The Xona Partners team was at Mobile World Congress and compiled a set of takeaways focusing on industry trends (link). Here, I wanted to add some personal observations on MWC 2018 which is a good barometer of the state on the wireless industry. But I don’t think you can judge based on the size of the event. Rather, it’s the many other signals that tell the story. This year comes in the midst of a slump in network solution revenues and a wave of consolidation of ecosystem players. The event shows how different companies deal with economic reality and an industry-wide transformation that’s reshaping the competitive landscape. Continue reading
Startups lead innovation in the technology world. But is there room for startups in the telecom world? And, what is the future of innovation in this industry? Innovation is one of the themes of this year’s Mobile World Congress which is starting next week, so will the ecosystem address this question?
Is telecom a utility play?
Services providers play a major role in setting the tempo of the industry: they own the end customer. For years, service providers squeezed vendors on price forming large purchasing consortia and bargaining down to the penny. Profit margins, which continue to shrink for everyone, are getting close to levels seen in utilities.
Startups seeking to sell into carrier have to pass many challenges, spend tons of money and wait years for acceptance and a purchase order. VCs don’t have patience for such processes; they backed off from many types of investment in this sector long ago. Continue reading
One of the criticisms of blockchain technology center on power consumption and the cost of mining. The electricity consumed in mining operations is high and continues to grow as mining difficulty increases in response to increasing processing power. Some think that blockchains is wasteful technology that is not compliant with a 21st century outlook for a green economy. Others accept it as the price to achieve consensus and trust in decentralized networks. Following recent work in this space, I like to share a perspective by making a comparison to the energy used in communication systems.
Bitcoin mining vs. mobile base stations
My estimates for bitcoin mining power consumption is around 7,000 MW, a average of a floor of 1,200 MW and ceiling of 12,000 MW. Many external sources point to values in the same range (at the time of writing, this example places power consumption on par with that used in Singapore). By comparison, I estimate that all the mobile base stations use around 12,100 MW, of which around 20% is in China. The power consumption for bitcoin mining has been increasing at a relatively fast pace. On the other hand, power comparison of mobile base station increases at around 2% annual. Based on this, the power used for bitcoin mining is set to overtake that used by mobile base stations this year, by late fourth quarter. Continue reading
Look at how well the price of Bitcoin correlates with its search trend. As Bitcoin raced to a record high nearing $20,000 earlier this month, so were the number of searches. We can see the same thing happening in 2013-2014 when a mini hype bubble developed focusing on narrow segments of people. Today’s hype bubble is more wide-spread and affects a much wider segment of people.
Bitcoin is one of the top stories in 2017. So are ICOs which raised over $2 Billion in funding, much of which in the second half of 2017, overtaking traditional equity investments in blockchain startups. If we plot ICO funding and its corresponding search term, we’ll have a similar graph. They too are in a hype bubble.
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This past week, I had the pleasure to moderate a panel on digital transformation and to join my Artificial Intelligence-expert partners at Xona in conducting a workshop on AI at TMT Finance World Congress to a crowd of ecosystem professionals. It is ironic that an industry that is a catalyst to the transformation of many other industries is itself in dire need to change. Telcos increasingly feel they are in a ‘straight jacket’ with few and painful options [some telcos actually still don’t see that: many incumbents still enjoy regulatory protection and sit happy where they are!]. Launching new services in the digital world is exponentially more complex with hardware-based networks. Transformation into efficient ‘digital entities’ through software and data is hard. Financial markets value enterprises with consideration to their future cash flow. Amazon, Google and Microsoft market cap alone stand at ~4x that of AT&T, Verizon, Sprint and T-Mobile combined. With the background, what does AI has to do with digital transformation?
Cloud players continue to set record revenues and profits while the telcos grapple with stalled revenues. The market cap of three to the top cloud players – Amazon, Google and Microsoft – stand at around $1.9 trillion while the top 4 US telcos – AT&T, Verizon, T-Mobile and Sprint, stand at under $500 billion. The telcos have lost the ‘Cloud 1.0’ battle to the OTTs. But, is there a way for the telcos to be more competitive? More specifically: can edge computing provide the telcos a competitive advantage over the cloud players?
Performance predictability is fundamental to the operation of any service provider. It is the foundation on which processes are built. Processes drive efficiency. So when it comes to deploying wireless technologies on large scale, service providers look for the “cookie-cutter” approach. No matter what a technology is, it will get little if any market traction if it cannot be deployed with relative certainty of performance. Continue reading
Xona Partners in cooperation with TMT Finance, has launched its one-day executive workshop series: Xona eXponent. The workshop on November 28th in London, will be focused on AI Investment. The event features four Xona team members who have worked in the Automotive, Financial Services, and Telecom Infrastructure industries bringing cutting edge technology to life.
Recent estimates report that AI is a burgeoning industry, generating over $5 Billion USD in revenue in 2015, with industry experts expecting this to grow 4X to $20 Billion USD by 2020. In this session we will provide an overview of the industry, the top 10 AI market trends in 2017 and beyond, and how this wave of AI currently flourishing is different than previous boom-bust cycles of AI in the past.
Click here to learn more about the AI Investment workshop.
Blockchain investments have long ceased to be the preserve of the fintech industry, having branched out over the past 2 – 3 years to different industries including health care, real estate, insurance, retail, and education to name a few. The telecom and Internet sectors are no exceptions. Focusing on the telecom space, we find that we are in the very early stages:
1- The VC arms of telecom service providers began making investments in blockchains as early as 2015.
2- Blockchain investments remain sporadic and limited to a few telcos in consortium with other investors.
3- The type of investments vary among different applications albeit a preference to invest in complementary solutions. Continue reading
It has been a long time since I attended an ‘academic’ conference, focusing instead on industry and finance events. But this week, I had the chance to drop by at IEEE VTC Fall, one of the leading conferences on mobile technology to get the pulse on the state of R&D and keep tab on latest developments from the best researchers in this field. I also moderated a panel on the ‘backnets,’ where an open discussion ensued on the evolution of the RAN and transport networks. From all perspectives, 5G dominated the topics. Here, I like to summarize some of the highlights. Continue reading
Blockchains has evolved from a technology for cryptocurrencies to one supporting applications in multiple industries, including telecom. A few leading telcos are investigating the potential of blockchains (link). Many applications are being proposed including roaming fraud mitigation, flexible service offering or selection, IoT contracts, authentication and many use cases. However, when it comes to actual and practical solutions, we are still at the early stages. Where and how to apply blockchains are still hard questions to answer. Continue reading
A survey of smart city activities around the world shows that much of the focus of smart city projects remains on establishing the most basic of services such as connectivity. In fact, there is a clear lag in the deployment of technologies and services in smart city applications, versus what technologies enable. We call this the cascading technology trap. Continue reading
Applications of millimeter wave (mmWave) technology in 5G fixed access are subject to a few important levers. To start, it’s important to understand that the cost of fixed access networks is directly proportional to the number of houses passed. This provides the advantage of growing the network selectively on geographic basis. But it also means that economies of scale are slower to affect the business case: passing more houses means more expenses. By comparison, mobile networks are designed to cover a wide area from the start which places emphasis on gaining subscribers to load the network and scale revenues. Continue reading
Artificial Intelligence is riding the hype curve, again! Pervasive digitization and connectivity, advances in processing power and low-cost storage are making possible what once could only be imagined. AI is penetrating every aspect of business with organizations seeking to build knowledge from data to gain competitive edge, sway customers and increase profits. This created high demand for AI expertise, tools and solutions as organizations ponder their AI strategy. But what to do about AI? How to build an investment thesis based on facts?
At Xona Partners, we have been engaged in artificial intelligence research since the mid-1990’s. In recent years, we have helped organizations develop their AI strategy and solutions, and investors in due diligence and deal flow sourcing. We distilled our observations on AI M&As into 5 fact that technology investors must consider when making investments in this space. This applies to technology companies looking to develop or acquire AI-based solutions, or financial investors looking to make investments in AI startups. The following 5 facts will help guide their strategy: Continue reading