Generative AI And AR/VR Poised To Revive Telecom Sector: GfK at MWC

Following a period of extraordinary sales during the pandemic, the Telecom industry has encountered a phase of stagnation, with a slight decline of 0.6% in global revenue in 2023. However, experts at GfK, during the ongoing Mobile World Congress (MWC) in Barcelona, have spotlighted generative AI and augmented/virtual reality (AR/VR) as key trends capable of rejuvenating the smartphone and gaming markets. Jan Lorbach, GfK insights expert for the Telecom industry, emphasised the importance of embracing these innovations early to capitalise on the potential demand surge.

Generative AI: A Catalyst for Smartphone Demand

Despite the continuous improvement in smartphone performance, consumers are on the lookout for new, practical applications of this technology. Currently, the predominant uses of smartphones include messaging apps, such as WhatsApp and WeChat, used by 72% of global smartphone users, and photography, with a 64% usage rate. Generative AI presents itself as the next significant frontier, promising to instigate a substantial demand for new devices. This is supported by GfK’s tracking of sales and consumer behaviour, which indicates a readiness among consumers to invest in advanced features. However, the lengthening of smartphone replacement cycles signals a waiting game for truly innovative leaps.

AR/VR and the Metaverse: From Niche to Mainstream

The metaverse, despite a reduction in public hype, continues to evolve, showing a clear division between interested and uninterested consumers. In 2023, the unit sales of metaverse-related devices slightly declined by 2%, yet revenue from these devices saw a 15%, underlining a shift towards premium products. Notably, AR and MR glasses experienced a 30 percent revenue increase, reaching 225 million US dollars. This trend varied significantly across regions, with Western Europe leading in MR glasses sales (83% of global revenue) and China dominating the AR glasses market (98%).

For the Telecom market to witness substantial growth, AR, MR, and VR glasses need to transition from being niche products to becoming integral parts of everyday life for the wider population. This is especially pertinent for sectors beyond gaming, where these technologies currently find their most common applications.

Global Smartphone Market in 2023: A Closer Look

The global smartphone market remained relatively stable in 2023, marking a minimal revenue increase of 0.1% from the previous year. The latter half of the year, however, showed promising signs of recovery with a 4.2% revenue increase. This growth varied across different regions:

Additionally, the average price of smartphones rose to $389 in 2023, reflecting the ongoing trend towards premium. The data further revealed that 5G models comprised 81% of revenue, a noticeable increase from 2022. There was also a significant uptick in the demand for smartphones with over 512 GB storage and wireless fast charging capabilities.

The telecom industry's future hinges on embracing and integrating generative AI and augmented/virtual reality technologies. As these innovations edge closer to mainstream adoption, they hold the potential to invigorate the market, appealing to a broader consumer base with enhanced functionalities and immersive experiences.