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New Devices on the Horizon for Telecom

September 28, 2017

Smart devices—from smartphones to tablets to technologies of the future—all help shape, and are shaped by, the telecom carrier market. In recent years, though, this market has undergone slow and relatively stagnant growth. What's more, alongside this trend, consumers have noticed a progression toward an inability to genuinely differentiate between the offerings of different telecom carriers, a process referred to by experts as "commoditization."1 Although this is does not mean that the industry is not still making gains. And, indeed, many suggest that innovation in wireless technologies such as the smartphone can help change the future course of the telecom carrier market.

Just what kinds of technologies will be most valuable to innovators driving the market? Many have pointed to the rise in demand for devices—from smartphones to Internet-of-Things objects to wearables—as the pivotal market driver for the telecom industry. We've already seen the success of Apple and Samsung in the area of smartphones. This article takes a look at the future of the telecom industry through current forecasts that account for the rise in devices, IoT, and consumer demand for innovation.

Apple recently announced its new iPhone X, a smartphone not unlike many of its predecessors but which boasts some new features such as built-in face recognition. Some have raised security concerns over the fact that in order to function, the new device's camera must remain "always on," which, in addition raising concerns around civil liberties violations, contributes to increases in connectivity.2 But perhaps more relevant to market trends in the telecom industry is the fact that the carrier market and the smartphone industry are growing much slower than they have been in recent years.3 Despite Apple's characteristic "shock and awe" style in unveiling the device's new features, the market impact for the new iPhone is just not the same in what Forbes has called a "slower growing market."4

It should come as no surprise, then, when market forecasters turn to emerging and future technologies when they attempt to predict where this industry is headed. In fact, some have predicted that telecom connectivity will increase fourfold by 2019—due not to smartphone usage, but because of the Internet of Things. According to IT analyst firm 451 Research, a host of factors will contribute to this heightened growth: firstly, hardware costs that enable device connectivity will drop with the emergence of IoT; second, cloud data will be utilized to a greater degree since data generated by devices will require greater amounts of remote storage and retrieval; finally, the market's shift toward further mergers and acquisitions will drive help technological development.5 Each of these IoT factors promises to contribute to telecom growth.

Wearables are another area to watch. Related to IoT, wearable devices are another important development especially considering their contribution to increased connectivity. Smartwatches and fitness trackers, in terms of sales, have already shown tremendous growth. US and Global Telecommunications sector leader Craig Wigginton writes that "While they are still relatively niche products, wearables such as smart watches and fitness bands have seen tremendous percentage growth." He goes on to note that from 2014-15 smartwatch penetration doubled, and later tripled in 2016, adding that "smartwatches have now penetrated roughly 12 percent of the mobile consumer market in the US."6 Indeed, such trends, even for a market that is still considered by many as "niche," are not to be ignored. Furthermore, such market growth—as with IoT—may be a key indicator of just where the carrier industry will go next.

Other mobile technologies like brain-machine interfaces are further out on the horizon. The domains of smartphones and wearables are quite established technologies. Yet the ability to directly interface the human brain with a communications network is perhaps not a common subject of carrier market discussions. However, many important investors are predicting that the so-called brain-machine interface will be one of the most important inventions of our time. Elon Musk, for instance, has already bankrolled a silicon valley company called Neuralink that intends to spearhead the brain-machine interface market by "developing ultra high bandwidth brain-machine interfaces to connect humans and computers."7 Such an innovation will not only have profound economic implications for the telecom carrier industry. Imagine if everyone walking around had a constant connection to the Internet! But such an innovation promises to radically change communications technologies as we know them.8

It is easy to look at recent trends in the telecom market with a pessimistic eye. In the short term, we see stagnant growth relative to the high rates of performance in prior years. However, smart investors will take a much longer view into consideration when it comes to innovation. Whether we're looking at IoT, wearables, or technologies to impact the future such as brain-machine interfaces, the carrier market is like all others: open to change. As smart investors we must look to which innovations promise a change in the most dramatic and positive direction.

1 https://www.strategyand.pwc.com/reports/industry-at-risk

2 https://www.aclu.org/blog/privacy-technology/surveillance-technologies/apples-use-face-recognition-new-iphone

3 https://www.forbes.com/sites/chrisversace/2017/09/11/no-matter-how-awesome-the-iphone-x-is-apple-remains-reliant-on-a-slower-growing-market/#4bd5001e45cc

4 https://www.forbes.com/sites/chrisversace/2017/09/11/no-matter-how-awesome-the-iphone-x-is-apple-remains-reliant-on-a-slower-growing-market/#4bd5001e45cc

5 http://telecoms.com/426201/4x-cellular-iot-connection-growth-forecasted-by-2019/

6 https://www2.deloitte.com/us/en/pages/technology-media-and-telecommunications/articles/telecommunications-industry-outlook.html

7 https://www.neuralink.com/

8 https://waitbutwhy.com/2017/04/neuralink.html

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