The China vs. US 5G Space Race

5G is rolling out. Early tests from Qualcomm and Samsung, and even some demo’s I saw at Google I/O suggest greater than 1gb per second speeds are likely. I understand the naysayers will point out those are controlled tests and on-base stations that are not clogged like the ones we have today. I also know the naysayers look at the promise of LTE and see how network congestion impacted the promise of LTE. Basically, I understand there is skepticism, and that skepticism is warranted. I do, however, thing 5G is fundamentally different from a technology standpoint, and because of that, it is interesting to watch the geopolitical battle happening between China and the US around 5G.

The 5G Space Race
Again, understanding the skepticism, the reality is 5G is a different promise. Nearly everyone I respect with technical chops that go way beyond my own is extremely bullish on 5G, and the consensus is this new network infrastructure will create a new Internet. What that means is with higher speeds, nearly sub 10ms latency, and vastly superior capacity and load tolerance, software developers will not be burdened by the network constraints of the past and thus will be able to develop experiences not possible in the LTE/4G era.

What stands out to me looking at what is going on in China with apps and the Internet is how different it is than what is happening in the US. The Chinese Internet already feels more advanced than the US internet in many ways. And yes, I’m intentionally looking at them as two different Internets. There was a time when the thesis was that US consumers, particularly younger ones, would start to desire solutions that are similar to China. We don’t have to look far to see some of that theory still be attempted at TikTok is focused on the US but is a solution with many Chinese counterparts.

I’ve long argued the opposite of this thesis is likely, and now it is becoming clear we are likely to have two very different Internets. The Chinese internet and the western Internet.

It seems like China understands this, and the potential for 5G as well. Chinese consumers already have standardized on mobile commerce, mobile payments, consume 4x more mobile video than western consumers, play massively multiplayer games wirelessly, create 3x more digital media posted to social media and blogs, and a host of other things western consumers still don’t do. And this is all on LTE. 5G feels like something that can enable China a whole new platform for their Internet. Ask any Westerner who travels there often, and they will all tell you how much more advanced the Internet is in China than the US. The Chinese government views 5G as an opportunity to pull further ahead of the US when it comes to Internet technology.

5G is the hope for the west to catch up, but I worry governments will get in the way instead of being a supported catalyst. Luckily, companies like Qualcomm, Google, and Apple, and Samsung to a degree, have a stake in seeing the US be competitive against China here and bring technologies, devices, and software platforms that will serve as a catalyst. But with the broad theme of regulation and the government’s slow-moving nature with regards to spectrum, I worry the US 5G ecosystem will move quite a bit slower than China’s.

The Aligning of Hardware Trends for 5G Innovation
One thing to contemplate as well as how the hardware trends may align with 5G innovation to enable new software and services experiences. For example, a foldable device seems like a technology that will greatly benefit from the potential of 5G. All data we have and have seen confirm that the bigger the screen, the more consumers create and consume rich media. Which makes for an interesting hardware discussion since you can make the case that the country with the largest installed base of large screen connected devices is the one where more software/services innovation will happen more quickly. For the record, I include the category of the connected car in this as well.

Next week, I will write up and share my takeaways from the Display Week, where I saw a clear path to larger displays in smartphones, notebooks/tablets, the home, and the connected car.

The 5G space race starts with infrastructure, that is where are right now, is then followed by the business model, and then followed by devices. The next 18 months we will see infrastructure get built out and hopefully carriers will reasonably price 5g experiences, so consumers are not priced out of the 5G world. As that happens, we will see more 5G devices as a large percentage of devices sold in 2021 and 2022. Along that time frame, we should see foldable smartphones and PC tablets start to come to market as they will have likely solved some of the major technical challenges that exist with them right now.

While I agree this is a marathon of a race, not a sprint, it is one that neither country can afford to fall too far behind on and the biggest companies in tech will rely on 5G as a catalyst for growth.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

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