MWC 2009 Roundup - Fear and Optimism

The giant mobile-telco bazaar has come and gone for another year. The pre-event fear about footfall seemed overplayed - everywhere was still crowded, if slightly less crowded than last year. The merchants were also out in force with their stands as huge and shiny as ever - perhaps there was slightly more unfilled space, but nothing that would indicate the mobile economy is in a massive downturn. As much as we hunted for the Four Horsemen of the Apocalypse - they were nowhere to be found.

The Nokia stand, day one Figure 1: the Nokia stand on day one

Unlike any traditional bazaar, MWC is not about the exchange of cash, but more about creating partnerships and product awareness which will lead to revenues throughout the rest of the year. Deals are a bonus, especially if they lead to the deployment of next generation technology - especially one's coming with a multi-year revenue flow.

Here is the Telco 2.0 analysis of the key events from the event:

LTE and 4G technology was everywhere, the focus of network equipment vendors' show, whether radio access or equipment to deal with the continued explosion in data traffic in backhaul and core.. Before the event even started, Vodafone, France Telecom & Deutsche Telekom placed a speed bump on the 4G highway, by saying that there was unlikely to be mass deployment in Western Europe before 2012. By Wednesday, Verizon Wireless, the largest US carrier, rode to the rescue and announced Alcatel-Lucent and Ericsson as their chosen radio access suppliers - contracts which will probably be worth billions over the technology lifecycle. More importantly, Verizon Wireless is pressing ahead for limited 4G launch in 2010.

mwc09.png Figure 2: Verizon's 4G plans

The US will definitely lead the EU on deployment of 4G technology, but it is hardly surprising given that the FCC has already auctioned the spectrum. Europe and most of the rest of the world is lagging in this regard, and there were several sessions urging the freeing up of the "digital dividend" of spectrum about to become available from the analogue TV switch-off for mobile.
The new GSMA chairman, Alexander Izosimov of Vimpelcom, said that mobile was the "new lifeblood of the global economy, and additional spectrum is not a luxury, but an absolute necessity for future growth".

Certainly in the UK, there is a lot of horse trading going-on with the government and Telco 2.0 wouldn't be at all surprised if the traditional highest-bidder wins auction route was circumvented this time around for a beauty contest with revenue share with commitments for rural coverage. The last thing anyone wants in a recession is a repeat of the runaway 3G auction.

The big news in the handset world was the Qualcomm-Nokia deal, whereby Qualcomm will develop drivers for its MSM (Mobile Station Modem) chips for the Symbian Operating System. The two will work together to develop phones initially targeted at the North American market where Nokia's market share is well below other regions of the world. It is encouraging that two industry giants have decided to invest in product development rather than lawyers.

The corollary of the deal is the uncertain future for Texas Instruments' mobile chip division - Qualcomm will certainly be looking for more than selling a few extra modems in North America. TI had a big stand showing off the fancy features of their OMAP application processor family, but it was completely overshadowed by Qualcomm Snapdragon platform. Two icons of the American mobile industry, indeed, the American electronics industry more broadly - Motorola and Texas Instruments - now look under severe strain.

LTE@Qualcomm

Figure 3: LTE on the Qualcomm stand

Snapdragon is a quantum leap forward for mobile processors and I suspect that 2009/2010 will witness a battle royale between Intel and Qualcomm in the low-end portable computing device market, whether we call them MIDs, Netbooks or whatever. If Gobi was Qualcomm's 2008 beachhead on the valuable silicon-space in notebooks building relationships with all the major notebook players, then Snapdragon 2009 is the full-frontal assault.

The brightest news of the Congress was the launch of Acer into the Smartphone market - with four new models. It follows on from their purchase of E-ten last year, but highlights that the lines of Smartphones and traditional portable computing are blurring. We expect to see a flurry of announcements of other new entrants in 2009.

Of course, the fruit on everyone's lips was the missing Apple and the fear of the iPhone - nowhere was this more in evidence than around the discussion of Application Stores. Most of the one's we heard mentioned seemed to be very me-too effects, whether Nokia's, Android's or Research-in-Motion.

Historically, Apple is hugely successful at leading companies into blind alleys. Application stores have all the appearance of a blind alley from our 20,000ft view of the world. Initial enthusiasm by developers will soon be curtailed if they don't make any money and the press moves onto the next great thing. We still occasionally bump into ex-Palm, BREW and Symbian developers who never quite made it to the end-user-paying-for-apps nirvana. Applications development is going to be seriously important - don't get us wrong. But app stores are not enough unless they get beyond being just this week's fad and copying Apple.

We believe that the most promising announcement around services was the Mobile Entertainment Forum announcement of their Smart-Pipes Enabler initiative. This brings together three key players (at least from an UK-centric view) - the BBC, mBlox and Vodafone. To quote the MEF:

"Enabler services offered by network operators will deliver many capabilities to content providers, including age-verification, location, identity authentication, reliable phone applications, specific tariffs to consumers and delivery with specific quality of service."

Very Telco 2.0, and far more important to a content provider than yet another Application Store. Note that all the elements of the Smart Pipe match the ones we identified in the 7 questions, and quite a few other Telco 2.0 documents beyond that - they are examples of key capabilities that telcos could provide to help optimise other people's business processes.

Overall, another good congress with lots of food for thought on industry changes for 2009 and beyond. Despite the hellish macroeconomic news, it's very clear that the fear and pain won't be evenly distributed. A large chunk of the North American market seems set for catastrophic change, with the possible exits of TI, Motorola and Nortel, at least in their current form. On the other hand, Qualcomm has successfully ridden the waves of uncertainty.

As far as operators go, it's clear that Telco 2.0 ideas have taken root at the most forward-looking carriers - will they be the ones to seize the opportunities the crisis presents? Further, we had very successful meetings with a number of major vendors - IBM, HP, Ericsson, NSN - and with operators around the forthcoming Telco 2.0 Club, which is intended to provide a forum to help the industry enable the two-sided business model. This is complementary to all the predominantly technical activity that the industry is engaged in.

Not everyone uses the same terminology - but more people than you think are working on the same lines.

Who would have imagined, not so long ago, that none other than AT&T, the biggest ugliest telcoest telco in the world, would be talking about the importance of ''standards-based APIs that ensure consistency, security and ease-of-use for developers''? But here's mobility chief Ralph de la Vega talking about just that at the end of his keynote.

dlv.jpg

Figure 3: AT&T Keynote

Not that APIs are sufficient in themselves. But with the parallel development of the GSMA OneAPI project and O2's Litmus developer platform, it's impossible to deny that the fear is with Telco 1.0 and the optimism is with Telco 2.0.

[Ed. - We'll be exploring the 'two-sided telecoms business model' in more detail at the next Telco 2.0 executive brainstorm on 6-7 May, run in partnership with the GSMA. It's invitation-only for senior strategy execs. To apply go here]