Thursday, April 14, 2016

Witnessing the Future of Technology at Mobile World Congress 2016

I have just returned from a very interesting and jammed-packed week at Mobile World Congress 2016 in Barcelona.  For the first time ever, over 100,000 people and 2,200 plus vendors attended this year’s premier technology festival.  Much has changed in the industry over the last year since I reported my observations of MWC 2015.  However, what is most remarkable is how the boundaries of mobility continue to expand and morph – everything now seems to be mobile?  As such, the show offers a fascinating glimpse into the future of technology and the major social and business shifts that we can expect in the next few years. 
The big take-away for me was that the show seems to have returned somewhat to its roots.  While there were still lots of new smartphones, wearables and cars scattered around the show floor, they seemed to be more wallpaper, or in the background.  Much of the buzz and marketing was around new network technologies and the core business of the mobile industry.  The new things were 5G networks, low powered networks, and the new Internet of Things solutions that are going to ride over these new networks. 
The following are my personal observations and extrapolations from the show, based on my conversations with operators, customer meetings, analysts, and colleagues, as well as from simply walking the show floor. 
  1. 5G – The Next New Technology —What is a technology show without a shiny new technology?  Despite the fact that only 20 per cent of global subscribers have adopted the previous new technology (4G), and many mobile users are still back on the second generation (2G) technology, we are now entering the fifth generation of mobile technology – 5G.  The remarkable thing though is that no one really knows what 5G is.  There are no agreed up technical standards or industry agreements on the definition of 5G.  And, the best estimates are that we really won’t see 5G becoming a reality until sometime in the middle of the next decade.  However, every major vendor is now “5G ready” and promoting their 5G solutions, and plastering the fact all over their exhibit booths.  Numerous announcements were made on new 5G partnerships and tests.  Verizon is looking to deploy in 2017 and the Japanese, Koreans and Russians have all promised to have 5G networks running in time for the various global sporting events that they are hosting. 
  2. From High Power to Low Power Networks – At the other extreme from the futuristic, high-powered 5G networks are LPWA networks – Low Power Wide Area networks.  These networks cover wide areas (up to 30 km and more per base station), require very low power (the batteries of attached devices can last for years), and transmit very low amounts of data at slow speeds.  Many see these networks as an essential platform to realize the Internet of Things revolution.  Everything from water meters to parking meters and agriculture sensors could be hooked up to these networks and essentially forgotten for years.  Sigfox and LoRa are the current leading contenders for these networks, but the GSMA and others are frantically working to release a LTE-based version.  Providers, such as Orange, Proximus and KPN are currently deploying LPWA networks and many others are trying to figure out their strategy.
  3. IoT – The Year’s Hottest Three Letter Acronym — These 3 letters – standing for the “Internet of Things” – were everywhere.  They were on the signs of practically every booth and on the tip of everyone’s tongue.  No doubt, the ability to connect sensors, devices and “things” to the Internet is the next wave of mobile growth and presents tremendous opportunities for technology vendors to sell new products and services.  A number of key partnerships were announced and some very interesting and compelling industrial IoT case studies were promoted.  The mobile operators shouted out their relevance in IoT by displaying their platforms, capabilities and lighthouse customer engagements.
  4. The Next Not So New Devices – In the shows of past, some of the biggest highlights were the highly publicized announcements of the next sleek and sexy smartphone.  While all of the manufacturers proudly displayed their range of devices, there didn’t seem to be any buzz about the “next big thing”.  Samsung announced it’s new Galaxy S7, but you had to look hard to understand how it really differed from their S6, which they announced with a big splash last year.  Similarly, wearables were on display, but not front and center like they were in 2015.  Phenomenal progress has been made in the smartphone and device space over the years, but I think that we have currently reached an innovation plateau.  In fact, I think that there might actually have been fewer, and a narrower range, of devices than in the previous year.   
  5. Virtual Reality Becomes Virtually Real — Not only did Samsung demonstrate its cool new virtual reality devices at the show, but they had a temporary building in the center of Barcelona, Plaza de Catalyuna, welcoming long queues of the general public to sample these new worlds.  HTC also demonstrated its VR devices, signaling the start of the virtual reality wars.  Several exhibitors were also using virtual reality devices to enhance the impact of their messaging.  Interestingly, while VR is a hot area, the consensus of a dinner of industry experts that I attended was that VR will be like 3D TV – a niche experience a select customer segment.  However, we all expect VR to have a big impact in re-shaping many businesses – far beyond the gaming world.
  6. Virtualization Reality — Virtualization and the cloud have finally hit the core mobile network elements.  Not only will this make it less expensive for operators to build networks, but it will provide them with much greater flexibility and responsiveness and allow the network to extend well beyond the boundaries of the traditional mobile network.   SDN (Software Defined Networks) are also critical to the new network architectures.  Network virtualization is finally hitting the mainstream.    Mobile operators, such as Telefonica, China Mobile, AT&T and NTT DoCoMo, announced fully operational NFV (Network Functions Virtualization) deployments.  And many others announced their plans for getting there.
  7. Mobile Monetization – An Industry on the Edge — At one time, service providers were the kings of the show.  They are now just one of the participants in the massive and rapidly changing mobile industry.  The decline in voice traffic, loss of messaging and competition to their data business from over the top providers and alternative access networks such as Wi-Fi, means that they desperately need to find new ways to make money.  Most of the world’s major mobile operators now have their own large and prominently placed booths on the show floor.   They are proudly displaying the latest business solutions, cloud services, gaming, IoT and other innovative mobile offerings that they have to sell.  They are hoping that these new revenue-generating opportunities will move them beyond merely connectivity providers and deliver the next wave of monetization opportunities.
  8. The Battle for the Great Indoors — Changes in devices, applications and social behavior are re-defining mobility from an on-the-go activity to a more nomadic activity, which takes place largely indoors.  Traditional macro networks have a tough time penetrating buildings and reaching indoors.  Hence operators are struggling to provide 5 bar coverage in homes, offices and public spaces.  Traditional mobile technology vendors are now showcasing their small cell, Wi-Fi and DAS solutions as the answer to this challenge of lighting up the indoors.  At one time, these solutions were relegated to the back corner, but they are increasingly becoming center stage as a solution to this new and growing problem.  Not to mention, they offer an attractive new revenue opportunity for traditional macro network vendors.
  9. The Mobile Ad Battles – A big bomb was dropped during that show was the announcement that the mobile operator Three was working with the Israeli start-up, Shine, to block mobile ads from being displayed to their subscribers.  Unlike ad blockers installed on smartphones, this blocking would be done in the core of the operators’ networks.  Mobile operators estimate that up to one-third of the traffic on their networks is generated from mobile advertising.  In addition to reducing the demand on their networks, operators argue that blocking this unwanted traffic is providing a valuable service to their customers who end up paying for these invasive ads from their data plans.  The counter argument of the advertising industry is that ads pay for the Internet and the services that users enjoy.  The majority of the operators who I spoke with suggested that There Mobile was not unique and that they expected many other operators to follow suit, banning mobile ads on their networks.  Let the mobile ad wars begin.
  10. Mobile Payments – Maybe Next Year? — The last point that I always seem to make on these reviews of MWC is on mobile payments.  At last year’s show I was hopeful that with the launch of Apple Pay and Samsung Pay that 2015 might finally be the year of the long awaited mobile payments.  Alas, that does not seem to be the case.  According to one analyst, only 6% of eligible Apple users actually use Apple Pay.  And, the number is even lower for Samsung and Google Pay.   This despair in the adoption of mobile payments was evident on the show floor.  Besides, a few small vendors scattered at the edges of the more distant halls, Master Card and Visa were they only exhibitors that I saw actively promoting mobile payments.  Well, there is always next year…

Small Data is the Core of the Internet of Things

The wireless world is all about speed and quantity.  The evolution of wireless networks is the history of trying to transmit ever greater quantities of data at faster speeds.  It was once viewed as revolutionary that suitcase-size “mobile” phones could make poor quality voice calls without wires.  Now, with the latest 4G cellular networks we can access the Internet, communicate with the world and watch the latest videos over our latest, svelte smartphones.  And, the new 5G networks on the horizon promise speeds measured in multiple gigabits per second, latency in the single digit milliseconds and the capacity to handle 1,000 times more consumption that current network technologies.  Industry pundits predict that 5G promises to bring the Internet of Things world alive, enabling new IoT opportunities like robotics and autonomous vehicles.

This exciting new future for mobile networks may be great for data hungry smartphone users and “sexy” new IoT applications, but the majority of IoT applications is pretty pedestrian, or as some might say, old school.  From a network connectivity perspective, this huge body of sensors transmits very little data, at slow rates.  Moisture sensors buried in farmers’ fields indicate when they need to be irrigated, trash bins communicate whether they need to be emptied, or embedded parking sensors indicate when a parking spot is available.  And, most of these sensors don’t have ready access to power, so they need to have very low power consumption to ensure that their batteries last for years.  Do you really want to be ripping up agricultural fields or water distribution networks every couple of months to replace batteries?  While the high-speed world of futuristic IoT applications sounds exciting, it is really this mass of connected, “small data”, sensors that is truly going to deliver on the social and economic promise of the IoT revolution.

The problem is how to effectively connect this “small data” IoT world.  Cellular networks have been fantastic for creating our wireless world but they are not very well adapted for much of the IoT world.  These networks and devices consume a fair bit of power, they are costly to build and operate, they have a fair bit of unnecessary technology overhead, and their coverage is typically confined to areas populated by people, not necessarily sensors.  The race is now on to deliver alternative, better suited networks to the rapidly growing “small data” IoT connected world.

There are currently three network technologies vying to connect the small data world.  All of these networks cover wide areas (up to 30 km and more per base station), require very low power (the batteries of attached devices can last for years), and transmit very low amounts of data (10 to 100 bytes) at slow speeds (60 bs to a couple of 100 kpbs).  SigFox is a French company that uses proprietary technology to build and operate its own networks, selling access to IoT users.  SigFox currently claims the world’s largest IoT network, covering much of Europe, Australia and ambitious plans to blanket the United States.  LoRa is an alliance of manufacturers, vendors and operators who collaborate to create an open, global standard and certification process.  Operators, enterprises and others can use their certified equipment to build and operate their own LoRa network.  Lastly, the GSMA, the association that represents the world’s cellular operators and vendors, has been frantically working with the global standards body to create, the yet to be released, Narrow-Band IoT (NB-IoT) which will be compatible with current cellular standards and deployments. 

The world’s mobile operators are in a precarious position, they know that wireless connectivity is essential to the IoT revolution, but they recognize that their bread-and-butter cellular networks will only take them so far.  They also need to be able to connect the small data IoT world.  Despite unclear business cases, operators around the world are launching these alternative IoT networks using one of the three network technologies.  While it is not yet obvious how they will make money, besides the very low access fees, they recognize that there is a “land grab” happening that will define who will connect the small data IoT world.

It is not certain which technologies or which providers will win in the race to connect the small data world.  But, it is certain that the small data world is the backbone of the IoT revolution and without effectively connecting this world, the revolution will never be realized.

Thursday, January 7, 2016

Who Can Help Businesses to Realize the Promise of the IoT Revolution?

We are embarking on a new technological journey that will fundamentally change forever the economy, society and the way that we live.  The Internet of Things (IoT) is a world where up to 50 billion things (or devices) will be connected to the Internet by 2020; or, the equivalent of 6 devices for every person on the planet.

The clear winners in this revolution will be those companies that, not only embrace the Internet of Things, but use it to transform their businesses.  Those winning companies will be the ones that integrate IoT into their operations, products and customer interactions to create new business models and sources of value.  In fact, McKinsey estimates that there could be as much as $11 trillion per year by 2025 in new economic value created by adopting IoT.

Businesses are beginning to completely re-design their processes, operations and business models to benefit from this new era.  We are already starting to see the emergence of smart cities, connected utilities, connected railways, connected factories, connected cars, and even connected mines, to name but a few.  All industries are looking to IoT as a breakthrough technology to help them optimize their business, enter new markets and enhance their relationship with their customers.  This is why industry analysts, like IDC, estimate that businesses will spend up to $20 trillion over the next four years to realize the promise of the Internet of Things. 

The dawn of the IoT revolution may have begun but it will still be some time before its transformational powers will be fully felt.  There are a number of technical, business, regulatory and perception obstacles that must first be overcome.  We are still very much in the early days of the IoT revolution with many companies knowing that they need to do something but not sure, what or how.  A study by Harvard Business Review and Verizon found that less than ten percent of enterprises had deployed IoT initiatives.  And, of that small minority only 56 percent of those had an IoT strategy.  What does that say for the 90 percent of companies who have yet to implement IoT initiatives? 

Recent Cisco research of enterprise IT and business decision makers revealed that their top 3 challenges with implementing IoT initiatives in their businesses were: 1) security of business data; 2) standardization of IoT infrastructure and compatibility with business systems; and, 3) cost of implementation.  The IoT supplier market is currently very fragmented with a multitude of big and small companies providing single pieces of the IoT implementation – devices, application, point solutions, different platforms, etc.  Hence, it is currently challenged to meet these demanding customer needs. 

We believe that Service Providers are well positioned to unlock the true value of IoT for business and public sector customers.  Our recent white paper, “How Service Providers Can Help Businesses to Realize the Promise of the IoT Revolution,” describes how SPs are well suited to deliver on these customer needs and the strategic and operational decisions that they need to make to build a viable IoT business.  In particular, we address a number of key questions that service providers need to answer to build and run a successful IoT business: 

  • What are the key challenges that businesses have with IoT and how are SPs best positioned to help them?
  • How can SPs add further value to their connectivity offerings?
  • What are the best opportunities more value and move up the IoT delivery stack from connectivity? 
  • What are the potential economics and business models of these new solutions and services and how can SPs best extract value?