Network operators may have reason to cheer Big Tech's Q4

AI and VR emerged as key themes among the quarterly earnings reports from Big Tech companies like Apple, Microsoft and Facebook operator Meta this week. And those trends could eventually create an upswing for network operators around the world.

But first, and perhaps more importantly, the global market for smartphones appears to be returning to health after years of declines. That's important to mobile network operators considering sales of new, more capable smartphones are a key element in their efforts to upgrade networks and, ultimately, capture new customers.

According to research firm Omdia, smartphone vendors globally shipped 8.6% more gadgets in the fourth quarter of 2023 when compared with the same quarter a year ago – the first such increase since 2021.

"This growth signals an end to nine consecutive quarters of year-on-year declines in overall smartphone shipments, a sign that the industry is stabilizing after a period of strong smartphone demand between 4Q20 and 3Q21, followed by supply chain problems in 2022," according to Omdia, which is owned by the same parent company as Light Reading.

Apple appears to be an outsized recipient of that growth, mainly thanks to growing demand for its more expensive phones. Samsung, meanwhile, is on the downswing, with shrinking shipments in the fourth quarter of 2023. 

Another casualty in the smartphone industry: Bullitt. The company made rugged phones, and recently invested in phone-to-satellite technology. But recent reports indicate the company has shut down. Light Reading's attempts to contact Bullitt representatives were unsuccessful.

In its latest quarterly report, Apple posted a 6% year-over-year increase in iPhone sales. But investors appeared spooked by Huawei's resurgence in the Chinese smartphone market, which dramatically cut into Apple's sales in the country. (Chinese shoppers are also avoiding other American imports like Hollywood movies, according to The New York Times.)

The AI question

But smartphones are a maturing market, and as a result much of the focus during the fourth quarter earnings season was on newer developments in AI and VR.

For example, in response to a question about AI, Apple CEO Tim Cook confirmed that the company was "excited to share the details of our ongoing work in that space later this year."

However, according to a report from Bloomberg, Apple has been mostly caught flat footed by growing interest in AI. Apple executives John Giannandrea and Craig Federighi are now scrambling to spearhead company research in the area. They're reportedly looking at ways to make Apple's Siri smarter with generative AI.

"One debate going on internally is how to deploy generative AI: as a completely on-device experience, a cloud-based setup or something in between," according to Bloomberg. Cook declined to answer a question on the topic during his company's quarterly conference call this week.

That debate is clearly of interest to telecom network operators considering they would be the ones delivering cloud-based AI data to Apple iPhones.

Regardless, other Big Tech companies like Amazon and Microsoft – which generally exceeded expectations with their financial results this week – pledged to significantly invest in AI technologies.

A BlackBerry moment?

Finally, VR continues to be a hot topic, with a wide range of companies showing off various glasses and goggles at the recent CES trade show. For example, analyst Avi Greengart with Techsponential published a lengthy CES article titled "all the things I put on my face."

This week, Apple began shipping its own VR goggles, the Vision Pro. The gadget received generally glowing reviews, but its price tag – $3,500 – positions it far out of reach of the mass market.

Meta, on the other hand, continues to sell far cheaper VR goggles under its Quest brand. In Meta's earnings release this week, the company disclosed strong VR sales, with revenues in its Reality Labs rising 47% year-over-year, passing the $1 billion mark for the first time.

According to one observer, the emerging VR battle between Apple and Meta may be similar to the battle between Apple and BlackBerry in the early days of the smartphone.

For network operators, that's also likely good news considering the popularity of smartphones dramatically increased demand for speedy wireless network connections. If VR goggles like the Vision Pro and Quest eventually untether themselves from Wi-Fi, wireless network operators may see another spike in demand.