Ben Arnold 

Today's session five ways 5g will and won't affect the future. Thanks for attending today. My name is Ben Arnold, I'm the Executive Director and Industry Analyst covering consumer technology at the NPD Group. A little bit of background, I'm a consumer device analysts. So I'm really focused on how consumers are using technology products. You know, how that affects the sales, retail trends and the channel and how that kind of lines up with different consumer segments. And so it's with kind of that angle that I'll be approaching the topic today. Just give you a quick background on who I work for I work for the NPD Group. We're a full service business intelligence firm. We do market research in a variety of industries, technology, which I'm a part of, but also areas like apparel and toys, footwear food service, we have a very huge footprint in terms of the industries that we cover, and also the markets. I'm primarily focused on North America with respect to technology, but in our other industry verticals, we have a worldwide footprint. And so, you know, in kind of thinking about our information today, you know, we are experts in consumers, what consumers are buying, what brands are they choosing, how much are they spending on products and retail, right? How are How are retailers maximizing the selling opportunity? How do new selling techniques, you know, drive the market forward. So, it's with that that we put together some thoughts today on the impact of 5g and, you know, thinking about NPD wide footprint of products right there implications for 5g that exists out there. side of technology that exists outside of, of consumer technology products that, you know 5g is going to impact products like apparel and food service and toys at a certain point. But we're talking about technology here today. And so with that, I want to get started with our talk. But a couple of viewpoints in terms of the adoption kind of story for 5g and the status looks like now. You can pay attention to some of the messaging over let's call it the last three years and consumers getting excited about the rollout of 5g. There's a marketing frenzy from the carriers around their rollout plans and building up the infrastructure. You know, probably six or seven months ago, I flipped on my iPhone, which is connected to at&t and saw five g at the top. And my wife asked me Do we have five g now? And I was like, Well, not really Really, you know, and so I think, to me, that kind of exemplifies a little bit of the uncertainty in the consumer market, you know, like, when will 5g come out? You know, at what point does it become available to my device? How much am I going to end up spending for it? And so I, you know, I think that, you know, you look at some other kind of rollouts of technology, and it seems like, you know, some of that confusion is a little bit on purpose, right, it's to get consumers talking, it's to get them interested in the technology to get them, you know, doing web searches and asking questions. You know, there's a lot of confusion about how 5g will benefit consumers. So even beyond, do I have 5g now or not, and where is it available and the different flavors of technology

 
Ben Arnold 

of 5g you know, what is it you know, suitable for? And to me, that's where a lot of the conversation exists right now. You know, is 5g going to benefit VR, is it going to you know, drive more streams of 4k video on mobile devices? Is it going to benefit the smart home? You know, all these questions are out there in the market. And to me, you know, part of this sort of approach to rolling out the technology is some discussion about what exactly is 5g good for? Maybe that could have been a subtitle to my presentation today, 5g, what is it good for and then the technological limitations, you know, consumer usage norms and application development, in my opinion is is what will really kind of drive 5g forward. You think about we get a technology and, you know, analysts like me kind of talk about, you know, what we expect it to benefit in the future, in my opinion, who really drives a lot of that momentum our application developers, you know, in working along with device manufacturers Figuring out, you know, killer apps for, you know, utilizing the technology. And so, you know, going back to something like technological limitations, whether it's a millimeter wave or mid band or you know, however you want to describe the technology, you know, those have certain benefits and drawbacks as well. And so all of these, I think, will combine to help push us into the 5g era, I don't think it's going to be sort of a line upward that way. You know, I think there'll be fits and starts but I do think that we're headed towards a you know, much more connected future if if that's even possible at this point. And that's, you know, the focus I think, for the technology again will be on mobile and mobile use cases. Just want to frame up the the 5g opportunity kind of quickly. So in my opinion, when we talk about 5g we commonly talk about see a faster speed. needs to our devices. And of course, a lot of the attention is being paid to smartphones and right the new generation of smartphone handsets that are due to come out and build up an infrastructure by carriers. And, you know, for consumers purposes, I mean, that's really the the majority of the conversation but, of course, 5g is about more than faster speeds to our devices, right, faster streaming of high quality movies to our phones, you've got higher data capacity of course and low latency of the connection and, you know, to me, you know, thinking about some of those aspects, there are obvious implications for things like smart cities, right, where they are, you know, very data intensive applications that need to happen, basically, in real time. You know, certainly, you know, areas like like medicine and telehealth, I think benefit from from 5g because of those assets. specs. But, you know, I think in a lot of consumers minds, it remains faster speeds to my devices. And so that's where we come out in terms of a lot of the the marketing attention and how 5g is being sold to to consumers. So, I kind of broken this up into a couple of sections, I wanted to kind of consider the market for mobile phones for smartphones. And you know, what the state of the market is now and as more 5g phones hit the market, you know, how does that change the landscape for the the smartphone market? So, what we're looking at here is some data from ntds mobile phone track service, and we commissioned a study at the end of each year to understand sales of smartphones, activations of smartphones. We're actually putting together our 2019 year in review of the research. So we've got three waves through 2018. And really what we see And I'll kind of walk you through this slide, but what we see is that the sales and new smartphones have slowed down. That's a story that we've all we're all very familiar with. Right? The adoption of smartphones has gotten to a point where, you know, new sales are slow and slower. But what we do see are some increases in smartphone activations or smartphone connections. What's happening here? How can we be adding connections while sales are declining? Well, there's two dynamics at play here. First, is that the refurb market for smartphones is pretty vibrant. So, consumer has a phone, they get rid of it. They someone buys it through another channel, and then they light it up. And so that's an instance where in our sales data, we don't necessarily pick that up as a new smartphone sale, but we do pick it up as a new smartphone connection. The other piece of this which is also at play is Consumers are holding on to their smartphones longer. And we're all pretty aware of that. The average length of ownership now is 33 months. So what's the what is what impact does 5g have on on this dynamic? Well, I think we're all pretty unified in the view that 5g service and new 5g smartphones and build up the infrastructure will drive consumers to to go out and update their handsets. And I think just as we saw with, with 4g, we'll see this dynamic where, you know, sales are kind of declining. We'll see that reverse. I think we'll see, you know, a pretty significant increase in smartphone sales as consumers seek to upgrade to 5g but that after that kind of upgrade cycle kind of plays out that we probably settled into a scenario similar to this. Right that adoption smartphones again, has gotten to a point where We have 85 or some odd percent ownership in the US, the 15% of resistors are not going to buy a smartphone anytime soon. And so, that kind of plateau nature of the smartphone market in my opinion will will will exist you know, after this you know, big upgrade cycle but I do believe that we are due for an upgrade cycle and as the kind of the the main smartphone oriens introduced their 5g handsets, you know that that will inject some energy into the market.

 
Ben Arnold 

We've also endeavored to, you know, look at some other things, looking at the length of ownership. And again, according to our mobile phone track service, the average upgrade cycle for us smartphones in the US is 33 months. And, you know, again, that's a In my opinion, a function of, you know, smartphone ownership being at a very high rate at this point. But also, you know, as we see more premium handsets enter the market that that you know, that's a reason to hold on to your phone longer. You know, I've paid so much for this phone I'm it's not subsidized anymore where I get a new phone every 24 months for $200 I'm now paying the full cost of that phone over time, I'm probably more interested in keeping it longer as a result. And so, you know, that's one of the pieces that's kind of elongating the purchase refresh cycle. And again, in my opinion, I think that as we you know, see more 5g smartphones hit the market that that will you know, that will again provide some some growth in the market that consumers will probably you know, hang on to their, you know, most previous phone a little bit less longer as they upgrade to 5g but then after that we settled back into you know, this you know, fairly mature looking state of the market where you know, Sales are, you know, steady, you know, maybe declining one or 2 million a year, but for all intents and purposes, remaining pretty flat. So how interested are consumers in 5g? how aware are they? Again, looking at the study we commissioned and you know, which we're about to update again, we're looking at two, two thirds somewhere about of consumers who say that they are, you know, aware of 5g that they know about 5g. We know that awareness is increasing. I expect that you when we get the data back for our our most recent report that we'll see, and it's probably three fourths 80% of consumers who are aware of 5g it's really hard at this point to to avoid 5g messaging, if you're, you know, consuming any media. You know, when we think about the smartphone OEMs whether they're kind of the tier one or tier two oriens. You know, they've been working on their roadmaps right. They've been working on introducing new products. In the market, and I think it's a combination of waiting for kind of the infrastructure to build up to a certain point. So that there is, you know, enough demand for for 5g smartphones. But in my opinion, right, if you've seen any of those videos online where somebody goes to Minnesota, and they've got a 5g smartphone, and they're starting some trials of 5g, and you see that speed tests, you know, run off the run off the charts. You know, that's a pretty compelling message for consumers, or with respect to 5g. There's also a future proofing message here, right? Even though the coverage isn't everywhere yet, even though we may have questions about each of the carriers particular technology by investing in a 5g phone earlier as opposed to later, you know, there's a degree of future proofing that you're ready. Once the service comes to your area, you're ready to take advantage and of course, that to me comes through very very clearly in a lot of the smartphone marketing from the carriers and the handsets as well interest interest in buying a 5g phone so what we found is that, you know, about a third of consumers again at the end of 2018 said that they were interested in buying a 5g smartphone. And to me this is something that kind of grows in step with with awareness and also is probably a function of news around you know, building up infrastructure as well. I think that as consumers kind of view 5g as a you know, a more near term technology for them that that helps to push purchase intention that helps to, you know, drive not just interest in 5g but actual interest in purchasing a 5g enabled device. We also ask the questions being that 5g is so integral to consuming contents on our mobile devices. We asked a few questions around willingness to pay for 4k contents, you know, to your mobile phone, taking advantage of 5g, those in register very high. And, you know, as a fairly seasoned market researcher, I can tell you that whenever you ask consumers if they're willing to pay more for something, they more often than not say that they are not willing to pay. But nonetheless, we want to gauge I guess, you know, interest in, you know, step up content step up experiences on mobile devices that benefit from 5g. You know, I fully expected this, you know, 30% number is actually much higher. But, you know, the confines of a consumer survey, provide us these results. You know, I also think that there's a little bit of a kind of a brand share conversation to have here as well. So, we've seen about a third of consumers say that they're interested in buying a 5g smartphone, At least in North America, we know that the kind of the landscape the competitive landscape for smartphones in terms of brand share is very heavily weighted towards Apple and Samsung and and LG.

 
Ben Arnold 

But what does introducing you know, 5g, not just among a few smartphone Williams, but you know, among all the smartphone OEMs What does that what does that do? What we're looking at here is awareness among smartphone OEMs among consumers. And my feeling is that this provides an opportunity for some of the you know, second tier OEMs in especially in the US market to gain a larger foothold. So, if, say a TCL or a Sony is offering 5g handset and there's a maybe a cost savings to be had a you know, versus some of the other you know, larger smartphone OEMs. To me, that creates a, you know, a competitive competitive advantage, but a competitive piece to the market where some of these smaller OEMs can disrupt the market, whether it's on price, whether it's on some other features may be bundling in, you know, some added pieces of service. But, you know, I think as we add 5g to smartphones, and as the infrastructure again gets built up so that consumers can take advantage of the service, that that, you know, probably opens up some some opportunities for other smartphone companies.

 
Ben Arnold 

And we also look at brand share, so I kind of alluded to awareness and if you're, you know, at all familiar with the smartphone market, in the in the US or in Canada,this looks very familiar, right, that's, you know, two thirds of the US market is really controlled by Samsung and Apple. You know, LG is you know fairly distant third and then we have a lot of smaller OEMs that may be playing some lower price points play in prepaid phones, I again I think that that you know what we see in terms of awareness of secondary brands or what we see in terms of market share that adding this technology and again being disruptive in terms of pricing or subscription options, helps to you know helps helps to drive some more opportunities for some of these secondary smartphone OEM. So, you know, in say 18 months 24 months when we have some more 5g service into the market, I fully expect to see some of this dynamic to change. Now, you know, we could see, you know, Apple drive, a lot of demand a lot of extra demand when they introduce a 5g iPhone, and that could take away you know, some market share from others. But I do believe that, you know, in thinking about, you know, all of these factors that it does open up some opportunities for secondary smartphone OEMs as a result, so it's really, you know, not just a technology that I think is confined to one brand or one group of brands. You know, we're all dependent upon the rollout of the technology and the build up of the infrastructure. And that creates opportunity across the board for smartphone brands to really compete with each other in a lot of ways. Next, I wanted to consider consumer devices. So we spent some time talking about smartphones and we're all pretty unified that you know, that's where consumers are focused in terms of what's happening with with 5g but, and considering sort of the the path of consumer devices, I think that there are some really interesting stories to tell along that way. One thing I want to kind of start off with is we have a very strong, very vibrant consumer technology market here in the US, again, I'm on my us focused North America focused analysts. What we're looking at here is six and 12 month, purchase expectations for a handful of kind of the more major consumer electronics products, TV smartwatches, smart home products, what we see you know, is that across the board purchase intentions are pretty strong, right? If you kind of think about some of the norms of purchase intent being in the kind of 10% range for a given product category, you know, we're over indexing in a lot of those areas.

 
Ben Arnold 

Also I got, I just got done doing a total market forecast for consumer electronics, and we're expecting the the market in the US to be a 5% compared to last year. So we're actually seeing the growth rate of sales accelerate for for consumer technology products. Again, what's the How does 5g play in here? Well, you know, a lot of the discussion a lot of the conversation about 5g has to do with connecting all of these devices that we're adding to our home, right, connecting the door lock my door and, and thermostats, having them, you know, independently connected to the, to the network. I'm not sure that that's a, you know, a viable, you know, a way that this all plays out. We know that, you know, wired broadband to the home enjoys a pretty high rate of adoption. You know, a lot of us now are able to, you know, have broadband speeds that allow us to stream 4k content to our TVs, you know, things like smart home products generally, you know, don't need a whole lot of bandwidth to to function. And so I guess what I'm getting at is, you look at a lot of the consumer technology market, at least in the end of the products that consumers are buying We're actually in a pretty good place, right? We're in pretty good place in terms of the connectivity may have some gripes about, you know, speeds or smooth coverage in our house. But I think for the most part, if you live in an area where broadband is pretty available, your consumer technology products are working pretty well. Again, there's always room to increase speeds is always a desire to make that 4k stream on Netflix a little smoother. But for everything that consumers do or want to do, right now, the market looks pretty good. And our forecasts show that it's, you know, going to get better and in 2020. So I'm not sure I'm not, I'll rephrase, I'm not sold on the idea that everyone will instantly light up their consumer electronics products with, you know, their own sort of connection to the 5g network. You know, another part of this is, is pricing and carriers are going I want you to pay for those additional 5g connections and so am I going to pay an extra $10 a month to connect my TV to 5g? I going to pay, you know, extra couple dollars a month for some of my smart home products to connect? Probably not. And so I think that there are, you know, some market forces that are pushing against this idea that all of our devices in our homes will be independently connected to 5g. Because I think again, a things are pretty good as it as it stands, there's a lot of demand for consumer technology products. And when we look at things like purchase intent, there's, you know, future demand for technology products, not like you know, we're seeing demand go down because I you know, I can't, you know, independently connect my nest to the network. Another part I wanted to kind of think about as well, again, as it relates to consumer devices is computing You know, if you're familiar with the computing market at all, you know that it's gone through, you know, a few permutations in the past several years. There was a time I may have been on a stage similar to this at CES talking about how you know, tablets are taking over the computing market and that's, you know, consumers will leave their laptops at home and really go for tablets hasn't really played out in the market. Actually, probably not long after I said, that's when we saw a downturn in tablet market because, you know, tablets, you know, their devices that last a long time you tend to, you know, not need a refresh every year. So, but actually seeing PCs, you know, notebooks and tablets, research in the market, especially at the premium levels and this is looking at unit sales of the above $500 market for PC devices broken up into iPads, Mac, PC, Mac notebooks and desktops and Windows notebooks and desktops. And why I selected this cut, the more premium cut of the market is because, you know, I really want to understand some of the trends for more productivity geared devices. You know, we spend so much time on client light things in our lower costs computing products. But what's happening in the more premium end of the market,

 
Ben Arnold 

we're actually seeing a resurgence of more premium tablets are seeing a resurgence of premium windows computing devices. A lot of this is being pushed by productivity and productivity. You know, whether it's work related or enterprise is something that is benefited by independent connectivity and high speed connections, low latency of course in high quality acity. And so we're, what I'm getting at is we're actually seeing the market for more premium PC devices grow. And as those PC devices are able to take on 5g connection, I think that that helps to push the market even more. So again, in the discussion about consumer devices and how consumer devices benefit from 5g, you know, we may see some benefit, I think, from lower cost computing devices, but I think where we really see consumers go for independently connected and fast connection computing devices. Now isn't the more premium segment of the market. If you paid attention to Intel's presentation yesterday, I mean, they're talking about the always on always connected PC once again, and I think that that is a you know, an idea that becomes, I think, more, you know, more interesting to consumers with the prospect of 5g on the horizon, and it's right it's not something That's necessarily for PowerPoint or Excel. But for these, you know, work applications where you need that capacity, you need that speed to perform some of those applications. So, again, I believe that the consumer computing market is really setting up to take advantage of 5g because we're just seeing more demand and some of these more productivity focused computing devices, more productivity, you know, enterprise focused tablets, and it's all setting up to make for a very interesting scenario. As consumers acquire 5g service. Gaming is a really interesting space as well. And we've all been paying attention to the news over the past year with the influx of gaming services that are coming to the market. And, you know, I really think about, you know, things like stadia and Apple arcade to a certain extent as right BYOD gaming, and the idea that you stay do anything with a Chrome browser can become, you know, kind of a gaming platform. How does 5g factor into this? I mean, you know, theoretically you think about, you know, having that faster speed coming into your home. I think the gaming services are helping to support more dynamic gaming experiences. All that seems to be lining up to take, you know, great advantage of 5g. But, you know, what we see is that a lot of the investment on behalf of consumers in gaming is in more kind of home based gaming devices, right? It's the game console that's in your basement, it's the desktop or notebook that's in your house that you use as a gaming PC. And, you know, that's where we're seeing growth in in in gaming devices.

 
Ben Arnold 

To me, I see a pretty I don't know a pretty stark sort of stop in terms of, you know, 5g, benefiting again, like home based technology products. I'm not sold on the idea that, you know, somebody in their home playing, you know, Google stadia on their TV is going to really desire a 5g connection. I think that there's a need for, you know, certainly better broadband in the household. And we'll get to some some of the ways that consumers are solving that problem. But I think where, you know, where I expect to see gaming make a much more significant impact is in mobile gaming. So we see that there's a, in my opinion, a pretty big Tam in terms of consumers who are, you know, interested in online gaming. I'm sure that there are a lot of conference tracks this week about gaming and it's so hot, we're seeing, you know, whether it's notebooks, PCs, peripherals, services, we're seeing all of those areas grow and so you know, gaming logically, you know, seems like a Great candidate for benefiting from 5g, but I think the nuanced view of that is it's probably more about mobile gaming, and, you know, gaming through your smartphone, maybe live streaming, I'm seeing, you know, people I've gone to the airport and seeing people live live streaming themselves playing games, right sitting in the, in the, in the lounge. And so I again, I think the, the linchpin here, the sticking point is 5g will really kind of drive more mobile related habits. Again, I'm not necessarily sold on kind of home based technology or home based devices, but anything logic, you know, obviously that has a mobile connection, I think will benefit you know, in in gaming terms will benefit from 5g service. And, to me The, the, you know, the extra kind of demand on this is exactly points back to those gaming services. You know, the idea is that I can, you know, play these, you know, great dynamic games all in the cloud, and then You know, there's minimal I guess, you know, processing power needed on the on the device on that it's all really being pushed to the cloud. And to me that that really sets up a huge sort of impact for 5g on on gaming on mobile devices. And I think that's a very logical kind of step that we see in the market. So what about video? So, we do some research at NPD trying to understand broadband speeds and consumers households. And we kind of took a shot at at analyzing, you know, what percentage of US households have, you know, broadband fast enough to stream 4k or 8k video? Right, we're here at CES. One of the biggest pieces of the show here is TV technology. And there are a lot of 8k TVs last year, there are even more aka TVs this year. I don't hear anybody talking about a physical media The format for AK at least I don't think so I'm probably missed that. But you know, the idea is that you're you're probably going to get 8k content through, you know, through a download, maybe through streaming. And to me, you know, that again kind of sets up the the 5g scenario, so 27% of households have enough bandwidth to stream 8k video. You know, I think if you talk to the TV manufacturers, they're probably looking to grow that addressable market a little bit more with some of the ambitions. But right or more than 60% have enough to stream 4k video. You know, what does that mean? Does that mean that we'll see kind of consumers adopt, you know, 5g connections to their TVs or streaming devices? I'm not sure that that's likely I think, probably we're in a state of you know, downloads for a bit, and then the technology transitions to streaming but Even though I'm not necessarily fairly bullish on you know five k service to you know home consumer technology devices you know and thinking about something like 8k TV and even though you know that you know, it'll be you know, some years before we all get AK TVs and have a need for streaming to them you know, what I believe is that you know, there are there are some benefits to perhaps having a you know, independently connected TV if it's a K again, if it's something you know, 4k, I think the vast majority of households you know, have you know, the ability to stream that content and we start talking about these more futuristic you know, bandwidth heavy video formats that that set the table for, you know, some demand for for 5g.

 
Ben Arnold 

I don't know if any of you saw this picture floating around on Twitter a month ago, but I thought this is really kind of cool. So there, there's a, there's a farm that's putting VR headsets on cows as a way to get them to produce better milk or more milk or something. But, you know, one of the kind of Hallmark examples of 5g in the future is that will enable more dynamic VR experiences. I, you know, I, to me when I think about VR, think, again, I think about VR very much as a kind of stationary kind of technology. Maybe its home base or what have you. But if the sort of the real power in five G is, is in mobile, it's me there's a little bit of a disconnect with virtual reality. We don't even here at CES we don't see people walking around with VR headsets on And so again, I'm not necessarily the you know, excited about the you know, the idea or the example of interactive or more dynamic VR experiences on because that's a that's an activity that you engage in at home, not necessarily in a more mobile environment. Again, right, do we expect VR headsets to independently connect to the network? I, you know, maybe some consumer consumers will be interested in that. But I think again, it's it's more of a home based technology that takes advantage of wired broadband in the household. Because it's hard to walk around with a VR headset on your head and walk into something. But augmented reality and commonly talked about AR and VR kind of in the same way, but in my opinion, they're very different technologies. augmented reality is definitely a technology that can benefit from 5g and again, thinking about kind of the use case for AR sure there are, you know, applications that allow you to You know, see how the couch at IKEA looks in your living room. But there are also a lot of applications when you might be away from a, you know, Wi Fi, whether you're on the streets walking around for directions and navigation. You know, one thing and I've been doing this long enough that, you know, I kind of been through the location based services craze of the, you know, 2000 10s. And, you know, the promise was that you could, you know, walk down the streets, and on your phone, you'd have, you know, stores kind of beaming you offers or, you know, get 20% off at, you know, Lulu them or what have you, and that those offers could be dynamic. I think there's something like augmented reality kind of puts that into hyperspeed, where maybe it's not just a, you know, sort of a icon, kind of directing you to, you know, hit on a button, but it's more a more dynamic kind of interplay with the retailer and the user. Maybe it's so You know, video or some other kind of dynamic content. And of course, you know, something like Pokemon Go. And those kind of AR based applications, I think are really set to benefit from 5g.

 
Ben Arnold 

Just as kind of a quick example. Again, as I mentioned, NPD tracks, consumer electronics products and we track accessories. And at the height of the Pokemon GO craze, which maybe was like 2014 2015. We saw a real surge in portable power packs. These people were walking around, they needed the power, Pokemon GO was a application that took a lot of power. And so you know, we did see kind of an impact on consumer electronics sales as a result of this application. You know, and thinking about how how AR can take advantage of 5g and 5g you know, obviously being probably a battery drain on the device. You know, I think we could see a similar scenario setup where some killer apps, you know, ar apps that are able to take advantage of, you know, the connection, or helping to kind of drive sales of other consumer electronics products. And so I think in that way, ar is very much suited for for 5g and what that promise becomes. And to get back to my earlier point about developers really, you know, kind of determining the the path of all this, I want to see what what you know, what Niantic or what some of these other app developers can do with you know, AR and a 5g connection. Again, it's probably around you know, dynamic video and you know, some of the the depth perception pieces of the camera, but I think that that will be a technology that really takes advantage of the of the of the connection. So we're gonna AR VR, VR have a little bit of issue with mobile VR. But I think something like augmented reality really gets taken to the next level as as consumers are able to take advantage of that connection. And drones. So, you know, if you've been coming to CES for, you know, a number of years, you've seen a lot of drone exhibitors that I want to say, you know, 2014 was like peak drone, in my opinion, that's where we saw sales really kind of spike. And we've been on, you know, fairly steady trend downward since then. But, you know, thinking about drones, and how they can take advantage of a 5g connection primarily through video, I think. I think that there is a big benefit for for drone sales in that way. Is it enough to kind of reverse the fairly significant declines that we've been used to over the past several years. I don't think so. I think the drone market is still kind of in this session. decline. But I think there are you know, consumers out there that will be really interested in taking advantage of the connection really interested in live streaming 4k video from their drone to a device on the mobile connection. And again, I think application developers will help determine what that what that looks like ultimately and where it's going. You know, in other pieces drone delivery and you thinking about say some of the some of the issues with millimeter wave right where the connection or it has problems going through rain or you know, can't go through a wall, you know, drones are up in the sky, and I think can take advantage of, you know, being a little more consistently connected to to 5g as a result, or, you know, whether it's, you know, for video purposes or for you know, bringing the medicine to someone in a rural area, but I think those are, you know, some pretty solid use cases are For consumer technology products that aren't phones or tablets, to be able to take advantage of this high speed, low latency connection. So I do think that 5g can revive the drone market to a certain extent, probably resides in more premium products. But I'm willing to bet that a company like DJI is keeping a keen eye on how 5g is being rolled out in US markets, because, you know, they're the largest drone manufacturer, and they're looking for ways in which they can, you know, drive more sales into the market.

 
Ben Arnold 

smart appliances. So, you know, you walk the show floor, you go into Central Hall, and you see all these great smart appliances. Now, we're talking about AI built into refrigerators and ovens. So it's not just simple connectivity to something like this benefit from from 5g I come back to my my earlier point about you know home based devices and you know how exactly can a smart appliance use a you know, high speed connection? So I you know, I don't I'm not exactly again I'm not exactly sold on 5g as a kind of accelerator of demand for for smart appliances but I'm pretty sure that we'll we'll see some of those connections in marketing as as we go forward. But you know, from a usability standpoint, I'm not sure that 5g does a lot for my connected refrigerator. I think we're still even you know, trying to figure out what exactly a connected refrigerators really good at but nonetheless we're you know, we're building more connectivity into the kitchen. I think that there's a confluence of you know, what's happening with respect to you know, food service and food ordering and ordering groceries, that the smart kitchen is going to be a you know, something that we'll see Just don't know that 5g connections really have an impact on, you know, on the smart kitchen. I think we're again, we're pretty good where we are with with broadband speeds that existing now that we have one area that we are really focused on is, you know, where broadband isn't necessarily available or where speeds are slow. You know, how does 5g benefit, you know, some of those areas. One thing I wanted to kind of talk about in the conversation of bringing more connectivity to, say rural communities in the US, we do have some ways in which to drive faster speeds, faster broadband speeds into our homes, right. What we've seen in terms of sales of mesh routers, even though it's not a huge spike up, right, we're seeing consumers kind of solve some of those problems, whether it's coming Ridge, but also speed in their homes. So there is there is somewhat of a cure for the, you know, Wi Fi that's not behaving very well in someone's house. But if you're not able to get, you know, if you're kind of still stuck at DSL speeds are like mini in the in rural areas, our mesh router is not going to help you much. You know, we've done an analysis on kind of broadband availability in the US and we found is that there's 31% of households that don't have broadband. We I just, I just lost my broadband connection.

 
Ben Arnold 

One second, folks. There we go.

 
Ben Arnold 

So right, so there's a definite need to bring broadband to some of these communities. And, and kind of bring them I think a little more fully into the technology market. And it's not just kind of an altruistic thing when, you know, bring broadband to rural communities. I mean, there's a, there's an incentive there, that there that we're looking at. And I'm just going to skip to this slide real quickly. So, we looked at as a part of this analysis, we looked at ownership of technology products nationwide, and then as a subset of that, in these rural communities in which, you know, I showed the earlier slide, and you know, pretty much overall what we see is that consumers in rural communities under index in terms of their ownership of key technology products, so you look at like streaming media players, and there's a, you know, the rural communities under index for ownership of you know, the kind of major streaming media players. Smart Home is, you know, commonly talked about smart home is kind of the, you know, Current driver of sales and growth in the consumer technology market ownership of in rural communities of smart home products also under indexes in nationwide. And a lot of this has to do with the lack of broadband. There's, you know, there's little use for a new Apple TV if I've got DSL speeds coming into my home. And so, as a result, a lot of those consumers are still kind of buying physical media and blu ray and going to Redbox and things like that. But the idea of, you know, building up, say, fiber to the curb or some of these other, you know, capital intensive technology rollouts to rural communities is costly, right, there are fewer households and, you know, per square mile, generally in in rural communities. And so, it's really expensive to bring that technology because you're, you're a you're serving fewer households than you In a more densely populated area and be the rollout is expensive in itself. And so as we sometimes see in, you know, kind of more emerging markets, I think we'll you know, see some consumers in rural communities kind of leapfrog that, you know, wired broadband, and go straight to 5g service and that there will be, I think, an incentive to bring, you know, roll out 5g into some of these areas that, you know, are not served by, you know, wired broadband, for whatever reason. And so, whether those consumers are, you know, independently connecting their, you know, blu ray player to, you know, at&t network, or it's something that goes through a home gateway. I think that, you know, the promotion of 5g, especially in some of these, you know, underserved communities is something that will really bring those consumers into the technology market much more fully, right. What we're kind of getting at is if you don't have suitable you know, internet service, you You're not going to be as valuable of a technology consumer, as somebody that, you know, has a lot of connectivity available to them. And so as we talked to device manufacturers and retailers, you know, we're saying, look, you can unlock spending among these consumers as you bring them online. And, you know, that was a very, you know, eye opening thing for me. And so I think there is a benefits provinces, some more home based technologies for rural consumers, just because of the, you know, the paucity of, of broadband, some of those areas. And then emerging use cases. So these are, these are a lot of things that we kind of read about examples that were 5g is useful. Certainly mobility and smart cities is one where there's a lot of debate. And I think the consensus is that, you know, 5g will, you know, will benefit autonomous vehicles, with you know, vehicles connecting to the grid. Right. That's again, a data intensive procedure, it's something that has to happen in real time. It's got to happen quickly. But I think there there's a little bit of debate on, you know, how 5g, you know, plays out across, you know, larger land masses, how it gets vehicles to communicate with each other, you know, there's some kind of competing technologies on that front. You know, I, you know, my feeling is that, again, we'll kind of see where the application developers take it, but, again, with some of the conversations about the particular you know, technology, you know, millimeter wave or, you know, mid band, or what have you, that there are some, you know, some challenges, I think, to rolling out 5g to power the smart city and in autonomous vehicles, I mean, capital investment is one of them, you know, and, and smart cities. And so, I think that that's something that kind of has to be be proven out and, again, as we see sort of the infrastructure get built up You know, a lot of these companies will help determine which way this is going and how to best take advantage of 5g. And you know what we like to call industry 4.0. And this is something I'm really excited about. So, you know, one of the kind of tag lines for 5g is that 5g is ready made for the enterprise. And thinking about a, you know, a factory where you have machines connecting to each other. And that's, I think, one of the great benefits of 5g especially in, say, a private network, the ability to kind of troubleshoots in real time, something happens on the on the factory floor, say the factory manager is off site and has to kind of stay on top of what's happening. I think all of these things kind of kind of line up to coincide with all the benefits of 5g. And so, you know, in terms of these emerging use cases, this is what I'm really interested in. This picture is from a bash factory, which is a kind of a 5g test. So In the UK, and so, you know, I'm one of the reasons I think there's such a conversation about 5g as it relates to countries is that it's a, you know, an economic enabler. And I think this is one of those great examples where, you know, 5g can help prop up enterprise and help prop up commercial applications. live entertainment experiences read last week, that you know, they're like 35 NFL stadiums that Verizon is connected to 5g and I think most of those are millimeter wave or all of them are millimeter wave. And so the entire the entire venue isn't connected, but parts of the venue are connected. You know, I'm not again, I'm not quite sure a what's, you know, what 5g enables someone to do while they're watching a basketball game. I mean, we're watching it, you've got video, you've got kind of your fantasy stats. Probably were five g benefits, the You know the live entertainment more so is in kind of, you know backroom logistics and you know helping to make sure that you know concessions are staying accurate and they've got enough stock so I think it's more about the operations of a live entertainment and and less so about what consumers are doing with their devices although again I think it was Intel talked about taking a 3d model of a football field and being able to get a you know, video of you know, the quarterback when you don't even have a camera on the quarterback and I think that's something that could be benefited by 5g but just the you know, the idea that we can't connect the entire stadium we can only connect certain pieces of the stadium, to me says a lot about against kind of the current limitations of the of the technology.

 
Ben Arnold 

I don't know if any of you have heard of this remote surgery pilots in China, but there's a surgeon in Sanya and China. There's A patient having brain surgery in Beijing, and the doctor was able to conduct the surgery remotely. And again, I think this is a perfect example of, you know, low latency, you know, high capacity, a great example of the technology. Again, the use case, though I, you know, let your doctor operate on your brain from, you know, 400 miles away. I'm not sure you know, how consumers will warm up to that, but I do think that there are some real, you know, valuable applications for for healthcare and telemedicine, some other areas. So, the building on the left is Rush University Hospital, and that's been a pilot for at&t, where they've lit up the entire hospital with 5g. And, you know, of course, it enables a lot of, you know, testings for back room and, you know, operations types of things. And, you know, I think in a hospital setting something like 5g, again with the nature of the applications of becomes really, really valuable. in a hospital setting, and then telemedicine, I don't know that I need 5g to communicate with my doctor. But again, there could be applications tests, you know, diagnostics that benefit from the high speed and low latency of the connection. But again, right, application developers will help determine where a lot of this goes. And right now, the you know, analysts like me are kind of prognosticating based on what we know, you know, what's currently in the market and what consumers want to do you know, how viable some of these things are. Banking, we've seen consumers adopt, you know, mobile banking using mobile payments. The smartphone is the focus of you know, how a lot of us pay for products you know, that's a pretty simple transaction. It's not you know, you buy something through Apple Pay. It's not a you know, very broadband intense application, but does this open up Some areas for safe, you know, trading or, you know, other types of financial transactions that really benefit from, you know, real time activity. And so again, in thinking about some of these areas, a lot of these things, you know, exists in certain forms, not necessarily in, you know, widespread just yet. But as we talk about the benefits of the connection, I think that helps to drive more interest and more uses around injecting the mobile device into more, you know, intensive applications around around finance that, again, are dependent upon the timing of making those transactions. So I did title this talk today, nine ways that 5g will and will not affect the future. And I did want to come back to that just as kind of my my parting thoughts for today. And I think you got a lot of my perspective on this. Right? 5g, the 5g wills, if you will drive new smartphone and tablet updates and sales. You know, we may go back to the, you know, earlier kind of dynamics of the market, but I think there's desire from consumers to, you know, upgrade their devices to take advantage of 5g. We talked a little bit about the rural benefits and other communities that are underserved by broadband access and how there you know, might be more of a play for home based technologies there and unlocking technology spending windows consumers as they come online, be an integral part of smart cities and autonomous vehicles. You know, 5g is is, you know, ready made for the enterprise. So, you know, in terms of enterprise applications, I'm pretty pretty bullish on that, and then promote, you know, in home medical care and telemedicine and, you know, certain applications at hospitals. I think all of these things are, you know, very much in the in the realm of being benefited from five areas where I'm gonna hedge my bets a little bit and just put probably in parentheses, but, you know, I don't believe that'll really significantly significantly impact home based technologies and consumer technology products. Again, because the current market is pretty vibrant as it is, you know, where that might kind of change where I might caveat that is in some of these rural communities, were bringing, you know, wired connections to the home is is costly. You know, I don't believe that will replace the vast majority of wired in home internet connections.

 
Ben Arnold 

You know, I certainly will see the, you know, some of these use cases appear, but I think as consumers are, you know, using their devices now, that there's not a huge, you know, motivation to switch over to independently connected 5g devices in the home. I'm not sure about remote surgery, I mean, that probably will be a place that we get to but just the Thinking about doctors and people's sensitivity around around surgery and things like that. I think consumers are a little bit skittish about that. And then I'm not sure that it does much for virtual reality just because that's such a stationary and home based technology. But, you know, the thing I'll kind of end on is, I believe in the power of application developers, and if there is a killer app that can utilize 5g when you're not connected to Wi Fi, and you're, you know, out on the street or something, and it's a, you know, an experience that's, you know, measurably better than what it had been. Well, you know, that's that's kind of the the essence of our industry, right, that application developers can help determine and help kind of build some of these experiences. So I believe we're at time I want to thank everyone for attending the session today. I'm going to hang out for a bit afterwards and here for any questions, but Thank you very much and have a great CES.

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