously. At first, the use cases will be subtle, like instant app downloads and 4K video streaming. The mobile phone experience will be better, but won’t be revolutionary. Over time, that will change. Real-time data will allow new phone designs, new apps, off-device storage, and processing in the cloud for AI applications, game streaming, and other compute-intensive mobile use cases. The smartphone is just one area that will benefit from low-latency, high-speed data. 5G will enable or vastly improve augmented reality, wireless virtual reality, countless IoT and smart home applications, autonomous vehicles, and V2X communication, to name a few.

The 5 Year 5G Transition: It’s important to note that the rollout of 5G will take time. We expect it will take until the end of 2022 before 75% of the US population will have 5G service. Investor interest and the resulting rise in tech valuations will precede the adoption curve by about a year. In other words, shares of AAPL should start to see an impact starting late in 2019, potentially lasting until the end of 2024.

My take: Conventional wisdom among the doomsayers, it must be said, is that Apple will have missed the boat if it doesn’t ship a 5G iPhone this year.

8 Comments

  1. David Emery said:

    “Conventional wisdom” is well beyond -stupid- here!

    For a lot of people, their current iPhone works well, and there haven’t been sufficient reasons to replace it. The promised performance jump from 5G would be exactly that kind of reason to replace a “perfectly good” iPhone. Of course, that means there has to be sufficient 5G roll-out from carriers and sufficient increase in bandwidth/functionality to meet the hype around 5G.

    Speaking only for myself, if 5G is available in my area (SE NH) and does work as promised, that would be enough to get me to trade in my existing iPhone 8.

    3
    February 27, 2019
  2. Gregg Thurman said:

    Thank you Turley, for a quote that got me thinking. That quote was, “an iPhone that isn’t sold this year is sold next year” (or something like that).

    iPhone unit sales for FY2018 grew .045% YoY. Expectations for FY 2019 were for growth essentially the same as FY2018. As we all know that isn’t going to happen for a variety of reasons. It doesn’t matter how low iPhone sales are this year or next, they aren’t lost, just delayed.

    If an annual growth rate (switchers and first timers), in a saturated market, of 0.045% (same as FY2018) then any sales below level that will be made up in the future.

    This brings me to believing there will be a confluence of several things by the end of FY2020. They are:
    * Trade issues will have been resolved
    * The world’s economy (most especially China) will be firmly in expansion mode
    * India will begin to be an important market for Apple.
    * the relative value of the US dollar will have declined by about 8%
    * 5G service will have hit critical mass
    * Delayed iPhone sales will be realized.

    The culmination of these events will be iPhone sales in excess of 250 million units during FY2021 through to FY2024.

    3
    February 27, 2019
    • Turley Muller said:

      Gregg, GLAD to see you are still posting. Like you said iPhone sales aren’t going anywhere. Timing may vary. FY16, FY17, and FY18 iPhone unit sales were practically the same. If they drop this year, they have highly likely they rise next year relative to FY18, meaning much higher than FY19.

      An illustration- pretend unit sales were 100 for FY16,17, and 18. Fall to 80 in FY19. 20% drop. Those 20 shift to FY20, and we get out usual 100 too, for a total of 120 in FY20. 120 vs 80 is 50% increase ! The Y/Y compare looks good!

      0
      March 1, 2019
  3. David Drinkwater said:

    Just a really simply thing:

    If 5G hits your phone, even if your phone is little more than an SE in your pocket, maybe slightly bigger for more battery life, whose primary function is to be a HUB:

    for your iPad
    for your AirPods
    for your MacBook

    Maybe even for your house the minute you walk in the door!

    it’s already very value enhancing. If the 5G is that much better, it’s WiFi output will be, too.

    And Apple’s ecosystem would make that transition virtually transparent.

    1
    February 28, 2019

Leave a Reply