Abid Hussain Barlaskar

‘5G-enabled smartphone’: Marketing lure or future-proofing?

While telecom operators are yet to roll out 5G services in India, top phone brands are actively pushing 5G enabled devices into the palms of Indian smartphone users.

Why are smartphone brands selling features that Indians can’t even use? The talk of the town in smartphone marketing is ‘5G’. Indians won’t be able to access 5G services for another year at least, yet smartphone brands are adding ‘5G-enabled’ to their features bucket.

Initially launched as a feature for the top-end flagships across brands (like OnePlus, Xiaomi and Apple), it (5G) is now being added to phones at lower price points as well. While Motorola recently launched the ‘most affordable’ 5G phone, Vivo offered the ‘slimmest’.

The latest launches by Motorola and Vivo suggest that despite being a ‘useless’ feature at the moment, just ‘5G’ may already be out of fashion and needs another differentiator to support it.

While the 5G craze is one extreme end of telecom innovation, the other end finds place in one of Jio’s recent ads for its ‘Postpaid Plus’ service. The ad, which is a dig at Jio’s rivals Vodafone Idea (VI) and Airtel, shows Bollywood star Ranveer Singh struggling to make a basic call due to network connectivity issues.

While the state of mobile network connectivity in India is debatable, Jio may have come across a basic insight that telecom consumers can’t even make uninterrupted calls.

At a time like this, is selling ‘5G’ just a marketing gimmick, or is it more about setting the market right for future? Or is it, perhaps, an outcome of disparity with markets like South Korea, China, and the US, which are already building and deploying 5G technology?

Putting it through a marketing lens, Rajesh Srivastava, former CEO, JK Helene Curtis, and professor (and author of 'The New Rules of Business'), says that most smartphone brands are based on aspiration. The use of ‘5G’ in marketing is a case of ‘alphanumeric branding’, i.e., 5G is better than 4G, he adds.

Rajesh Srivastava
Rajesh Srivastava

Putting forth an example, Srivastava says, “Without even considering the change in features or quality, the consumers believe that an iPhone 11 is better that an iPhone 8. Similarly, iPhone 12 is better than 11. They feel that the higher number is better, in terms of quality, and is also priced higher.”

Mahesh Uppal, telecom expert and founder of ComFirst (a telecom consulting firm), says that 5G compatible handsets may not be a marketing gimmick, but in the light of the delay in India, their introduction seems premature. “The 5G handsets will contribute to the ecosystem, but in a marginal way.”

Uppal mentions that while the mobile brands introduce 5G compatible handsets (that they are selling in other markets) in the Indian market, the 5G ecosystem needs clarity. Clarity when it comes to factors, like what spectrum will be allocated, when (at what time), in what quantity and at what price. This has been further complicated by the poor financial health of the telecom sector.

Mahesh Uppal
Mahesh Uppal

“The strengthening of the ecosystem also poses other challenges. We need more clarity on, for example, the kinds of handsets needed, their functionality, etc. 5G growth is going to be a long haul, since several other bits of the ecosystem are also not in place,” adds Uppal.

Neil Shah, partner and research VP at Counterpoint Research, explains that as most smartphone brands are global players, there are supply side dynamics at play here. “Players like Vivo and Oppo are already launching $150 (Rs 11,000) 5G phones in China. The race is to bring the new feature to every price segment.”

Neil Shah
Neil Shah

Shah mentions that OEMs (original equipment manufacturers) are launching 5G devices at the mass market level outside India, and a bulk of their component purchases within the portfolio are 5G chipsets.

“There is already a dearth of 4G chipsets, and soon it may get costlier than 5G components. It makes more sense to build a 5G smartphone, than a 4G phone. The supply side dynamics are getting brands to roll out 5G phones in India, even though we don’t have a 5G network. It does not make sense to launch a 4G phone specifically for India.”

In a recent company blog, top chipset manufacturer Qualcomm Technologies mentioned that it is working hard to drive the global scaling of 5G. After enabling 5G on its 8 (888, 865) and 7 (750, 765, 768) Series chipsets, Qualcomm recently announced that it is now bringing it to its affordable 6 Series chipsets (665, 690).

‘5G-enabled smartphone’: Marketing lure or future-proofing?

From a consumer standpoint, Shah says that it is about future-proofing devices, especially because the replacement cycle of the phones are extending (getting longer), with the devices getting better. The current cycle stretches beyond two years, in comparison to the previous life-cycle of around 20 months.

“Since a consumer buying a phone today plans to use that device for three years, it needs to be future-proofed. They know that 5G will be here eventually, and no one wants to be stuck with a 4G device when others move on,” Shah adds.

Faisal Kawoosa, founder and chief analyst, techARC (a tech research firm), says that the ‘5G’ marketing is a mix of both gimmick and ecosystem building. He, however, maintains that it is a healthy practice, since in the world of technology, a particular feature can’t sustain as a hook for too long.

Faisal Kawoosa
Faisal Kawoosa

“The launch of the 5G devices across price points drives volumes and, in turn, penetration. The ecosystem is aligning too. It might turn out advantageous for operators, since the market will already be ready once they launch. Also, while the smartphone is still the charm of the ‘smart’ world, 5G is not about phones alone. Brands can concentrate on other areas, like IOT, etc., once they are done with phones,” Kawoosa adds.

Counterpoint’s Shah mentions that launches across brands are also driven by competition. “If your rival has a 5G portfolio, you have to have one. Once a phone is in place, it can be marketed in many different ways, like slimmest, foldable, cheapest, etc.”

Adding to the ecosystem perspective, ComFirst’s Uppal mentions that the transition to 5G should be treated very differently from 2G, 3G, 4G, which, he says, were more of a ‘natural progression’. They were more about increasing data speeds and bandwidths.

“5G does offer higher data speeds, but its functionality and relevance is not the same as the previous versions of mobile technologies. 5G is not going to be a pervasive nationwide network. It is likely to be deployed in a patchy fashion in specific areas (industries), like automobiles, entertainment, health, etc. It is not a natural extension of 4G and is a discontinuous step,” Uppal concludes.

Have news to share? Write to us atnewsteam@afaqs.com