The backlash against China has given unexpected notoriety to a number of companies, Ericsson being one of them. And they have not been shy about increasing their visibility since they have landed a plethora of new business in the 5G space. Do not get me wrong. I like them, I think they are a top-notch company and have had a fair amount of interaction with them during the golden era of print publishing. But I think they are getting a bit too big for their britches, particularly in their public statements regarding the state of 5G.
Not long ago they said the global market for smartphones would be $190 million for 2020. A month or so later they upped that number to $220 million. That means they were off by nearly 15 percent. And it was not like much changed except the pandemic got a bit worse. I would think that, given the current state of global affairs, one would be more conservative in expectations.
Further, Fredrik Jejdling, Ericsson’s executive vice president and head of business area networks said in the November 30th report, “2020 will probably also be known as the year when society as a whole took a giant leap forward in our digitalization journey.”
I get it – companies like Ericsson base a lot on orders – potential orders, promised orders, existing contracts and the like. If they just want to spin data the best way possible, that is fine. However, bad forecasting has a ripple effect and reduce credibility. I think Ericsson is way off base on this number – we will see. But I also think Ericsson, Nokia, Samsung and other OEMs should leave the forecasting to analyst firms that do it full time.
Analyst firms such as Gartner and Counterpoint have a much better grasp on markets – they have to. Forecasting is their livelihood. However, such firms are not always correct either and often present contradictory data. However, for the most part, and for most of the time, they are relatively accurate.
For example, recently Counterpoint forecasted that smartphone sales would be relatively flat YoY for 2020. Gartner, on the other hand, predicted a decrease of nearly 6 percent for the same YoY. Analysys Mason puts that number at 2.7 percent.
Another analytics company, IDC seems to think smartphone growth for the fourth quarter is “optimistic” (whatever that means). Its pegs growth at about 2.5 percent, YoY. These forecasts are all within the margin of error for credibility, so I have to wonder what data Ericsson used to predict such a large number in such a short period of time.
Anshul Gupta one of Gartner’s analysts, made this statement: “Consumers are limiting their discretionary spend even as some lockdown conditions have started to improve.” That makes sense. However, the reverse is now occurring, and the lockdown is getting tighter. Does Ericsson see this as a trigger for users to rush out and purchase 5G smartphones? I find that hard to believe.
As well, if one has had their finger on the pulse of the pandemic, one knows that the medical community has been warning of an uptick in severity since the end of summer. So I would have to wonder why anyone would expect the consumer to ramp up spending on smartphones, especially in light of the holiday spending season where consumers are going to spend on gifts (I doubt they will all be 5G smartphones). And that prediction is down this year.
The analysts’ forecasts are within line of each other. What informal research, and what I hear on the street, seems to agree on is not much uptake in 5G smartphones will take place until next year.
Five percent between Gartner, IDC, and Counterpoint is not a big difference. But it also is not rocket science, if you have a decent finger on the pulse (or simply read the business section of the paper (err, I mean Yahoo), or just take in what is happening, globally, such as the pandemic. Those sources are nice to give one a flyover of what the industry is doing. And since they are generally accurate, and OEMs can plug them into their business models as data to help them forecast.
But the real success is in being able to hit the numbers before the results are in. Kind of like betting on the horses or blackjack. The more you understand, the better are your chances of success.
That is done regularly, as well. For example, Analysys Mason expects the telecom industry to grow a modest 1 percent next year. And recently I received a report from ABI predicting technology trends and markets for 2021. I will revisit these at the end of 2010 just for fun.
Forecasting is a tricky business. A couple of months ago, the majority of the analysts in this space predicted a “supercycle” of 5G activity following Apple’s entry into the 5G space and Verizon’s media blitz that “5G just got real.” I had presented my case on why there would not be a supercycle a few columns ago. And a couple of months later – still no supercycle.
It is not that I am any smarter than anyone else. As an editor, and being in the industry for 30+ years, my livelihood does not depend upon accurate forecasts when I occasionally dip my toe in those waters. But my credibility does. It would be foolish to go out on a limb unless I have a high degree of confidence in what I pen.
Some forecasting is relatively straightforward – ya know, past performance being an indicator of future potential – Christmas buying, for example. It is a pretty safe bet that this case can be forecasted, with a relatively high degree of accuracy, by simply watching the state of the economy. As well, all things being equal (no pandemic or other global crisis) adding gains is generally a safe bet since the mathematical algorithms developed to analyze past data are relatively reliable.
As well, many seem to think (or wish) that China is done in the telecom infrastructure space and Ericsson, Nokia, Samsung, and others are the new superheroes of 5G. That is a bad assumption and if you are an analyst, counting them out of your predictions is a mistake. In fact, according to Stefan Pongratz, a Dell’Oro analyst, Huawei and ZTE were the only telecom vendors to show growth for the first three quarters of 2020 despite the Trump administration’s attempts to bury them.
Regardless of how the China landscape is at present, they have tremendous resources at their disposal. Their 5G business is booming at home and do not think nations will not want their advanced technology as the 5G ecosystem evolves. That has fooled some of the analysts recently.
China, Huawei and ZTE particularly, continues to advance 5G technology faster than any other country. The same with AI. The past administration’s ridiculous position has, certainly, put a crimp in their global presence.
However, the United Statesand its allies are not the only game in town. And now that Trump, Barr, Pompeo, and the like are finished, I am confident that the new administration, and our allies, free from American bullying, will revisit the global wireless, semiconductor, AI, and other technology ecosystems and try to reach a more amicable coexistence.
We do not have to sit around the fireplace and sing Kumbaya with China. But we would be smart to take a step back and see how to develop a global 5G ecosystem where we can all get along.
Developing individual nation ecosystems will not work out well for anyone. That will certainly do us more harm than good.
It will certainly be an interesting ride in the next few months and to see how the analysis sector deals with all of this, going forward.