Could COVID slow smartphone sales, but increase data speeds?

For the first time, Deloitte has altered some of its TMT predictions mid-year. Here are the ones that will affect media.
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They say technology marches on – but COVID-19 has managed to upend even some of the most foregone conclusions.

Deloitte’s technology, media and telecommunications (TMT) predictions are released every year in December, based on swaths of global research by the company and statistics directly from sectors. The purpose of the reports is to predict what will happen in tech for the year to come. But, as we all know, 2020 had other plans.

Duncan Stewart, director of research for TMT in Canada, issued a brief update on some of the trends that have been revised since the initial report – marking the first time in TMT’s history that the stats have been revised mid-year.

One revision that will most directly impact media is a decline in smartphone sales. Initially, the devices were set to see a modest increase in their sales value – TMT predicted sales would rise 5.8% to US$484 billion. But following a rocky Q1, and with Q2 results anticipated to be even weaker, TMT is now hedging its bets on a 10% global decline for the full year.

Additionally, Deloitte previously predicted that the “smartphone multiplier” – the revenue of things like smartphone apps, accessories and, of course, ads –would be $459 billion. That’s since been dialled back to $393 billion.

“Longer term, and post-pandemic, we would expect that the market for both smartphones and the things that accompany them to return to growth,” Stewart wrote, noting that the multiplier will probably grow faster than device sales.

Smartphones might also not get quite as “smart” as TMT initially predicted. It reported that, by the end of the year, one-third of phones would have their own neural processing unit (AI chip). TMT is now predicting that fewer AI processors will be created overall (initially, 750 million processors would be created, with 500 million going into smartphones), with approximately 100 million less produced. That will still represent significant growth overtime in phones with AI chips, and that growth will mostly remain unabated through to 2024, writes Stewart. For marketers, the presence of an AI chip means significant implications on data transmitted, as well as on privacy and security.

One prediction that has not decelerated is the roll-out of 5G. In fact, the TMT predictions have been revised to include more private 5G tests (from “over 100″ for the year to “under 1,000″). This is based largely on the number of private tests seen in Q1; while not directly tied to the pandemic, Stewart wrote that “testing a new technology while a factory is otherwise idle might make sense.” Notably, some 5G trials have been done in the medical and logistics/distribution verticals, both of which are sectors whose activity has been accelerated by COVID-19 stresses.

For marketers, the roll-out of 5G will be crucial in the delivery of higher-impact mobile advertising, including video. Download speeds will be faster, enabling for quicker delivery of data. In Canada, 5G is expected to have a more significant presence in the market by 2022.

The increase in activity from content delivery networks (geographically distributed groupings of proxy servers and data centres) will also boost download speeds and video streaming. That market was originally set to increase by 25% in value to $14 billion this year. It’s possible now that the content delivery network market could actually increase by 30% to 40% in value this year. This increase has also been attributed to trialling among key sectors that have higher demands due to COVID-19, such as telehealth.