Let’s not forget that technology takes longer to roll out that all of us want to think and 5G is no different. We have had no excuses since we only have to look at how long it took 3G and LTE to become mainstream and how long the transition from the prior technology took to move to the next generation.
However, the mobile and telecom industry is not the same as it was when earlier telecommunication tech was being upgraded. In the past hardware, benchmarks feeds and speeds dominated the marketing messages, but now it is about software, cloud and ecosystem collaboration. Gone are the days when the telecom equipment vendors ruled the conversation about their technology – that has clearly been replaced by IT companies leading the charge with topics such as virtualization, IoT, analytics and new services. Once there was a US automobile commercial that touted the latest edition of its cars was ‘This is not your father’s Oldsmobile’. Well, 5G is not your father’s telecom infrastructure!
This time around, operator and equipment vendors may have to take the collaborative partner role in any new digital solution. Instead of 5G projects being dominated by Ericsson or Huawei for example, there is a role for the likes of VMware, Microsoft, and Salesforce to be the lead company. In some cases, it could be Bosch, PTC, or Siemens while in others it could be Audi, BMW or Mercedes. The overall trend here is that all of these companies are being digitally driven to deliver new services to a customer that is firmly at the center of an ecosystem. The one industry sector who might lose out could be the telco operators who could be squeezed by the surge from IT vendor relevance, despite them investing heavily on 5G licenses. However, this time the operators are in a much stronger position to be the perfect channel for the massive amount of intelligence-laden data being created by smart connected devices that are not typical mobile devices.
So what was the outcome at MWC? I visited both the Huawei and Ericsson booths following pre-MWC briefing sessions to see if the customer buzz was there – and indeed it was.
Ericsson may have won the prize for the most crowded booth, while Huawei’s sprawling booth wins the most lavish and largest booth. The two company’s 5G messages could not have been more different.
The Big Two
For me, Huawei had invested heavily in making its hardware products very compelling for operators to install. Clearly, there had been a lot of research had gone into replacing existing infrastructure with massive performance upgrades and deployment friendly attributes e.g. size and weight of base stations that could be mounted by individuals rather than by cranes. The result of this strategy is that Huawei’s customers can quickly deploy 5G platforms with lower CapEx and OpEx thus creating significant incentives for operators to migrate to 5G networks.
Ericsson’s leading story was about migrating to 5G by highlighting its key enablers (i.e. carrier aggregation, LTE-NR spectrum sharing, and dual mode 5G cloud core). It appeared that Ericsson had moved its message off hardware (which, by the way, is still table stakes in any selection process and Ericsson had plenty of new 5G related offerings) and onto a strategy of smooth evolution and deployment at scale – a much more business leader discussion than a network, driven by software. Finally, both companies had strong messages around their AI capabilities to help their service providers make sense of the growing complexity of services that will be generated by the connected smart IoT devices.
The Importance of IT Software On 5G
IT and industrial companies played an increasingly important role at this year’s MWC as service providers and they became involved in deeper partnerships. 2019 was the year when the gaps for 5G between the network and IT services were being filled in. For example, I saw AR (augmented reality) solutions by PTC supported by Microsoft and being fed by data off a 5G network. This showed how industry, cloud and network service providers will accelerate new technologies.
In another example, Salesforce showed how Edge Computing events triggered Salesforce SaaS-based enterprise management services while being supported by AT&T’s 5G network and the modules being designed and tested at AT&T’s Foundry. Here, AT&T 5G network was being used as a high-value channel for Salesforce’s customers to run their business functions at the edge of the network.
Digital twins have shown up as a digital representation of a physical device or asset. However, this year, I saw a Wipro example of how 5G could drive digital twin concepts beyond physical assets and into the workflow, supply chain management, logistics and worker safety. Every ‘asset’ that was to be used in a factory floor was digitized into a digital twin and then a 5G network was used to monitor and manage every aspect of the factory. It seemed that Industry 4.0 had arrived in its full glory.
Finally, VMware continues to be the IT company that service providers will either love or dislike – I still don’t know which one it will be. VMware’s virtualization and cloud management capabilities have been extended right into 5G networks. For example, NFV (Network Function Virtualization) is critical to operators as they slice the 5G bandwidth into the appropriate services. VMware has its strategy correct when it says that it could virtualize the network just as it has with the cloud, but in doing so is making itself either a partner or a competitor of the operators for their 5G services revenues. 2018 was the year when VMware made a big splash at MWC, 2019 was the year when they showed that they have something to offer – will 2020 be the year when they take over the network software virtualization profit pools just as they did with the enterprise server virtualization market?
Crawl, Walk, Run
In conclusion, MWC 2019 was the year that the 5G gaps to make end-to-end infrastructure solutions where clearly being filled in. Service providers had stepped up their willingness to be part of the customer-centric ecosystem that is almost certainly being led by IT software companies. Telecom equipment vendors were offering technology solutions to speed up 5G deployments while making forward compatible solutions much easier. Finally, 5G-supported applications remain the last piece of the puzzle that MWC hasn’t addressed fully. As a result of the massively varied 5G use cases, there is still a look of curiosity on which industry will be the lead for 5G – will it be the auto industry with autonomous cars, will it be Industry 4.0 and the smart factory, or will it be smart cities with video surveillance. In addition, it is certain that IoT is still very much a necessary part of any 5G strategy just as AI outcomes continue to fuel IoT-based sensors in technologies such as the self-driving cars, AR, and digital twins. 2019 may have been the year that decided that it won’t matter whether the connected IoT device used licensed (NB-IoT) or unlicensed (LoRa) spectrum protocols as both will be seamlessly connected to a 5G network. IoT was not dead, it had simply grown up and was now integrated with more valuable solutions.
Winner MWC2019 – Deutsche Telekom – IoT Solution Optimiser
IoT and Network Infrastructure Vendors
This section is reserved for a few players – Ericsson, Huawei, and Nokia share most of the pie around the network infrastructure. A suspicion of Huawei security and doubts on the Operator’s role in election outcomes can delay 5G deployments in Europe. The Americans and the Chinese have already placed their decisions.
Only Huawei granted me an opportunity to meet their VP, a friend of mine.
I tried several times to reach Nokia whereas I did not even try to reach Ericsson this year, I already heard its strategy three times in the last year.
By far, Nokia has gained in terms of its connectivity offer with Nokia Wing, the ecosystem and the use cases (somewhat more advanced than those presented last year).
Winner MWC2019 – Nokia – Nokia Wing
IoT and IT Technology Vendors
The technology behemoth Microsoft revealed its second-generation HoloLens AR and all I can say is that it left a ridiculous gap for IoT. Other IT giants such as Dell-EMC-VMware, SAP, Cisco, Oracle, SAS or SAG-Cumulocity did not showcase anything new.
Moving towards the System Integrators, they are not even expected at this fair in relation to IoT. Neither the Cloud, nor the Edge IIoT, nor the IoT Platforms, nor the IoT applications had any new ideas that could have attracted the interest of veterans and novices. Where are the millions of dollars going in the industry, which they say are being spent on IoT?
Winner MWC2019 – No Conclusión
IoT and Countries
Finding an IoT gem among the many tiny cubicles of various countries was similar to finding a needle in a haystack. To me, there was hardly any interest to go through the dozens of small companies that used this event as a stage to make themselves visible to the world. The umbrella allows them to be here but attracting visitors between so much noise and variety to their booth was a big and miraculous task.
Every year, I get in touch with IoT companies and know companies from Israel, UK, Sweden, Canada or France. However, this year to my surprise, I found an interesting company in the pavilion of Belgium. They have developed another league of IoT platform and I liked what they have achieved with Orange. They are my winner of this year.
My special regards to the Colombia pavilion and my friend Edgar Salas.
Winner MWC2019 – AllThingsTalk
IoT and Start-ups
I could not visit 4YFN, but I went to IoT Stars. My friend Marc Pous and his colleagues always do a great job, who comes as a jury every year. It was a good time spent with them over a beer while sharing impressions of the IoT and discussing new ideas to accelerate this market once and for all.
In my opinion, there was no great achievement this year and I still notice a gap in the Industrial IoT start-up space. Most ideas are like “Déjà vu” applications for Consumer IoT which reminds me of the post-years after the Internet boom. Much remains to be done here and it will take time for Universities to train innovators and entrepreneurs of IoT.
Winner MWC2019 – No Conclusión
P.S. The IoT Stars jury awarded two prizes
It does not matter; this Congress was as soporific as the Oscars ceremony but for some strange reasons I keep coming back every year. Although after the fiasco of 2019, my expectations were set to find progress and opportunities in IoT but considering the after-effects, I think next year I will reduce my stay to only two days.
It has become clear that the MWC no longer holds anything interesting with respect to IoT to attract visitors, exhibitors, companies. Instead, IoT enthusiasts should probably look to other – more focussed – industry events.
If you want me to cover anything specific on IoT from MWC,19 then let me know in your comments.
The partnership agreement was signed at the annual Mobile World Congress (MWC) 2019, in Barcelona. The trials are projected to showcase what banking in the future might look like, and how 5G technology and edge computing can help to lower the requirements of the infrastructure presently required for banking operations.
Speaking on the subject, Ecosystm’s, Principal Advisor, Tim Sheedy, thinks that “this trial will help all parties better understand where the opportunities are for users of the mobile networks, and for the telco and equipment providers too. They will understand the potential demand for specific network slices and capabilities and get a better idea of what they need to deliver and whether or not there may be demand for these services”.
5G edge computing is still in nascent stages and there’s not much present in the market. Whether it minimises infrastructure or distributes it differently is yet to be seen. “The trials will likely determine what the shape of the new distributed architecture looks like (how close to the “edge” do the data centres need to be?)” says Tim, “There are unknowns of 5G at the moment – so the trials are invaluable to all parties to help them know where and what they need to invest in to make 5G services commercially viable.”
For a layman, 5G edge computing is all about delivering the reliability, speed, and latency that they need – or more likely – a sensor needs in order to get its job done. Once the technology becomes mainstream the end-users/banking customers will reap benefits from it. “5G is not just about delivering faster speed but it is about delivering them intelligently”, says Tim, “5G will help Telco’s to prioritise traffic AND network services – meaning that the end user can achieve their goals.”
While it’s too early to tell at this stage how will 5G benefit the banking sector, it should help banks offer their customers more reliable and relevant services – but what services need to be distributed at what times, and what can remain at the core are not yet understood.
However, let’s assume that the 5G hype is in the rear view mirror and we look to see what could be ahead of us in the mobile and telecom industry. At the end of the first day of this year’s MWC, I may have seen the future opportunity – and it is awesome! Pat Gelsinger asked the question “why can’t we build the telco networks like the clouds have been built for with scalability, flexibility, efficiency, and agility”? It’s a very fair question. After all, we do have Network Function Virtualization (NFV), and we will have new 5G services, so why not a new telco cloud?
I spent time with two companies that may show us a glimpse of the future network and cloud infrastructure. The first is the Israeli software startup, DriveNets with its solution “Network Cloud”. DriveNets is focused on helping service providers disaggregate proprietary routers from their networks as they move to 5G. DRiveNet’s Network Cloud solution aims to disrupt the current network business model by separating network costs (e.g. proprietary hardware functions) to create network functions from its software stack and two ‘white label’ hardware building blocks. The entire network infrastructure is software-centric allowing for agility, scalability, and normalizing costs with business growth.
However, Network DriveNets is an unusual startup in that it came out of stealth mode with $110 million in its first round of funding. The company was founded in 2015 by Ido Susan who should be familiar to Cisco watchers as he sold his first startup, Intucell (self-optimising network technology), to them for $475 million in 2013. DriveNets other co-founder, Hillel Kobrinsky founded Interwise (web conferencing) which was snapped up by AT&T for $121 million. To that end, the company is well funded and has the ability to sustain itself long enough to potentially disrupt the $50 billion network hardware business.
The second is Rakuten Mobile, a well-known name in Japan, but the first mobile virtual network operator (MVNO) to launch there in over 10 years. MNOs are not new so what makes Rakuten different? The company’s CTO, Tareq Amen explained to me that they are building the world’s first end-to-end fully virtualized cloud-native network running all of its workloads in the cloud. Being a fully virtualized network enables Network Function Virtualization to take advantage of cloud computing basis assets where a service delivery platform can be implemented, customized and scaled at speed. Finally, all of Rakuten’s core technology including its Radio Access Network (RAN – a topic that has been highly discussed at this year’s MWC) on 5G thus delivering immediate and actual 5G services. This compares to most of the rest of the industry who will have to build an uncomfortable transformation roadmap from 2/3G and LTE to 5G. While Amen’s strategy is compelling, there are a few technical hurdles to overcome. For example, enterprise-grade 5G indoor coverage isn’t fully there yet so Amen will have to rely on the operators that he is competing against who have that real estate.
So why highlight DriveNet and Rakuten in the same blog? In Rakuten’s case the CAPEX and OPEX business models for operators may be turned on their heads by the fact that its network is taking all of the competitive advantages of 5G while offering customers as disruptive pricing models and services. In a country such as Japan where traditional operators have struggled to modernize their networks, this could be a competitive threat. Equally, there could be a global rise in copy-cat pure 5G/cloud-based MVNOs spring up and fiercely compete against the incumbent local operators as well as give other MVNOs a tough time. As for DriveNets – it’s simple…it’s software and virtualization of the switch and router market which is very appealing to the service providers. It will commoditize the hardware, lowering their costs while allowing them to continue to focus on new 5G services.
Recently IBM and Vodafoneannounced a new strategic commercial agreement, as a joint venture, to provide their clients with the ability to integrate multiple clouds that have a need to access emerging technologies such as 5G, AI, Edge Computing and Software Defined Networking. Under an eight-year engagement valued $550 million (€480 million), IBM will provide managed services to Vodafone Business’ cloud and hosting unit.
Businesses are becoming more and more challenged to run their operations and business processes in a seamless manner as data is distributed and managed across more and more clouds. Together, Vodafone Business and IBM aim to remove these complexities to support the basis of any digital transformation and enable a company to share data freely and securely across its organization.
On the surface, this announcement makes sense if you are a Vodafone business customer who wants to take the next step in a digital transformation journey. The convergence of multi-clouds has the ability for companies to enrich their own data management systems with external sources. With the purchase of Red Hat late in 2018, IBM now has the ability and credibility to offer that capability. However, as many IoT-based solutions create the data to fuel these cloud processes, IBM has not had a clear Edge Computing or network connectivity strategy. This is where Vodafone can help IBM connect the edge of the network to the enterprise systems. This announcement seems like a complimentary win-win situation for both sets of IBM and Vodafone customers.
However, this market is still shaking itself out and there are many other competitive offerings to Red Hat. There are startups such as RightScale and Morpheus who can offer up multi-cloud management. Alternatively, as a mature company, VMwarecompetes head to head with Red Hat and has had a long-standing partnership with Vodafone. In particular, VMware and Vodafone have partnered in telco specific functions such as NFV and 5G.
To understand the importance of VMware in the midst of this announcement is to appreciate the end-to-end customer experience that VMware can bring to telco customers such as Vodafone. As 5G rolls out and NFV-based network slicing becomes a valuable onboarding differentiator VMware could offer its vCloud NFV solution to Vodafone’s customers. Vodafone’s customers could have access to the same multi-cloud services from VMware and not IBM while obtaining AI, cognitive and ML services available from the major public cloud providers (such as AWS, Google and Microsoft). VMware’s position at the edge of the network would, therefore, appear to leapfrog IBM’s position. Vodafone Business’ customers could bypass IBM and its cloud services strategy. At the end of the day, IBM could be left with only the managed services contract while missing out on analytics and cognitive business services.
To negate this scenario, IBM will have to lead more and more with Red Hat and be willing to downplay the cognitive and machine learning services. Business solutions in vertical markets such as agriculture are extremely price sensitive and customers will look closely at the cost of connectivity followed by the cost of data acquisition to enrich their business outcomes. We believe that if the cost to run data science and cognitive services are too expensive, then Vodafone customers will seek the same tools and services from other cloud service providers and not IBM.
Our advice to tech buyers who are in the midst of business transformation should consider how they fuel their decision-making engines for analytics, machine learning, and cognitive computing. Real-time processing and dissemination of business outcomes is one of the table stakes for a successful digital company. As a result of that, seamless end-to-end processing across a complex and distributed enterprise infrastructure is a challenge that needs to be overcome. Tech buyers should ask if IBM’s edge computing strategy and Vodafone’s connectivity are mature enough to funnel IoT-data generated smart data to a broad inter-cloud infrastructure.
My return to CES, the Consumer Electronic Show, was something that I had been looking forward to for some time. After all, it had been almost 4 years since I attended the last CES when the Internet of Things (IoT) was the latest solution looking for problems to be solved. As an industry analyst whose passion for IoT is well known, I was frustrated at the weak offerings, poor quality demos and wasted money at the booths. CES had halls and halls of IoT ‘stuff’ that made little or no sense to me, with almost no chance of these startups being around in 2019. But, that’s what these shows are meant to do.
Roll forward to 2019 and my mission was very specific. I was only interested in two major things – 5G and autonomous/self driving vehicles. I was determined not to get soaked up in the awesome glory of 8K televisions, and kitchens that would even scare off Chef Gordon Ramsey! 5G has been positioned as the natural platform for IoT innovation – fast, high capacity connectivity for applications such as autonomous vehicles, video and medical services. However, at this year’s CES, it seemed that the technology world and the trade press had finally gotten into the same room and realized (just like IoT) that 5G can mean many things. To that point, businesses were keen to call their new technology offerings that can be called 5G, 5G. I could see history repeating itself – hype and confusion this year, followed by disillusion and disappointment next year.
Let’s start with AT&T. When is 5G not 5G – when it is 5G E? AT&T insists on using the term 5G for its advanced 4G LTE network. I assume that if AT&T’s commercials say that 5G E is 5G then who are we to doubt them! In my humble opinion it is misleading and muddies the waters into convincing customers that they already have 5G. (By the way the ‘E’ stands for Evolution, or as one journalist put it “it’s a work in progress towards 5G’. Other global operators also made claims that they too were the first to market or the first to have a customer. However, 5G from a marketing aspect was a bust at this year’s CES. It was supposed to be a leading theme, but in reality it lacked reality. Perhaps selling to consumers is easier than selling to enterprise customers who know that 5G will require an upgrade of the entire network infrastructure, which in turn will take time.
Despite the marketing and messaging confusion, 5G is the underpinning technology of some very exciting technologies being shown at CES – in particular in the transportation industry. Here there was proof that progress has been made in the last 4 years. It was clear that core technologies such as mapping and location tracking have made it possible for the auto industry to think about services both inside the vehicle and outside it. Companies such as TomTom, Naver Labs and HERE showed the levels of progress that they have made in navigation, mobility services, and fleet management. Adjacent technologies for EV (Electric Vehicle) combined with advanced high quality mapping, make it possible to know better where to recharge and how to accurately navigate highways as efficiently as possible.
Innovation in this space takes on a new meaning when the vehicle isn’t a concept car, but rather a fully laden truck. At CES there was no shortage of trucking companies showing off their highly connected vehicles. For example, Paccar Inc., the parent of Peterbilt Motors Co. and Kenworth Truck Co. had an exhibit that featured a pair of battery-electric Peterbilt models and a hydrogen-electric truck from Kenworth and Toyota. Autonomous truck startup TuSimple also returned to CES, where it offered demonstrations of the sensors and machine vision behind its self-driving technology and announced plans to expand its US fleet to 40 trucks by June.
At CES, autonomous vehicle concepts from all of the global car brands were on display. Typically the German and Asian manufacturers showed a wide range of vehicles that continued to look like ‘travel pods’ or people movers rather than traditional automobiles, while US-based brands tended to focus on the infotainment services within the car. In summary, CES’s auto offerings showed that there is a very strong ecosystem of partners determined to change the way that we get from point A to point B in a safe and sustainable manner. In parallel, the ability to extend vehicle ride sharing across multiple modes of transportation including bicycles and helicopters (Bell’s Nexus product) is driven by high speed, real-time and accurate data fed from thousands of intelligent sensors.
In conclusion, CES confirmed for me that despite the technical greatness of 5G, telecom operators continue to appear to be lost in their positioning of the product. Part of this may be stemming from the significant investment and consequently the risk of return on that investment. Part of it may be – like IoT – defining what 5G is really all about. Early IoT success stories have shown that it’s as much about positioning the business value around the data as it is about connectivity. Finally, CES showed me that while fully autonomous driving societies are several decades away, the strong industrial ecosystems that exist today are making significant progress towards that future.
As part of the very public turnaround plan, Helena Norrman, Ericsson’s SVP and Chief Marketing and Communications Officer and Head of Marketing and Corporate Relations announced the following: Ericsson’s focused strategy continue to be based on a vision to empower an intelligent, sustainable connected world while enabling the full value of connectivity for service providers. Results of the strategy included accelerated cost cut – which was on plan to reduce expenses by 10 Billion Swedish Kroners (SEK), with an improved cash position by over 11 Billion SEK.
While not out of the woods yet, it appeared that the renewed focus on business efficiency, improved end-customer experience and new revenue streams has given Ericsson a level of optimism that hasn’t been seen for at least 4 years. For example, Norrman shared that Ericsson’s networks had become 50% more efficient in energy consumption on footprint and operations optimization. She indicated that new digital services were being rolled out 86% faster than before. Finally, she indicated that Ericsson had achieved 201% RoI in the first year for an IoT-based factory maintenance system.
In his update, Niklas Heuveldop, President and Head of Ericsson North America, suggested that there might be continued changes for the big 4 US-based telecom operators. With a background of a six-fold increase in mobile data, mobile revenue remains flat, blended ARPUs declining, and cellular connections (including IoT) growing by 4.4% from 398 million 3Q-2016 to 434 million 2Q-2018, he indicated that operators would have to look for new revenue streams to stay profitable. This was on top of a new operator market that may change structurally as a result of the T-Mobile/Sprint merger (offering a broad range of spectrum for both consumer and enterprise customers), and the arrival of new wireless network operators.
5G and IoT
The day was dominated with the business opportunities based off 5G networks, as Ericsson continues to look to expand the addressable markets by enabling new revenue streams. For example the combined Critical and Massive IoT markets based off 5G networks could range between $200 – $600 Billion as part of scale driven and performance driven opportunities in markets such as Industry 4.0.
However, this is a new looking Ericsson who shared its new IoT strategy. Jeff Travers, head of IoT, was clear that IoT would follow a path of disciplined growth with goals to:
Capture new revenues through rapid innovation building on 5G and IoT
Make our primary customers, services providers, succeed in new value pools
Use a lean startup approach to validate and scale ideas.
These goals would be achieved off the backs of things that Ericsson does well:
Build a connectivity platform:- IoT Accelerator
Be the forefront partner in Industry 4.0 wireless connectivity
Aggressively position itself as a leading partner in Edge Computing for its operator customers and network partners: – Ericsson EdgeGravity
Processing and providing network insights and analytics :- Ericsson Emodo
5G and IoT have been pushed by the major operators for some time and the industry has been holding its breath as vendor after vendor attempts to craft a profitable business strategy and identify use cases that deliver an acceptable RoI. Most have not yet either reached scale because of the lack of readiness of the whole ICT infrastructure once IoT devices are connected. Too much emphasis has been placed on too few IoT applications at the edge of the network. Too much hope has been placed on Edge Computing without meeting customers’ needs of an end-to-end solution.
However, we belief that Ericsson’s clear focus on connecting IoT devices, while maximizing the edge computing needs through local analytics while enabling operators to partners with cloud service providers will open up vertical industries such as manufacturing to IoT deployments. Ericsson’s solution for wireless capabilities within Industry 4.0 could be readily accepted by customers who want to transform themselves to digital-based businesses.