The iPhone 14’s Satellite Texts Sound Cool, but 5G Is Still What Matters

When Apple executives show off the iPhone 14 next week, as is widely expected, you probably won’t notice many changes. Rumors suggest the notch where the selfie camera sits may be smaller, and the company will likely tout camera improvements or newly introduced always-on screen technology. But the feature Apple will be betting on most to draw people will be the one introduced two years ago: 5G wireless.

Sure, for some people, 5G is yesterday’s news. For others, it’s just a bigger number than 4G that came before. But increasingly, data is piling up that indicates 5G wireless is becoming nearly as important in today’s iPhones as battery life and storage, the two features people watch out most for when buying their phones. The current wireless standard, which has been available for several years now from all of the major US carriers, is also the second-most cited reason people told researchers at the consultancy Deloitte that they’d switched mobile providers, behind “better value for the money.”

This is a far cry from how 5G was perceived at launch and in the early years, when the service switched on with lots of fanfare but little actual coverage. But the carriers have poured billions of dollars into the infrastructure and airwaves to support it, which has resulted in better service in many places. 

Apple CEO Tim Cook is one of 5G’s biggest boosters, citing it nearly every time he’s discussed iPhones in public since first offering the technology with the iPhone 12 in 2020. “5G has been an accelerant,” he said in July when discussing future prospects for his company’s handset, despite rising inflation and a looming recession. “I think there’s reason to be optimistic.”

Every year seems to be a test of the iPhone’s continued popularity, and that’ll continue with good reason this year too. The iPhone is the company’s singular most important product by nearly any measure. Apple rang up more than $191.97 billion in iPhone sales last year, which was more than half of its overall revenue. Much of the iPhone’s technology has seeped into the rest of its business as well, with related products like the Apple Watch, AirPods headphones and iPad tablet becoming multibillion dollar businesses unto themselves. 

It’s also helped to push Apple’s value to more than $2.5 trillion, up from the $60.7 billion Wall Street valued the company at just before the device was first announced 15 years ago. Now, Apple is the most valued company on the planet, followed by oil giant Saudi Aramco, Microsoft, Alphabet (Google), Amazon and electric car maker Tesla.

The big picture

This year, though, the iPhone’s success won’t just be a measure of sales that add to Apple’s profits. It’ll also be a bellwether for the larger economy, giving some sense of whether people are willing to spend at a time when our collective confidence in the economy has fallen to its lowest point in decades. Businesses large and small have slowed new hiring or begun to lay off staff, as Snap, the smaller social networking competitor to Facebook, did last week.

Yet 5G, as yawn-worthy as it is within the tech industry, may be Apple’s key to success navigating the souring economy we all seem to be facing. Wedbush Securities estimates about 240 million of the 1 billion iPhones being used worldwide haven’t been upgraded in the past three-and-a-half years and thus aren’t running on 5G networks.

Those owners of older iPhones will likely upgrade at some point, particularly as wireless carriers pack on perks like free subscription movie and TV services to entice people to upgrade. “The stickiness of the iPhone upgrade cycle is still being underestimated,” Wedbush analysts wrote in a message to investors earlier this summer. “This continues to remain Apple’s unique advantage over other technology stalwarts.”

Dream a little 5G dream

An odd aspect of the 5G upgrade cycle may be that while people are buying in — as in, they don’t want to buy new non-5G phones — 73% of respondents to Deloitte’s surveys said they wanted a “better understanding” of what 5G offers, and 30% said they’re disappointed by “a perceived lack of innovative apps and services that leverage 5G.”

When carriers began promoting 5G several years ago, they talked of next-generation wireless technology that could usher in a new sci-fi-device-laden future. The promise of 5G showed up everywhere, from self-driving cars to remote medical care to smart cities.

So far, 5G has largely delivered on its promises of higher speed and increased reliability, but that’s about it.

Carriers, meanwhile, have convinced people 5G is necessary in part by turning off older 3G service, effectively pushing some people to upgrade and indirectly putting 4G users on notice that they, eventually, will be next.

Now, with economic uncertainty on the horizon, people are having to think more carefully about device purchases they may not upgrade again for several years.

“If you’re going to buy a smartphone, you’re going to buy the best you can at a certain price point,” Maribel Lopez, longtime industry watcher and head of Lopez Research. “People have to make serious choices when they’re looking at 30% increases in food costs and doubled gasoline prices.”

“No one, unless you need a value phone, would buy a 4G phone today,” she added.

Shiny Apple

All these trends don’t mean Apple’s iPhone is a guaranteed hit, with or without an unfolding economic catastrophe happening around the world.

To sweeten the iPhone 14’s introduction, Apple’s teams are working hard to offer software updates with its iOS 16 software update, like a new “widgets” to add info to the lock screen, undo-send in Mail and heightened security. 

They’re also rumored to be polishing new features like the always-on display, which would allow iPhones to show limited information on the screen even when it’d be typically turned off, and emergency satellite texting, which could come in handy if you’re stranded on a desert highway or in the middle of the ocean.

For some people, that all may seem like unnecessary features just to have something new on the box this year. But Creative Strategies analyst Carolina Milanesi said Apple has to be careful to introduce features that matter to early-first adopters and premium purchasers, who are “critical to the brand perception.”

“You can’t leave that high-end user feeling left out or forgotten,” she said. And for everyone else, she’s expecting carriers to offer subsidies and other give-aways to convince people that the real big changes will be to the value they get out of the phone.