5G is not yet mature, so why are manufacturers rushing to release 5G mobile phones?

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Since March, "5G" has gone from a topic to a reality. Consumers who are curious about new technologies can finally buy a 5G mobile phone and use the 5G network. According to the GSA 5G terminal ecosystem report, there were 16 5G mobile phones publicly announced by the end of April. However, after sorting out the data, it was found that only 6 of the 16 5G mobile phones have been launched and have a clear price. The rest are prototypes and PPT releases. The average price of these 6 mobile phones is as high as 6,587 yuan, and 4 of them are from Chinese brands.

In fact, China's 5G pre-commercialization will be in 2019 and officially commercialized in 2020, which means that 5G mobile phones will be the commanding heights of competition among brands until the end of this year.

But on May 8, OPPO first launched a 5G friendly user recruitment plan in China, allowing users to experience the 5G network in Beijing, Shanghai and Shenzhen through the OPPO Reno 5G version of the phone - this is also the first time that a domestic mobile phone brand's 5G mobile phone has gone from the display cabinet to the hands of ordinary users.

Why do domestic mobile phone manufacturers rush to 5G?

Although major operators and mobile phone manufacturers are actively deploying 5G in 2019, this year is not a suitable time for ordinary users to officially use 5G services.

First of all, for 5G devices, before the release of the next-generation Qualcomm 5G modem X55 in 2020, 5G phones will only consume more power than 4G phones. For example, the screen and frame of the Samsung Galaxy S10 5G version are larger and thicker than the 4G version, so that the phone can carry a larger capacity battery to support the high power consumption of the phone. These additional hardware costs will ultimately be paid by consumers.

From left to right: S10e, S10, S10+, S10 5G; image from the verge

Even if 5G phones are ready, the current 5G network is still not ready. For example, China Mobile promised to build 10,000 5G base stations in Beijing to ensure good network operation, but in 2019, China's 5G network was in the trial commercial stage, and the number of base stations was far from this number. Last week, digital KOL Flypig (@flypig) got the OPPO Reno 5G version of the phone, and when he was experiencing 5G service in Beijing, he drove for half an hour but could not find a 5G signal.

In the United States, where 5G has been officially commercialized, the situation is not much better. Millimeter wave high-frequency signals are the mainstream network signals of American operators (Version and AT&T use millimeter waves, while T-mobile uses 600MHz signals), and the problem with this signal is that the signal propagates when it encounters obstacles - the challenges brought by the high-rise buildings in cities in the 5G era may be far greater than before, and the requirements for base station distribution and even base station density are also higher.

So under this premise, why are mobile phone manufacturers still trying so hard to launch 5G mobile phones?

(1) If you run at a constant speed, you will be eliminated

In 2010, overseas mainstream operators began to build 4G base stations on a large scale, which was called the first year of 4G. It took about 4 years from the first year of 4G to the maturity of the network. Today, the scale of domestic 4G users has reached 70%. In the next ten years, 5G will also repeat the development path of 4G and become the mainstream network.

Mobile phones must have hardware support such as 5G chips, radio frequencies, and antennas to receive 5G networks, which means that if you want to use mainstream 5G networks in the next ten years, you must change your phone.

According to IDC's 2019Q1 global smartphone shipment report, global mobile phone shipments were 310.8 million units, a year-on-year decrease of 6.6%. The global mobile phone market is still declining, and 5G will lead global mobile phone users into a wave of phone replacement.

This wave of replacement is a growth opportunity for the saturated mobile phone market. Chen Fengwei, a professional manager with 20 years of experience in the communications industry, believes that "without the rapid iteration of 5G, my country's mobile phone sales will definitely continue to decline." This is also consistent with another data forecast by IDC - as 5G mobile phones become more popular, smartphone sales will gradually increase.

In this new round of market growth, no one dares to fall behind. In the future, there will be 5-6 mobile phone brands. When all players are accelerating, running at a constant speed means falling behind. A mobile phone industry insider once said in an interview with Caijing (http://yuanchuang.caijing.com.cn/2019/0221/4564685.shtml), "The Chinese mobile phone industry has entered a mature stage. The competition between manufacturers is no longer about comparing advantages, but about who has shortcomings."

According to IDC's forecast, 5G mobile phone shipments this year will reach 6.7 million units, accounting for only 0.5% of total shipments. By 2023, 5G mobile phone shipments will reach 26% of total shipments.

(2) Mobile phone manufacturers compete for the right to speak

In 2004, telecommunications companies led the transition from 2G networks to 3G networks. At that time, the entire industry had not yet found an important use for 3G networks. Operators had an absolute dominant advantage and took away the industry's most important profit point. Mobile phone manufacturers needed to rely on operators as an important mobile phone sales channel.

Therefore, the market value of operators is high and they hold the right to speak in the industry. For example, at that time, China Mobile's market value of 172.7 billion US dollars far exceeded that of mobile phone brands Nokia, Samsung, and Motorola, while the market value of Internet service companies Tencent, Alibaba, and Baidu was not even a fraction of China Mobile.

In 2008, Apple launched the iPhone 3G version and APP Store, and the 3G network finally found its true value. Industry profits began to shift from operators to mobile phone manufacturers and Internet service companies. In the business world, the more money you make, the greater your say.

Although mobile phone shipments have reached a bottleneck period, mobile phone manufacturers are still trying to use technology to gain more voice in the industry.

The 5G standard-setting is a communication standard-setting activity in which Chinese mobile phone manufacturers participate. OPPO, vivo, Nubia, Coolpad, and Xiaomi have all participated in the 5G standard-setting, which started with operators, component suppliers, etc. jointly leading a communication revolution. The 5G voice of each company depends on the number of core patents that ultimately participate.

5G Standard Essential Patent Ranking Data Source: IPlytics

Judging from the above figure, 5G core patent technology is still in the hands of upstream core component suppliers, but the cooperation mode between mobile phone manufacturers and them is no longer a simple one-way purchase, but has created more possibilities for patent cross-licensing.

Previously, OPPO Vice President Shen Yiren said in an interview, "The patent fee issue is not OPPO's most important concern and worry. OPPO also has sufficient patent layout in 5G and will also have cross-licensing of patents." According to IPlytics statistics, among mobile phone manufacturers with smartphones as their core business, OPPO has obtained a relatively large number of standard essential patents.

(3) Good opportunities to expand new markets

Among the six brands in the world that can provide 5G mobile phones, four are Chinese brands, which is enough to show the determination of Chinese mobile phone manufacturers in 5G.

There is no doubt that the leading 5G mobile phone manufacturers will definitely have a better brand effect after being blessed with the halo, and for them, this halo will have a greater impact in new markets. Chinese manufacturers have had relatively successful development in the Southeast Asian and Indian markets, and have encountered obstacles in entering the US market. Europe has become a new battleground for Chinese mobile phone manufacturers in the mature Western markets.

In the European market, according to the "European Smartphone Market Share in the Fourth Quarter of 2018" report released by market research firm Canalys in February this year, Chinese mobile phone brands have a market share of more than 32% in Europe. Among them, Huawei and Xiaomi, as the two most successful domestic mobile phone brands in the European market, account for 23.6% and 6% respectively.

Especially during this 5G boom, the first market to accept Chinese mobile phone manufacturers was the European market. In addition, South Korea and the United States, which have officially commercialized 5G, have announced that the mainstream 5G mobile phone brands on the market are LG, Samsung, and moto.

Despite this, on May 1, OPPO launched the OPPO Reno 5G version in Switzerland, becoming the first 5G phone available to users across the European continent, while Huawei and Xiaomi announced the next day that they would accept pre-orders for their 5G phones in Switzerland. Tech media TechRadar (https://www.techradar.com/news/the-first-5g-phone-in-europe-was-unexpected-and-heres-what-it-means-for-you) believes that the OPPO Reno 5G version was not only released a day in advance, but was also available for purchase directly, and "OPPO's first-mover advantage in the European 5G phone market is greater than people think."

On the other hand, Europe is an operator-dominated market. For new players in the European market, being able to launch their products into the European market by cooperating with local operators to provide 5G services is not only a great marketing promotion opportunity, but also an effective way to expand channels. Xiaomi, Huawei, and OPPO have all chosen to cooperate with local operators to launch their 5G mobile phones in Switzerland.

Everyone is rushing to develop 5G, so why is OPPO at the forefront?

(1) Independent 5G technology solution capabilities

Before the official launch of Reno 5G, OPPO had actually produced two 5G prototypes, which were modified based on R15 and Find X. Through the former, OPPO opened up China's 5G signaling connection and data link. Through the latter, OPPO realized the connection of three frequency bands, n41, n78 and n79. Among them, n41 is currently China Mobile's experimental frequency band, while n78 belongs to China Unicom and China Telecom. This also means that OPPO already had the basic ability to support the networks of China's three major operators in December last year.

The complexity of 5G communication standards has brought many challenges to mobile phone design - the number of internal antennas and RF devices in mobile phones will increase significantly. In addition, the internal design of mobile phones, power consumption and heat control are all problems that make mobile phone manufacturers scratch their heads. On the other hand, the current configuration requirements of mobile phones have also increased the difficulty of 5G integration. For example, more than 90% of full-screen designs will further occupy the clearance area of ​​the antenna and hinder the transmission of 5G signals. Only by mastering the underlying technology can mobile phone brands avoid being restricted by technical limitations in innovation.

According to Tang Yue, a 5G R&D staff member of OPPO, OPPO did not directly adopt the reference design provided by the chip manufacturer, but developed its own solution. Although this will greatly complicate the design, the self-developed customization method will relatively reduce the cost for users, so that users can use products with better performance.

(2) Stable mass production capability

For consumers and operators, there are currently not many 5G mobile phones to choose from, and the actual supply status of mobile phones is not as claimed by major manufacturers. Even if the release date and price of many mobile phones have been announced, they are still in the pre-sale stage and consumers cannot buy the real phones. Ensuring sufficient spot supply has also become a core competitiveness.

OPPO has always been good at supply chain management and has built its own factories around the world to ensure production quality and efficiency. Therefore, we have rarely seen any negative news about OPPO being out of stock or panic buying. The OPPO Reno version available for purchase in Swisscom stores is also a good example.

(3) Better understanding of users

OPPO ColorOS users currently exceed 300 million. According to IDC data, OPPO has shipped 113.1 million smartphones in the global smartphone market. The huge existing user base is likely to become the next user of OPPO 5G.

At least through the 5G Spark Plan, OPPO has accumulated buyers for its future 5G mobile phones that will be officially launched in China.

For current users, 4G phones can already meet their needs, and the difference between 4G phones and 5G phones is only 80 points and 100 points. But for OPPO's 5G Spark Plan and similar activities in the industry, this is an opportunity to understand what users need from 5G, and to pave the way for exploring killer applications for 5G phones.

OPPO's 5G Spark Plan communicates with users and developers through 5G mobile phone products, hoping to build the software and service portions of the entire 5G ecosystem as soon as possible, and seize the initiative before everyone has figured out the revolutionary significance of 5G for mobile phone manufacturers.

This is also one of the manifestations of continued high-dimensional competition in the mobile phone industry in the future.