A customer came to me recently, asking whether I had any experience with inflationary economic conditions and their effect on the mobile industry. My response: No. Nobody has any experience with how inflation will affect the mobile industry.
Will consumers cut back on buying new phones? Will data demand slow down or speed up? Will investments in 5G networks or edge computing slow down? Nobody has a historical example that is useful here, because it hasn’t happened before.
The last time that inflation was this high (1974 to 1981), there was no mobile market at all; in fact, I would argue that the PC market was not mature enough during the '70s to be a good case study either. During the '70s, I would argue that the nascent consumer electronics market existed, but it wasn’t important in the same way. We didn’t use stereo sets every day at work. We didn’t sign contracts to buy a house using our transistor radios. And the telephone business was a monopoly.
So, it’s not an easy question to answer. What impact will high global inflation have on 5G and the mobile telecom business? In my opinion, we will see a slowdown in spending by consumers, which will reduce the demand for phones, and in some places, for data. In a few weeks, I will release an edge computing forecast with more conservative numbers, showing a stepwise approach to the market instead of a big blowout investment in nationwide edge computing infrastructure. Some countries may not invest in nationwide 5G for years.
But on the positive side, technology can save a lot of money in essential sectors of the economy. Covid is finished, but we may skip that European sales trip next year and conduct the meetings using video calls instead. We might continue working at home because it’s become too expensive to rent an office (and drive to it).
My job is to be quantitative, and to weigh all technical and business factors to provide an accurate forecast of the next few years. In the end, I believe that the mobile market will survive and adapt to inflation. You will see some reductions in Mobile Experts forecasts over the next six months as we discover just how “transitory” this inflationary period really is. Macroeconomic conditions have not been a part of my forecasting over the past 15 years, but they’ll be a factor this year.
All available economic data indicate that a severe recession has started. Mobile Experts forecasts will be shifting to account for it. In the end, however, I believe that mobile technology and edge computing hold the key to our society emerging from the economic disaster, with a level of automation and productivity that will make us better.
Get ready for the winter, but hold onto your seed corn.
Joe Madden is principal analyst at Mobile Experts, a network of market and technology experts that analyze wireless markets.
"Industry Voices" are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceWireless staff. They do not represent the opinions of FierceWireless.