MWC 2019 Wrap-Up: Folding Phones, 5G, and AR Made This the Most Important Show in Years
MWC - Context
MWC is the world’s largest annual telecom show held in Barcelona, Spain. If follows CES in Las Vegas, which has become as much a consumer IoT/auto show as consumer electronics, and precedes Berlin’s IFA, which takes place at the end of the summer and is half consumer electronics show, half consumer appliance festival. That makes MWC the key launching ground for global telecom software, services, and hundreds of new phones. It is, indeed, global, with unique brands and devices destined for Asia, Eastern Europe, Africa, and the Middle East – not just North America, Western Europe, and South Korea. This year, we expected to see 5G network launches, 5G hardware launches, and folding phones. We got all that and more: this was easily the most exciting and news-packed MWC in several years.
Key Themes
Phones are exciting again!
In addition to the usual iterative improvements, we saw new form factors and ideas like folding phones, wrist phones, extra-long aspect ratios, camera arrays for computational photography, and more. Smartphones may be a mature category, but the landscape is shifting: outside the U.S., Chinese manufacturers are moving upscale and into new market segments.
5G is coming
You can safely ignore those who say it’s already here, because the networks are not ready yet, and it isn't clear what new use cases 5G brings consumers. However, the carriers are aligned, and chipset vendors and device manufacturers will be ready once the networks are deployed. Qualcomm is even talking about its upcoming second generation 5G modems and third generation integrated SoCs. This is the first network generation where the modems and devices are ready before the network itself, and device vendors at MWC were all trying to show off products that don’t actually do anything yet. Despite the noise around 5G phones, the most compelling 5G use cases at the show were all aimed at the enterprise, public safety, or public health.
AR is ready for work
There were other AR stars at MWC, including nreal and LetinAR, but Microsoft stole the show. Microsoft did not just improve the field of view and make the visor more comfortable, it built extensive ties to its Azure cloud and Dynamics software so that companies can quickly deploy HoloLens 2 to get things done. This is a transformative product. Note: We attended the HoloLens 2 press conference in Barcelona and got multiple demos of the AR headset in Barcelona and again in New York. We will be writing about Microsoft’s AR efforts in a separate report.
What We Did NOT See
There were plenty of 5G industrial IoT demos, but there was surprisingly little emphasis on AI and consumer IoT. Amazon had no presence at the show at all. Google had its usual Android pavilion, but, compared to its prize machines and amusement park ride at CES, it was quite restrained. Google still wants OEMs, distributors, and developers to work with Android, but it isn’t competing for attention with Amazon or Apple at this show.
MWC Winners:
Microsoft – of all the products launched at the show, HoloLens 2 stands out as the one with the most far-reaching impact, even if there wasn’t much of a mobility angle to it, and it is squarely targeting enterprise, not consumers. HoloLens 2 is the first truly impactful device of what will eventually be a major new computing platform.
Qualcomm – 5G is becoming a reality, and, for the first time, devices are ready before carriers have rolled out networks to support them. That’s all thanks to Qualcomm, which solved multiple technical challenges and was rewarded with a presence at every major carrier and nearly every smartphone OEM launch.
Huawei – Huawei is the other big force behind 5G, but it stole the show on the device side of its business with the undeniably compelling Mate X folding phone. Yes, it will cost $2600, durability of the exposed display is unknown, and it won’t be sold in the U.S., but Huawei has been trying to catch up to Apple and Samsung for years, and with the Mate X it leapfrogs them.
New Form Factors
Folding phones were all over the show floor, and more were being shown off in closed door meetings. Samsung’s Galaxy Fold was stuck behind a glass case, but Huawei did allow us to get hands-on with its Mate X. The Mate X design is more elegant than Samsung’s Galaxy Fold. The asymmetric edge that houses the camera becomes a handy grip for holding the phone in tablet mode. By folding the unit back against itself this way, Huawei does not need to add another display or even a selfie camera – the main camera faces the user when the unit is closed. It is a very large device, even when folded, but it did fit in the front pocket of tight jeans. We were not able to test the hinge or ascertain how durable the always-exposed display will be. We were also unable to test the software in any significant way.
Xiaomi did not publicly debut its folding phone, nor did Lenovo publicly confirm rumors of an upcoming folding RAZR reboot. LG is one of the leading flexible display manufacturers in the world, and its mobile division is almost certainly planning a folding phone. However, at MWC, it showed off a case with a secondary display for its otherwise traditional V50 smartphone. This is a clever idea, but it will not be cheap, and will almost certainly be seen by consumers as a gimmick rather than as a credible alternative to folding phones.
We will see multiple folding phones for sale in 2019, but they will be extraordinarily expensive and aimed at early adopters and tech enthusiasts. One key issue we discovered by talking to OEMs at MWC is that the manufacturing capability for folding screens this year is rather low, so vendors are deliberately charging super-premium prices for what they can build. There are other concerns as well: how quickly will developers update their apps, and until they do, will the user experience be acceptable? Will the flexible plastic coatings scratch too easily? Will they show a crease? Will consumers accept flexible glass if it cannot fold flat? What is the most popular configuration – a large phone that expands into a full tablet, or a large phone that folds down into something more pocketable?
Once Samsung, Huawei, and others work out the core issues with folding phones, the fast followers will come. At MWC, TCL was showing off various flexible displays and hinge designs intended for more mainstream priced products. Avenir Telecom’s Energizer brand showed off a picture of a purported folding phone it will offer in the indeterminate future. Finally, Apple will be a slow follower. It is undoubtedly already prototyping its own variants – and its own software – in secure labs, but it will hold off launching anything unless it is certain it has figured out how to make and sell them in volume.
Flexible displays also make entirely new form factors possible, though that doesn’t mean that they make sense. Nubia, a Chinese company partly owned by ZTE, was showing off the Nubia Alpha, a watchphone with a flexible display that wraps around your wrist. It cannot be taken off your arm, straightened out, and used like a regular phone. It also does not run Android apps, so it is more of a fancy watch with voice and data features. It is worth the thought exercise to consider whether there is any version of this product that could act as a smartphone replacement: even if it did run Android, apps would need to be redesigned for its long and narrow user interface.
Not all the new form factors on display at MWC were based on flexible displays. Sony introduced a line of Xperia smartphones with extra-long 21:9 aspect ratios. The top two models are so tall – 167mm – that they may not fit in pants pockets, but the smaller Xperia 10 provides a lot of screen real estate (6”) while still fitting comfortably in the hand (it is just 68mm wide). Unfortunately, it may take another vendor to popularize this idea, as Sony’s booth traffic was extremely light – I stopped by the booth multiple times over three days and there just was not much interest in Sony’s phones.
One booth that was incredibly crowded was Avenir Telecom’s Energizer stand, which had a long line of vloggers waiting for a turn with the Power Max P18k Pop. This Android phone has a pop-up camera, but that isn’t what had everyone intrigued – its incredibly thick 18mm body is packed with an 18,000 mAh battery. It is not clear if there is an actual market for a battery with a phone built in, but it certainly reinforces the Energizer brand.
Industry Shift to China
There were 5G phones announced or on display in prototype form at MWC from Huawei, Lenovo (Motorola), LG, OnePlus, Samsung, Xiaomi, and ZTE. Of these, the most notable was Xiaomi’s Mi Mix 3 5G. Priced at 599 euros ($679), it might not seem like a budget phone, but other 5G phones are expected to cost several hundred dollars more, so Xiaomi is setting the 5G price floor quite low.
Xiaomi had a large, professional booth, and appears serious about expanding West. It is focusing on Europe first. Xiaomi has been planning to enter the U.S. for a long time, but delayed its plans once it realized how radically different the U.S. market is from China and even Europe. We do expect Xiaomi to target the U.S. with phones, most likely in 2020 when 5G networks are better deployed and it can use cost as an advantage. There are certainly political and trade considerations keeping some Chinese OEMs out of the U.S., but Xiaomi has no unique security red flags for U.S. agencies or politicians. It is worth remembering that other big Chinese brands like Lenovo (Motorola), TCL (Alcatel, BlackBerry), and BBK (OnePlus) sell phones in the U.S. without any problems.
Chinese carriers are slightly behind the U.S. in getting small 5G network clusters lit up, but their rollout plans are massive. China Mobile has the largest 4G network in the world, and it has committed to rolling out 5G in four cities in 2019. Chinese cities are big, and China Mobile does everything with scale in mind. There may be a state-sponsored marketing push around these launches, and patriotism and subsidies could be used to achieve faster 5G phone penetration in China than in other geographies. This will primarily pose a threat to Apple, which gets over 15% of its revenue from Greater China and is not expected to have 5G offerings in 2019 in any market. Apple is also unlikely to have a major form factor change in this year’s iPhone models, which will add to the headwinds in China, where visual differentiation has historically driven upgrade cycles more than in other markets where Apple’s software and ecosystem lock-in are stronger.
The biggest beneficiary of a state push for 5G in China is likely to be Huawei, which already has a strong brand, especially inside China. Huawei’s hardware and imaging quality is now world class. The company has sold over 10 million Mate 20’s, it is launching the P30 in Paris later this month, and the folding Mate X was the most exciting phone at MWC.
It is not all good news for Chinese handset vendors. ZTE was at the show with a 5G phone, the AXON 10 Pro 5G, aimed at China and Europe and due out in June. The AXON 10 Pro 5G boasts a Qualcomm processor and modem, but it does not fold. More critically, ZTE is not a volume player inside China, and U.S. carriers have largely shunned the brand after it was briefly shut down by the U.S. government last year. ZTE will need to significantly improve its marketing and distribution in its home market if the AXON 10 Pro 5G is going to matter.
Odds and Ends
HTC, Sirin Labs, and other vendors were showing off phones designed for secure communications, storing cryptographic currencies, or both. This does not seem to be even as large a niche as gaming phones, but it is a trend worth watching.
HMD’s new flagship, the Nokia 9 PureView, has a 5-camera system from Light which uses computational photography to theoretically produce better images. Imaging is important to consumers; we need to get time with a unit to know if this system is a breakthrough or a gimmick.
HMD’s other smartphones were not as interesting, but the company’s approach to software is somewhat unique. Most vendors have shied away from stock versions of Android because they want competitive differentiation. However, HMD is weaponizing Android One as a differentiator, promising that even its inexpensive Nokia smartphones will improve over time as Google updates the OS.
Featurephones were surprisingly resilient at MWC. KaiOS was showing off a half dozen new phones from different vendors. The most impressive was the WizPhone, which is being sold in Indonesia for just $7, yet it can download games like Subway Surfer and messaging apps like WhatsApp. While most phones running KaiOS at the show were targeting emerging markets, there were also featurephones aimed at wealthier consumers. Swiss startup Punkt had a private booth at the show where it was showing its $349 MP-02 phone to the press. The MP-02 runs an embedded version of Android and is designed for consumers seeking a phone for digital detox, often in addition to a regular smartphone. We should have a review unit soon.
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