After years of hard work on the hype treadmill, it looks like 2018 is going to be the year that 5G networks finally launch (in a couple cities with no smartphones available, but I digress). 5G smartphones should start popping up in 2019, but according to every rumor we’ve heard so far, it’s going to take until at least 2020 for Apple to make a 5G iPhone available.
There’s a bunch of common-sense explanations for that. Apple, as we’ve seen in the past, isn’t very interested in putting cutting-edge wireless tech into its phones, as it doesn’t think the faster speeds are really worth it. The benefits of 5G, like lower latency and gigabit speeds, aren’t particularly useful for smartphones right now, and Apple would rather wait for coverage to be ubiquitous before bothering to integrate a new technology.
But as a new report points out, Apple has a very specific financial reason to delay putting 5G technology into the iPhone. Wireless companies, including Qualcomm, Nokia, Ericsson, and Huawei, have invested billions of dollars and years of research into developing the 5G standard, and they recoup their investment by charging licensing fees to handset makers that use 5G technology.
According to VentureBeat, the total cost of licensing 5G technology for a single smartphone could be well over $21, compared to an average cost of $9.60 for a 4G device. For Apple, that extra cost in licensing fees alone — that excludes the actual 5G components — may not be worth it. As smartphone unit sales continue to drop, Apple needs to make more and more profit on every handset if it doesn’t want to see its iPhone business decline. Licensing fees, which directly eat into Apple’s profit margin, are a logical place to make a saving.
As VentureBeat points out, a large part of the licensing cost will go directly to Qualcomm, which is heavily invested in 5G, and has tussled with Apple over royalty payments before. Nokia announced today that it’s capping its licensing cost around $3.50, a low cost compared to its competitors.