Van’s note: Van Bryan here, Jeff Brown’s longtime managing editor. At the end of every year, I sit down with Jeff to discuss his biggest predictions for the coming year.
Over the next two weeks, we’ll cover everything from 5G and precision medicine to artificial intelligence, cryptocurrencies, NFTs, SPACs, private investing, and so much more. And we’ll also be checking to see which of Jeff’s 2021 predictions came true. You can see our past predictions here.
Today, we start with a topic longtime readers will know well: 5G wireless networks. Last year, Jeff predicted that 5G would become the most consequential technological leap of this decade. Today, I’ll ask Jeff about how the 5G network build-out is proceeding… and the technological megatrend it’s bringing out into the mainstream.
On behalf of Jeff and the entire team, we hope you enjoy the 2022 prediction series. And thank you for being a reader.
Van Bryan (VB): Jeff, we’ll be covering a lot of ground. But I’d like to start with 5G technology. It’s been an area of focus of yours for years.
Jeff Brown (JB): You’re right. I’ve been publishing research on 5G for the past five years… longer than any other analyst. And the truth is that I’ve known the potential for much longer than that. I’m glad we can come back to it.
VB: To start, let’s check in on your 5G prediction from last year. You predicted that 500 million 5G-enabled devices would ship in 2021. How did that prediction turn out?
JB: It was spot on. We’ll have to wait to see what the final number is, but estimates put final shipments at around 560 million 5G devices. I absolutely knew this would happen.
Last year, all of the economic lockdowns had put a strain on smartphone manufacturers. In the second quarter of 2020, especially, there were work stoppages and manufacturing delays. This ultimately led Apple to delaying the release of the 5G-enabled iPhone 12 by two months.
Losing two months really impacts how many devices you can sell in a calendar year. But it’s not as if the demand for 5G handsets went away. It was just pushed into 2021, and that’s why we now have this flood of new 5G phone sales.
VB: And what does that mean for the 5G rollout?
JB: Well, let’s back up and remind everybody about the phases of the 5G rollout.
A technology like 5G rolls out in three phases.
Phase One is the infrastructure phase. Think of things like network towers and fiber-optic lines. We really entered Phase One in 2017. And it’s still going today.
Phase Two is the devices phase. That’s when the network begins to go online, and we start to see smartphones and other devices that can access these networks go on sale.
Phase Three is the services phase. That’s when we start to see applications running on these networks that would not be possible on 4G.
[Van’s Note: Paid-up readers of Exponential Tech Investor can check out Jeff’s recommendations for his favorite 5G companies right here and here. And for any readers who would like to join as a paid subscriber, you can watch Jeff’s special presentation on the 5G “flip” right here.]
We are well into Phases One and Two. And 2022 is going to be the year when Phase Three, the applications, pick up steam. And it has to do with an important event that happened this year…
VB: What was that event?
JB: In the third quarter of this year, sales for 5G-enabled devices outpaced the sales of 4G-only devices. I gave this event a name. I called it “The Flip.”
We could say that the balance of power “flipped” from 4G to 5G. From here on out, 5G will be the dominant wireless technology. We’ll still use 4G networks, but they’ll keep giving way to the faster 5G network technology.
VB: And what will happen because of “The Flip?”
JB: I worked in the wireless network industry during the transition from 3G to 4G. And what most people don’t know is that 4G actually went “live” in the 2009/2010 timeframe.
But like all wireless network technology, it isn’t widely dispersed right away. It takes years for these networks to be built, for devices to be manufactured and sold that can access these networks.
And it really wasn’t until the 2015–2016 timeframe that “The Flip” from 3G to 4G happened. 4G devices outpaced 3G devices, and the new wireless network technology became the dominant standard.
What happens at this point is Phase Three. That’s because now you have scale… Now you have enough new devices in the field that you can launch applications that use this new technology.
In the 4G era, a perfect example is the company formerly known as Facebook. We might be surprised to learn that 81% of Facebook users access the platform via a mobile device.
And it simply wasn’t possible to watch videos and scroll through photos over a 3G network. You didn’t have the bandwidth.
Or we can consider ride-hailing services like Uber or Lyft. These applications simply would not work over 3G networks. It’s not a coincidence that these applications gained adoption when we flipped to 4G.
VB: And what sort of applications or services can we expect thanks to the 5G Flip?
JB: In 2022, we’re going to see an explosion of augmented reality (AR) applications running over 5G networks. Augmented reality is when our view of the world is “augmented” with additional data or images. Amazon already has a useful AR feature that let’s you visualize furniture in your living room.
Amazon’s AR Tech in Action
Also, 5G networks will be used to “tether” our smartphones to a pair of augmented reality glasses.
VB: Could you unpack that more?
JB: I’m on record saying that augmented reality glasses will be the next consumer electronics craze. These lenses augment our view of the real world. I had the chance to try a pair of AR lenses from a company called Magic Leap not long ago.
Jeff Tests Out Magic Leap
But in order for these glasses to be a hit with consumers, they need to become smaller, lighter, and feel more like a normal pair of glasses. And in order to do that quickly, I think the majority of mass market AR glasses will tether to a phone in your pocket. That way, they can leverage the hardware components that already exist in our smartphones.
And I’m going to make my first prediction for 2022 now. I believe we will see at least three major augmented reality glasses launched next year.
VB: Who do you think will launch a pair of AR glasses?
JB: Apple is the obvious one. Remember, AR glasses have the potential to literally replace our smartphones over time. Everything we do with a smartphone – texting, calling, streaming, emailing, etc. – can also be done with a pair of augmented reality glasses.
It won’t happen right away, but Apple’s iPhone could eventually become obsolete. Apple knows this. So it’s preparing a pair of augmented reality glasses for the mass market.
Facebook – or Meta, as it’s now called – is another obvious choice. The company has ambitions to dominate metaverse technology in the years ahead. And augmented reality glasses are one way we’ll be able to interact with a metaverse.
[Van’s note: In the days ahead, I’ll ask Jeff what he sees for the future of the metaverse, and he’ll reveal why he thinks Facebook’s metaverse goals will fail. Keep an eye on your inbox for that.]
Samsung is also a possibility. Some smaller companies like North or Nreal are also contenders to launch a pair of AR glasses.
What’s important to note about these new products is that they will be the first generation aimed at mass market appeal. They will be sold at an affordable price point – around $500.
And at those levels, they become products that can be mass produced, shipped in volume, and used by a large number of people. It will really be an important inflection point.
VB: Thanks, Jeff. We’ll keep an eye on that in 2022. Before we conclude, I wanted to check on a prediction you made to me a long time ago.
In early 2017, you shared a chart showing mobile data traffic. At the time, it was around 10 exabytes per month.
[Van’s note: An “exabyte” is a unit of measurement for data. One exabyte is roughly equivalent to 100,000 times all the printed material in the Library of Congress.]
And you said that mobile data traffic would be multiples higher in the next five years as the 5G rollout got underway. I was a little skeptical. But I recently checked, and you were right. Mobile data traffic is almost eight times higher.
JB: [Laughs] So I made a believer out of you, huh?
This is the nature of exponential growth. It sneaks up on us. We progress linearly at first. Then, we hit an inflection point… that was around early 2017. And then it takes off like a rocket.
This is a result of the proliferation of social media, of streaming video, and of gaming applications. All these applications take up more bandwidth.
And then you introduce a technology like 5G that has even greater capacity and nearly zero latency, which ramps up adoption even further.
I’ve been following the 5G rollout for seven years. And by now, I’m sure a lot of people think that it’s “old news.” That’s a mistake. Everything has been leading to this next stage. Things are about to get very exciting for 5G technology in 2022.
VB: Thanks for your time, Jeff.
JB: Of course.
Van’s note: Be sure you check your inbox tomorrow for our next edition in Jeff Brown’s 2022 Prediction Series.
I’ll ask Jeff what the new year holds for precision medicine, what to expect next from CRISPR technology, and if the 2020s are still “the decade of biotechnology.”
And as Jeff shared today, 5G-powered AR glasses are gearing up to be the next multibillion-dollar consumer electronics craze. Few see this. Even fewer are positioned for this explosive move.
But Jeff is already ahead of the trend. He recently released a report where he names his No. 1 augmented reality stock to buy today. All the details right here.
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