From boring 2016 to 2017 with some question marks

08 Dec 2016

This year didn’t bring much new in the telecoms and mobile device businesses, it was just more organic development, nothing really new or game changing. The network side is waiting for 5G. The explosive Samsung Galaxy Note 7 was probably the handset that got most attention in 2016, and that really says something about how many new innovations there were in the market. Mobile payment solutions started to grow. In 2017 we cannot foresee much more innovation or disruption, but maybe the operating system and manufacturing race will enter a new phase.

Ericsson, Nokia and Huawei dominate the network market. Their results this year have been between ‘as expected’ or ‘minor disappointment’. Nokia was able to finalize its Alcatel-Lucent acquisition, which has now stabilized the top 3 positions.

The market is now waiting for the next building wave that is 5G. It is still hard to say, when it exactly it will happen, but it won't be in 2017, except more trials and research. Probably the industry will start to see activities in the next two or thee years. Network vendors cannot offer any significant growth, but when their business is very cyclical, 5G will definitely boost their revenue and profit.

The carrier business is also in a stable situation. Carriers are looking for new growth strategies that generally seem to be more local than global now. The carriers are looking for cooperation, acquisitions and new offerings in local content and business services. Carriers must also get ready for the 5G setup and develop their business models to then be able to invest.

The handset market has been good to Android. But the Android market itself is quite fragmented. Apple’s iPhone 7 got even serious Apple fans to wait for iPhone 8 that should offer something new. Microsoft’s Nokia phone track is very much dead.

Next year could be more interesting in the handset business. Google launched Pixel, their serious product for the hardware market, and they can now really offer a seamless customer experience by managing hardware and software. Apple is probably investing quite a lot into the iPhone 8.

The interesting thing is that Microsoft’s mobile game is not necessary over. Their Surface product line already offers very interesting PCs, laptops and tablets. The company probably plans a Surface phone too, and it would be a really new product (not Nokia descendant) and maybe could offer a new user experience with other Surface family products. The Nokia brand should also come back with an Android phone by a 3rd party that has licensed the name and technology from Nokia, but it is hard to believe it could get any significant position.

Wearable products are still an unfulfilled promise. Smart watches are not yet really independent devices but tied to phones, and they are ugly too. We must still wait for watches that can really offer stand-alone value and probably we need a next generation design. Nokia’s acquisition Withings is actually an interesting exception in the smart watch design.

Next year will bring stable growth in mobile payments. Apple Pay is getting more users all the time, but also Android Pay is accelerating its speed. Google has still work to do with the customer experience, but probably Pixel helps them develop better usability. They also plan to roll out several new countries for Android Pay.

As a whole 2017 seems to continue the stable development of 2016. Maybe the most interesting question is what will happen in the handset market, especially for Apple’s, Google’s and Microsoft’s own products. We probably see accelerating mobile payment growth and better design in wearable products. The network and carrier business probably won’t see any disruption yet in 2017. Then generally we have the Trump card; does that create a new situation e.g. for the US manufacturers or a high tech trade war between China and the US?

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