2022 is just around the corner. What will happen to the communications market in the new year? What are the opportunities and challenges for operators? Combined with the current policy environment and market development trends, Cyrison makes the following predictions about the new changes that operators may face in 2022 from the perspective of individuals, families and government and enterprise markets.
Prediction 1: The individual market is facing the reality of continuous reduction of incremental space, and also ushers in new possibilities for value management
In 2021, under the vigorous promotion of operators' "card slot operation", the scale of individual users will resume growth. According to the data released by the Ministry of Industry and Information Technology, as of October 2021, the scale of mobile users in the country increased by 2.5% year-on-year (this data was only 0.1% in the same period last year), of which mobile Internet users increased by 5.0% (compared with 1.2% in the same period last year). On the one hand, this growth is due to the impact of the epidemic, on the other hand, it is due to the operators to obtain new space driven by the 5G replacement upgrade and the multi-card slot filling load, especially the multi-card slot filling, which has rapidly increased the number usage in the form of a multi-card or relatives and friends. Although the data results are valid, and we expect operators to continue this model to acquire new users in 2022, we still need to be vigilant against the risks of user virtualization and value diversification brought about by this new model. In addition, the scale of 1.6 billion mobile phone users and the scale dividend of 1.4 billion mobile Internet users do have a peaking trend, and operators need to face this situation of gradually decreasing incremental space.
On the stock side, the importance of user value management will be even higher. Operators continue to create new benefits through 5G upgrades, contracts, integration and other business means. At the same time, the metaverse concept continues to ferment, which will increase the possibility of more personal application value filling. Although the actual development of the metaverse is still in the initial stage of its construction of the macro concept, the development boom of VR/AR and 3D driven by it is the content and application source that needs to be filled in the current 5G package products. The concept boom promotes the market to maturity, and the continuous enrichment of product content not only enhances the user's 5G experience, but also effectively stimulates the user's willingness to upgrade, constituting a virtuous circle of user value management. To this end, operators can obtain new space for user value growth outside the scale, and there is still a large potential for individual market operations.
Prediction two: the family market is competing in the direction of DICT, the development of intelligent Things has opened up new spaces for connection, and the aging social structure requires more attention to the needs of silver-haired people
Competition in the home market is no longer limited to competition in broadband and Internet TV services. Operators will launch a deep integration war of "smart home" in 2021, and home networking WiFi services, housekeeping services, and home cloud storage have become the standard content of products pushed to home customers. The home DICT service represented by "whole house intelligence" has begun to sprout, operators with early layout have profited from market sales, and operators who started a little later have also begun to have solutions. It is expected that in 2022, the development of home DICT based on "connection + terminal / hardware + content / application" will be more large-scale, and the competition around this business will be more intense.
In this trend, there are two new changes that deserve attention.
First, the development and rise of intelligent IoT brought about by the mutual promotion and mutual achievement of AIoT and smart home/smart community will bring operators new connectivity space in addition to individual users. According to the "China Smart Home Device Market Quarterly Tracking Report" released by IDC, the shipment volume of China's smart home device market is expected to be 230 million units in 2021, an increase of 14.6% year-on-year; it is expected that the shipment volume of China's smart home device market will continue to grow at a compound growth rate of 21.4% in the next five years, and the market shipment volume will be close to 540 million units in 2025. Behind the rapid growth of smart home shipments is the large-scale demand for 5G + intelligent Internet of Things, and 5G connectivity will usher in breakthrough growth.
Second, the demand for health security/smart old-age care caused by the intensification of social aging needs to be paid attention to by operators. According to China's seventh census data, by the end of 2020, China's elderly population over the age of 60 reached 264 million, accounting for 18.7%; and according to the projections of the United Nations Population Agency, this number will rise to 400 million in 2035. This huge number of elderly people will form a new subject of smart home service demand, and their needs will obviously be more focused on smart pension services such as security/health/nursing, and operators need to pay attention to this outlet and layout as soon as possible.
Prediction 3: Driven by the development of the digital economy, the government and enterprise market will usher in a new round of growth, and at the same time inevitably face challenges such as competition diversification and data security
The digital economy continues to develop, especially with the continuous implementation of the digital economy and digital transformation policies by the central government and various localities, the scale of China's digital economy will continue to increase. According to the outline of the 14th Five-Year Plan, by 2025, the proportion of added value of the core industries in China's digital economy in GDP will increase from 7.8% in 2020 to 10%. Driven by the development of the digital economy and digital transformation, more digital informatization demand space will emerge. The demand body is as large as the country, city, industry, small to enterprises, families, individuals; the demand direction covers both Smart City, Digital Government, Digital Society, Digital Village and other ToG scenarios, as well as ToB scenarios such as industrial Internet, digital office, and digital operation; the demand landing involves mobile Internet technologies such as 5G and the Internet of Things, and also requires emerging technologies such as big data, cloud computing, artificial intelligence and even blockchain. For operators, the growth pattern of government and enterprise affairs brought about by the digital economy will gradually emerge in the "14th Five-Year Plan" and even longer, with broad prospects and promising future prospects.
In the near future, in 2022, the main changes in the government and enterprise market that we can foresee include:
(1) 5G application scenarios will be more widely realized under the accelerated deployment of operators, and the value of network connectivity will be further highlighted. Specifically, in 2021, the 5G customized network centralized by operators will show large-scale development in 2022, the project space represented by "5G + industrial Internet" will be opened, and the deep integration of "informatization + industrialization" will form more business opportunities.
(2) The cloud computing service market continues to flourish, and the integration of cloud and network is moving towards depth. According to IDC reports, by 2024, 25% of organizations in China will improve business agility through application integration on edge data and cloud platforms (through cooperation between cloud and communication service providers); while the cloud market pattern has a trend of "slowing growth of top cloud vendors and rapid growth of rising stars". For operators who have made structural adjustments and business process optimization for the development of cloud-network integration in the past two years, in 2022 and the future, they will continue to gain new growth momentum from the integration of cloud-network integration.
(3) The needs of SMEs for digital transformation will form a new blue ocean. As the most important component of market players, on the one hand, smes are favored by policies and have a trend of vigorous development, on the other hand, there is an objective demand for digital transformation driven by factors such as industry environment, technological development, and cruel competition, but at the same time, they are subject to their own scale, capital and other factors, most of which are still in the early stage of transformation exploration. The opportunities left for operators mainly lie in the value-added application expansion on top of the basic connection products, and the standardized solution of "small and beautiful" is the recommended direction. At the same time, operators also need to face the diversified challenges brought about by cross-border competition, and the ability to cooperate in the development of application products for small and medium-sized enterprises needs to be reserved.
(4) Data security is also a new opportunity and challenge that operators need to face in 2022. The Regulations on the Security Protection of Critical Information Infrastructure and the Data Security Law came into force on September 1, 2021, and the Personal Information Protection Law came into force on November 1, 2021. According to IDC's forecast, by 2024, data privacy, security, placement, use, disclosure and other requirements will force 80% of large Chinese enterprises to reorganize their data governance processes on an autonomous basis, and data governance, zero trust and privacy computing, cloud and edge security have become the just needs of enterprises. For operators, this just need will form a market space for security products, which is a new point of opportunity. However, as a large enterprise, operators themselves have clear responsibilities and obligations in the security protection of critical information infrastructure, and they need to pay continuous attention to and invest in this regard.
In summary, the market environment faced by operators in 2022 has both a complex side and many favorable factors, and in general, the opportunities are greater than the challenges. It is believed that operators can seize the opportunity and face the challenges head-on, and the performance in 2022 can be on the basis of the high growth in 2021.