Tech Players Battle For Relevance In Crowded Industry

Device Manufacturers, app developers, equipment vendors and telcos – all battled for the limelight at this year’s Mobile World Congress.

By
Robert Anderson
April 11, 2015

Once a year, the breezy coastal and cultural charms of Barcelona become a battle scene for the world’s biggest (as well as some upstarts) tech giants to showcase their best mobile technologies.

This year was no different. It is an exciting time in the world of mobility. New developments are enabling devices that are ever more sophisticated and applications that address new market needs, as telcos look ahead to networks that will redefine the internet.

But as one industry veteran argues, with technology evolving ever faster, those operating in the telecom space cannot afford complacency.

“You will probably see 40 to 50 per cent of service providers over the next decade become irrelevant. This will be a period of speed,” says John Chambers, CEO of global networking company Cisco.

“It’s about not doing the same thing for too long, staying in your comfort zone, and it’s about being encouraged to reinvent yourself, the company and the leadership.”

While predictions of half the world’s service providers becoming redundant in the next decade may seem unthinkable, staying relevant and adapting to market transitions was clearly the name of the game at this year’s Mobile World Congress (MWC).

“That is probably the key takeaway versus a year ago. It doesn’t matter if you’re at MWC, the World Economic Forum or the Consumer Electronics Show. People realise they have to change,” says Chambers.

From device makers positioning themselves in a growing wearables market, to apps developers looking to capitalise on consumer trends and telcos preparing for 5G, it will be those that remain agile and adapt fastest that come out on top, he warns.

“Companies that do not disrupt themselves and have the courage to be able to make that change will get left behind.”

Year of the Smart Watch

One sector always full of companies eager to prove they are ahead of the curve is the mobile handset market.

Even before MWC opened its doors, device manufacturers were out in force, with both South Korea’s Samsung and Taiwan’s HTC seeking to gain the initiative for the week ahead.

The Samsung Galaxy S6 and its curved screen variant the S6 Edge drew particular attention, due to their more premium design, doing away with the plastic of the S5 in favour of metal and glass, and enhanced specs.

HTC meanwhile stuck to its much- praised metal unibody design for the M9 with several improvements to the camera, internals and battery.

But if the two companies wanted to be the talking point of the event, they may have failed, with two surprise entries attracting the crowd’s attention.

The Huawei Watch and LG Watch Urbane were among the unexpected launches at MWC this year and proved a hit with the crowd. Both embraced a more traditional watch design and style, in a market full of plastic and square devices.

The Huawei watch in particular earned plaudits for its metal body and 1.4-inch AMOLED circular display with a variety of customisable faces and straps, combining for an appearance more closely resembling the traditional timepiece.

“The growth of wearables globally is really interesting. You’re talking about from zero two years ago to more than $100 million in 2014. That’s something we have to consider,” says Ashraf Fawakhrji, regional vice president of Huawei Device ME, explaining the Chinese giant’s motivations for entering the space.

He insists that the market is still open to innovation given that it is still in its nascent stages. “Someone came with a camera. Do we really need a camera in a watch? Someone came with a sim card. Do we really need a sim card in a watch?

We need to keep monitoring the trends.”

That Huawei, LG and other manufacturers are keen to position themselves in the wearable space with strong entrants this year comes as little surprise, given the growth expectations for the market.

Global smart watch shipments are forecast to increase over 500 per cent from 4.6 million units in 2014 to 28.1 million in 2015, according to research firm Strategy Analytics.

However, it is the Apple Watch, like the iPhone for the smartphone market and iPad for the tablet market previously, which is set to be the main driver of sales and awareness of the segment. Strategy Analytics estimates Apple will
sell 15.4 million units this year with other manufacturers sharing the remaining 12.7 million, which will mean slimmer pickings for Huawei and LG.

GoinG Anonymous

While device makers jostle to get noticed, some app developers are arguably looking to help their users do quite the opposite.

Spurred by the success of Snapchat, a new wave of anonymous social and messaging applications are addressing user concerns for privacy, with the likes of Secret and Yik Yak growing in popularity, particularly among younger smartphone users.

Another app developer looking to make its mark in the space is PeeeM, an anonymous social and messaging application that promises to connect people without taking their name or phone number.

The application has proven particularly popular in the Middle East, according to CEO Christophe de Courson, who cites societal, and app restrictions, as well as concerns over privacy, as key drivers for its use.

“There is complete privacy on PeeeM because when you send a file or you perform a voice-over-IP call, its peer to peer. So nothing goes through our server, we don’t know what you send and we don’t keep your conversation text.

“It has been really popular in the Middle East for these reasons. We noticed, for example, there are a lot of use cases in countries like Saudi Arabia where certain types of socialising are forbidden.”

PeeeM’s user base is currently around two million, 60 per cent female and the majority aged between 13 and 20, but Courson reveals he is looking to grow this number, particularly in its most popular Middle Eastern market, Saudi Arabia.

Plans include partnerships with smartphone manufacturers and telcos, with the firm close to signing a revenue sharing deal with a carrier in the Kingdom and in talks for a regional deal with Lenovo. It is also in talks for additional funding, having raised 300,000 euros last year from a business angel investor.

PeeeM’s new Shout feature, which Courson describes as a combination of Twitter and Secret, is also part of this growth strategy and a potential means of revenue in an otherwise ad free and non- freemium model.

next Gen

New devices and app developers aside, walking the halls of this year’s MWC it was almost impossible to escape talk of 5G.

An evolution from the current 4G and 4.5G infrastructure, 5G is being marketed as far more than a standard speed upgrade, with the focus on connecting not just smartphones but all devices, sensors, applications and services across sectors.

“5G will not only matter for the telecoms industry, it will also be an enabler of other industries,” says Yang Chaobin, CMO of Huawei Wireless Network Business Unit on 5G.

In terms of data volume, 5G is estimated to support up to 1000 fold gains in capacity, connections for at least 100 billion devices, and offer each individual user up to 10GB/s of bandwidth, with latency reaching as low as one millisecond, according to Huawei.

The price of achieving these numbers will be higher network investment costs for operators than 4G, says Chaobin, but they are expected to benefit from advances in spectrum efficiency and the connected sensor industry, dropping the cost per sensor unit from around $20 today to an estimated $2 by the time 5G networks are deployed.

IT and telecom players have big ambitions for the technology, claiming it will be the next phase in enabling a globally connected digital society, drive the future of the internet itself and drastically alter the way mobile networks are constructed – all the while providing new revenue sources for operators, particularly in the Machine to Machine (M2M) space.

But there is still some work to be done in deciding an overall vision for 5G and its use cases, with a variety of groups including the European 5G Public Private Partnership, Next Generation Mobile Networks Alliance and 3GPP having their say.

“The situation of 5G today is just like the situation of LTE in 2004. The standardisation hasn’t been struck permanently and the requirement conditions are still under discussion,” says Chaobin.

For now talks are on going, with the requirements for 5G networks set to be decided by the end of this year.

From there work on specifications and a globally unified standard, enabling benefits in terms of global roaming and economies of scale when completed, will begin with an expected end date of 2018. Trial networks will follow from 2018 to 2020 with commercial deployments expected in 2020.

Among the key drivers for 5G deployments are large global events in technologically advanced nations, including the 2018 Winter Olympics in South Korea and 2020 Olympics in Japan.

In the GCC, UAE telco Etisalat is using the country’s own big event, Expo 2020, as a deadline, with plans to launch the region’s first 5G network in 2019, while others in the region are also watching the deployment of 5G technologies very closely.

“We are going to be actively involved [in 5G] to also influence so that it becomes useful for our customers to access that technology as fast as possible,” says Nasser Marafih, CEO of Ooredoo Group, revealing that the telco’s home market of Qatar is expected be its first operation to deploy the service.

For now, however, he also stresses that the availability of spectrum and handsets are key concerns that need to be addressed in many countries. Of the telco’s recent milestone of 100 million customers, Marafih says only 40 per cent have access to data, while only 20 per cent of Ooredoo’s revenue is from data services.

“One of the major issues we are Battery 300mAh facing over the coming years is to get governments and regulators to understand the importance of trying to encourage more data to come into their markets,” he says.

Marafih emphasises that while some are looking ahead to 5G services, there are still markets that haven’t issued 4G licenses and spectrum to operators.

“We’re trying to encourage governments to issue those licenses as soon as possible. Our latest one of course was Iraq in January and last year we were also given a 3G license in Algeria. But our concern is that we are still talking about 3G in a market where 4G is spreading across the world.”

Ooredoo is also looking to broaden its data revenue via the B2B segment, where it is rolling out services across its Middle East, North African and South East Asian markets.

“The size of that business now is roughly $1 billion and we know the potential size is $10 billion. There are a million companies within our footprint, so there is a huge growth opportunity there,” says Marafih.

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