Apple given golden opportunity to crack India with relaxed rules

Apple has struggled to gain any sort of traction in the Indian markets to date, but new Government rules could perhaps open the door a crack.

India is a market which represents a significant opportunity for the major players in the digital economy. It has the second-largest population globally and a smartphone penetration rate of roughly 24%, but one of the few markets worldwide where smartphone shipments are increasing quickly. Thanks to certain market disruptions, India is currently under-going its own digital revolution, with the increasingly wealthy middle-class easing into the digital euphoria Western consumers have been accustomed to as the norm.

Year Smartphone penetration1 Average income (US $)2
2018 23.9% 2,020
2017 21.9% 1,830
2016 20.4% 1,690
2015 18.6% 1,600

1Statista 2World Bank Group

The evolution of India and the surge of the digital economy in the country is moving at a dramatic pace. The opportunity for profit is monstrous, but this is a tricky market to crack.

This is the conundrum which Apple is currently facing. It currently has less than 2% of market share across the country (which isn’t increasing), and premium prices are stifling any genuine ambition to increase this.

Indian consumers are gradually spending more on devices, though by the time Apple’s prices would be deemed palatable, other brands might have already developed a strong sense of loyalty; do not underestimate the power of the Android/iOS divide.

Brand Market share
Xiaomi 31%
Samsung 26%
Vivo 6%
Oppo 6%
Realme >1%
Apple >1%

Figures curtesy of Counterpoint Research – Q2 2019 shipments

However, there is a glimmer of hope. The Indian Government has this week announced it will relax rules which dictate how foreign companies can operate in the country. Fortunately for Apple, the easement will allow it to sell directly to customers through its eCommerce channels.

In by-gone years, a foreign company had to source 30% of its production locally to create a retail presence in India. This presence includes online channels. With such reliance on China for the manufacturing elements of the supply chain, Apple has always struggled to meet these requirements. As a result, Apple’s devices have been sold through local partners, who add a premium to an already premium product; it has struggled to gain a foothold in the market.

Another element tied to this is the brand story. The Apple Store is a presence in 25 countries around the world, not only presenting a direct-selling opportunity, but a chance to offer an experience to current and potential customers. This is a fundamental building block in the Apple strategy, which is all about creating a brand and an identity to cultivate customers into the loyal iLifers you see around the world today.

Thanks to new elements being considered by the Indian Government, Apple now meets the requirements and will allegedly begin selling products through its own eCommerce channels in the coming months. These new considerations take into account more iPhones will be manufactured in India, not only for Indian consumers, but for export to Europe as well. This is massive win for Apple.

In short, there are two massive benefits for Apple. Firstly, it can own the purchasing relationship with the customer, dictating the messaging and reducing the price while maintaining profit margins. Secondly, it can begin to create the Apple experience for customers to nurture the sense of loyalty which is so critical to the Apple success over the years.

Apple is an incredibly successful smartphone manufacturer because it creates excellent devices, but the work which has been done to build loyalty with its customer base should never be underestimated.

Think back to the 90s and 00s when you saw Apple adverts on TV. None of these adverts ever really discussed products in the way you would expect but talked about the Apple experience. A huge proportion of advertising today is designed around story-telling and brand experience, but Apple was arguably one of the first to do it and remains one of the best at building this experience.

The result of these campaign was an ‘us’ and ‘them’ mentality which persists today. Whether it pins iOS versus Android, or Mac versus PC, the split is very apparent, and crossover is very rare. Not only does this segmented approach maintain loyalty for the individual products, it presents significant cross-selling opportunities. How many iPhone users have an iWatch, an iPad or a Mac also? We suspect a high percentage.

Shifting people into, and keeping them in, the Apple universe can partly be attributed back to the brand marketing campaigns, the closed ecosystem and ownership of sales channels and brand experience. And now, it presents another massive opportunity moving forward; software and services revenues.

Period Net sales Software and services revenue Percentage of total
Q3 2019 53,809 11,455 21.2
Q2 2019 58,015 11,450 19.7
Q1 2019 84,310 10,875 7.7
Q4 2018 62,900 9,981 15.8
Q3 2018 53,265 10,170 19
Q2 2018 61,137 9,850 16.1
Q1 2018 88,293 9,129 10.3

Figures taken from Apple financial reports – USD ($) in millions

Apple CEO Tim Cook has made a big deal about software and services, and he is very right. It attracts recurring revenues without the R&D and manufacturing price tag. There will of course still be R&D, but smartphones are very expensive products to produce at the level Apple customers demand.

Generating revenues through AppleCare, iTunes, Apple Music, iCloud, Apple Pay, Apple Books, Siri, maps, search or TV subscription services becomes substantially more profitable once people are bought into the ecosystem. And as you can see from the table above, it is becoming an increasingly important facet of the financial spreadsheets.

With many users persisting with the OS they have become accustomed to, if Apple wants to make India a profitable market, it will have to start embedding itself in the minds and lives of Indian consumers today.

The Indian market is one which offers great prospects and profits for those who play their hands wisely. Up to now, Apple would have been written off by many industry commentators, but will changes to the rules, the door is slightly ajar. But that is all it is right now.

Apple will have to convince smartphone users it is a better alternative than the Android ecosystem, while also justifying the premium it traditionally charges for products. This will be a very difficult battle, but Apple is in a better position today than it was yesterday.

Q&A with Chong Siew Loong, CTO at StarHub

Telecoms.com periodically invites third parties to share their views on the industry’s most pressing issues. In this piece the 5G Asia team interviewed Chong Siew Loong, CTO at StarHub who oversees the Network Division, ahead of the show to gain a sneak peek for what we can expect at their upcoming conference.

1. In a recent article, you mentioned that 5G cannot be servicing only smartphone devices. Can you expand on this further and tell us more about StarHub’s 5G vision?

The new world of 5G is beyond just smartphones and infrastructure. StarHub’s 5G vision is to deliver smart applications and services so as to serve customers better and in more personalised ways than ever before. To do this, a vibrant ecosystem is essential. We are nurturing a 5G ecosystem of technology and business partners with the objective of co-developing new mobility services and enterprise applications infused with data analytics and artificial intelligence. 5G, with its high-speed, low-latency and network slicing capabilities, provides an opportunity for StarHub to redefine its role in this enhanced value chain.

2. Which industries do you expect to drive 5G adoption in Singapore? What new 5G enterprise services should we expect StarHub to bring to the market and why?

StarHub aspires to be a forerunner in 5G to serve our customers’ needs better than anyone else. As a telco, we have a front seat view of the positive impact mobile evolution is having on people, businesses and the society. From 2G to 4G, speeds and service reliability soared, and so did the pace of innovation. We strongly believe that 5G will play a critical role in the fourth industrial revolution. We are therefore engaging in trials and proof-of-concepts with enterprise customers to discover digital innovation and automation never thought to be possible. At the outset, we expect 5G to appeal to sectors that require ultra-reliable low-latency communications, massive Internet of Things and network slicing capabilities for time- and mission-critical activities.

3. Can you tell us more about how StarHub is gearing up for 5G?

5G is critical to Singapore’s Smart Nation development, and StarHub is ready to be one of the leading companies to support the government, businesses and consumers in this innovation drive. We have dedicated people and resources to our 5G Centre of Excellence, which is a business unit tasked with developing a partner ecosystem and co-creating innovative 5G services for the unique Singaporean market. A portion of StarHub’s network is 5G-ready today. To facilitate ongoing trials and industry engagement, we are broadcasting ‘live’ 5G signals from our headquarters and will expand 5G coverage into more areas. We will also upgrade our cellular-on-wheels vehicle with 5G, to allow us to showcase the benefits of 5G island-wide.

4. What have the main (market, technology, business, regulatory or other) challenges in achieving 5G rollout been? What needs to be done to unlock 5G innovation in Singapore?

Singapore’s measured approach to 5G is encouraging as it gives time and space for ongoing industry discussions and localised use case research and development. For 5G to succeed, the entire ecosystem, from technology to talent and regulation, needs to develop. Given the nascency of 5G, we believe onerous regulatory obligations on 5G services should not be implemented too soon, to allow for adequate research and development. In addition, concerns about public health and safety would need to be addressed in order to facilitate smooth rollout.

5. You will be joining the Keynote Panel on Defining the 5G killer app in Asia at 5G Asia (10-12 September, Singapore). Could you give us a sneak peek of what the audience should expect to hear from you? What are you looking forward to at the show?

10 years ago, we could not have imagined where we are today with Mobile. 10 years from now in a 5G world, we will again look back and marvel at the ingenuity of the human mind. 5G may seem shapeless at this moment, but I believe our collective imagination and creativity will see the birth of many innovative use cases. 5G offers promise and challenge, and the StarHub team has been hard at work distilling what would work well for customers on this side of the globe. I look forward to sharing our Singapore-centric experience and lessons to spark new ideas and conversations. Forums such as 5G Asia are excellent opportunities for knowledge sharing, and I hope to also glean insights from other international trailblazers in the 5G ecosystem. In the lead up to 5G commercialisation, our priority is to develop innovative and sustainable business models and explore exciting new ways of meeting our customers’ needs.

Chong Siew Loong 2019 (with tie)
It’s your chance to hear from Chong Siew Loong directly at 5G Asia 2019 which is taking place on 10-12 September at the Marina Bay Sands Expo & Convention Centre in Singapore.

Are you an Operator or Enterprise? If so, click here to register for your free pass now! 

WhatsApp making progress on WeChat emulation ambitions

Facebook has been promising some sort of payments solution for WhatsApp, and it seems to be making a bit of progress in Indonesia.

According to reports from Reuters, Facebook is in discussions with several potential partners to offer a mobile payment feature in the app in Indonesia. Although this is not Facebook’s first venture into mobile money, there is a stuttering initiative in India, the Indonesian experiment will focus on creating a digital wallet to tap into one of the worlds’ fastest growing eCommerce markets.

Earlier this year, Facebook CEO Mark Zuckerberg suggested to investors a wander towards mobile money was an ambition of the business, though this should actually surprise few. When you consider the success of Tencent-owned WeChat in diversifying the offering of the messaging app, Facebook is playing catch-up.

For those who haven’t used WeChat, what you can actually do is quite remarkable. The app was solely focused on messaging to start with, but now you can send images, make phone calls, peer-to-peer payments are included, as are in-store purchase via NFC and paying utility bills. Soon enough, cards could become redundant, such is the growing usage of mobile payments through digital wallets and WeChat.

If Facebook could capture a slice of this success, WhatsApp might start to begin paying off the $19 billion Facebook had to fork out during the acquisition.

The original purchase of WhatsApp was seemingly a means to capture a messaging application which was taking the world by storm. However, the data which WhatsApp would have offered the Facebook advertising machine would have been very beneficial. The team has found integrating the two platforms very difficult to date, though mobile money is certainly a way of creating additional revenues.

In Indonesia, the Facebook team is in discussions with several partners to tap into the eCommerce platform, though in India it is focusing on peer-to-peer payments in-app. There are several reasons for the differing approach, regulatory barriers being one, though experimenting with two ideas could offer two new features for a global rollout.

Interestingly enough, something which might get the White House twitchy is the alleged conversation with one of the potential partners; mobile payments firm DANA, which is backed by Ant Financial, an affiliate company of the Chinese Alibaba Group. Considering the current relationship between Washington and Beijing, these must be interesting conversations.

Globally, this is a very good move from Facebook. According to data from Sensor Tower, WhatsApp was the most downloaded application during the first quarter, with 223 million new installs, taking the total north of an estimated 1.5 billion users worldwide. This is a massive addressable audience, representing huge potential if the team can get all the moving parts to align.

Softbank opens yet another investment fund

Softbank CEO Masayoshi Son has continued his quest to prove he has been a man in the wrong career for the majority of his life with the launch of another investment fund.

The Growth Acceleration Fund has completed its first closing with committed capital of $269 million, somewhat short of the $100 billion raised during the first venture, though it will offer plenty of opportunity to explore new opportunities.

Having launched the Softbank Vision Fund and the Delta Fund, this latest attempt will look to target start-up businesses globally, though the primary focus of the fund will be the Asia markets. Softbank Group will be the main and controlling partner of the fund, contributing 52% of the capital, while other Softbank subsidiaries will also contribute as well as institutional investors such as Korea National Pension Service.

This is of course not the first fund which has been launched by the Softbank business, though it is another step-forward for Son, who seems to have the goal of being the most influential person in the technology industry.

The first investment body, the Softbank Vision Fund, was launched in 2017 and now has $91.7 billion in committed capital from the likes of the Mubadala Investment Company, Apple and Foxconn. With this capital, Son has made some heavy bets in the technology space including Nvidia, Arm, Slack and WeWork.

The more humble fund, the Delta Fund, is headquartered in Jersey and currently has $6 billion in contributing capital. The focus of this fund is also on the technology industry, although Softbank is less forth-coming with the names of its investments. So far, the Delta Fund has directed investment towards ‘VR/AR development tools’, a ‘geographical location platform’ and a ‘GPU developer’.

Although investment management is somewhat outside of the realms of Son’s experience to date, it seems he has a knack to running funds. In the financial year ending March 31, the two funds added 1.26 trillion yen in profits to the Softbank accounts. With such profits being realised, you can see why Son is keen to double-down and explore further.

China plummeting and India soaring but Apple just can’t get a break

IDC had a stab at smartphone shipments in two of the worlds most lucrative markets, and it does not make pleasant reading for Apple.

As the Apple management team has now decided against dishing out the specifics on iPhone shipments in the quarterly statements, analysts are the closest we’re going to get for sales figures. Here, IDC is suggesting a sluggish market overall in China, with iPhone sales dropping considerably, while the Indian market is booming, but Apple can’t claim a slice of the action.

Starting with the Indian market, IDC estimates 142.3 million units were shipped across 2018, demonstrating a 14.5% year-on-year increase, though the final quarter saw a 15.1% sequential decline. This might not look as bad as it originally sounds however, as Q4 actually increased year-on-year 19.5%, suggesting the third quarter was just exceptionally positive.

“Amongst the big highlights of 2018 were the online-focused brands that drove the share of the online channel to an all-time high of 38.4% in 2018 and a whopping 42.2% in 2018Q4,” said Upasana Joshi of IDC. “This was primarily driven by several rounds of discounts by e-tailers driving affordability through various financing options, cashback offers and buyback schemes.”

The Jio effect is clearly sustainable across the country as Indian consumers appetite for the digital economy continues to grow. With the disruptive telco promising further expansion, greater digital inclusivity and additional services over the coming months, more consumers might be encouraged to upgrade to more premium devices. As Joshi notes, the premium end of the market was the fastest growing price segment, demonstrating 43.9% year-on-year growth.

What will be worrying for the iLeader is the inability to get a foothold in the market and capture the attention of Indian consumers. India is traditionally a market driven by low-end devices, however the encouraging growth of handsets priced north of $500 should offer some traction for Apple.

Xiaomi led the market, having recently overtaken Samsung, with 28.9% of total shipments, a healthy 58.6% increase from 2017. Samsung collected 24.7% of Indian devices sales, while Vivo had 10%, Oppo 7.2% and Transsion with 4.5% completes the top five vendors. The remaining 27% of shipments were shared through multiple vendors, Apple included, though the bundled peloton chasing the leading five saw total sales drop by 10.7% year-on-year.

With sales across the world seemingly declining for Apple, the booming Indian market is one it can ill-afford to miss out on. Last year, it announced it was moving manufacturing into the country, with partner Foxconn aiming to be up and running in early 2019, while there are also plans to expand the retail footprint. The team reportedly plan to open three massive stores in both Delhi and Mumbai, owing to the success of retail operations elsewhere around the world.

While India might be a headache due to the iLife indifference of the locals, China is turning into a full-blow migraine for completely separate reasons.

IDC estimate Apple’s smartphone shipments have declined by 19.9% in China, while the home favourite Huawei saw its own shipments grow by 23%. Apple’s loss is Huawei’s gain, though it does appear the iChief is losing its prestige badge in the market.

These figures are of course estimates, as Apple has decided against telling anyone about specific shipment numbers, though the revenues over the last quarter give a decent idea. During the last quarterly results, revenues for the Greater China region declined by roughly 26% from $17.9 billion to $13.1 billion. In years gone, Apple used to be able to simply release a new colour variant of flagships and China consumers would be queuing out the door, but the bonanza is over for the moment.

The big question is why? Of course, there will be a preference from some for local brands, and there will of course be the cash-conscious. But ultimately you have to wonder whether Apple is living up to the brand promise which it spend so many years cultivating; where is the innovation?

Over the last decade, Apple has crafted a brand which is built on the principles of innovation and technological supremacy. Steve Jobs was the figurehead of this image, and many Apple enthusiasts were prepared to pay the premium on devices because of this identity. However, in recent years, Apple has done little to differentiate its devices and justify the pricing premium which is placed on products. Of course, this is not just Apple, innovation has stuttered across the segment, but gone is the assumption Apple immune to market trends.

With revenues declining across the international markets, and Apple set to sit out the initial 5G devices euphoria over the next couple of months, 2019 is starting to look like a very uncomfortable year for Apple.

Designing IoT for Asia

Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Ong Geok Chwee, CEO of Bridge Alliance, looks at the opportunities in IoT and the considerations when thinking about scaling IoT into Asia.

The “Internet of Things” is a term we cannot avoid in this age. Yet, even industry experts still find it a challenge to grasp how its potential can be unlocked. This calls for design – designing with intention, rather than just letting things happen. This is important as we start wrapping our heads around IoT and the functions or people it will serve. Who or what will be using IoT? When and how does IoT come into play? And where will IoT be readily received?

We often talk about IoT as a gold mine that many are sitting on. In fact, that that gold mine is in Asia – the leading region for IoT spending, accounting for more than 40 per cent of the total worldwide IoT expenditure in 2018.

So how do we design our intelligently connected products for the Asian market?

It is important to note that though seen as a collective region, the Asian market is highly fragmented. There is a significant variance in the urbanisation levels and characteristics of each country. Some are more advanced and have better infrastructure, while others have a larger population, with a wonderful climate for farming.

This means that the use cases for IoT in these markets might vary, especially when we talk about scale. IoT solution providers might want to consider these variances and identify similar markets, so you may further refine your offering to serve a common need across multiple geographies.

Designing for Feasibility

Feasibility is also an important element to the design phase. How do we design our IoT solutions to be cost effective? Keep it simple. The simpler your process, the more you save on unnecessary features that are not core to your offering. Take for example the use of a global eSIM, where from a manufacturing point of view, it is simply a single stock keeping unit (SKU). This optimises the logistics and distribution process, reducing the number of production lines required.

The Battle of the Platforms

The GSMA predicts that platforms, applications and services growth in the emerging IoT segment will soon surpass that of connectivity, capturing 68 per cent of the total by 2025. This means that IoT platforms are very much the focus. When it comes to platforms and technology, interoperability is critical. This is the trick behind the seamlessness of IoT, where platforms are the enabler of machine-to-machine connectivity. However, this means that there will be a huge advantage for whichever platform that captures the greater market share. In this case, the risk of a monopoly emerging is highly likely, which raises the concern of how the market will adjust to such a situation.

Internet of Things, or Internet of People?

We are ultimately trying to solve issues for people in our IoT designs. It is easy to get carried away when designing a solution with such complicated technology involved. We need to remember to simplify – the emergence of IoT came about with a purpose to simplify our lives and make things as seamless as possible.

It is not just about the devices and platforms, nor just about connecting places and things, but about connecting the people. That is why we see the move towards customer experience and building relationships. This is also because the human connection is most often superior and an innate need, deftly enabled by the connectivity of things. Through this new age of IoT, we may understand people more through analytics, serve them better through experiences empowered by technology and delight them at just the right moment where it counts, through intelligence and the effective use of big data. Such an exciting time to be continuously designing, redesigning, testing and living in the world of technology and telecommunications.

 

Hear more from Ong Geok Chwee at 5G Asia 2018 in Singapore next month, where she will be discussing what the telco of the future will look like in our CxO keynote panel.

 

Shaping the Asia Pacific MVNO Market 2018

MVNOs Series explores the latest developments in the Asia Paficic MVNO market. With contributions by Gary Bhomer, Tel-Consult, and Renato Reis, Acqua Telecom, this report offers you a snapshot of the market, the impact of regulation and the latest business trends in the region.

Comprising more than 50 nations and territories, two continents and an area equivalent to more than a third of the total landmass of the Earth, the Asia-Pacific APAC) region boasts around 60% of the global population, including three of the five most populous countries.

Given its sheer size, it is no surprise the 2.7bn unique mobile subscribers across the APAC region represent an unrivalled market. But due to the varied demographics of a region characterised by sharp contrasts between urban and rural, wealthy and poor, connected and remote populations, mobile ownership only represents a 67% penetration rate.

This is why, as well as ranking as the world’s largest mobile market, APAC is the grand prize being chased by many Western brands. As domestic markets across the region open up to MVNOs, virtual operators are widely viewed as having most to gain. When asked their opinions on the prospects of regional MVNO markets, participantswere unanimous – APAC is the region where industry insiders expect to see most growth in mobile overall, and it is where they see the best opportunities for MVNOs.

This is backed up by most economic forecasts for the key APAC markets. According to GM Insights, China – the world’s single biggest domestic mobile market – MVNOs are expect to grow year-on-year 16% through to 2024, above the global average of 12%. This figure soars as high as 56% CAGR for MVNOs in emerging Asian markets, where low mobile penetration in less developed economies presents even greater growth opportunities.

In emerging economies like Pakistan and Bangladesh, mobile penetration remains as low as 50%, creating ideal ‘virgin territory’ for MVNOs to move in on. Predictions for explosive MVNO market growth in these economies are largely founded on the rapid roll out of 4G – the GSMA predicts these two countries, alongside India and Indonesia, will be major drivers of 4G connection growth in the coming years.

Relationships between virtual operators and MNOs remain crucial to MVNO prospects in individual domestic markets. In the Middle East, despite some signs that governments in countries like Israel and UAE might be prepared to introduce MVNO licenses, a lack of will on the part of MNOs is preventing virtual markets from emerging. Elsewhere, in countries including Australia, restrictive commercial structures are viewed as holding back innovation amongst MVNOs.

In this report, we provide you with a snapshot of the current state of play in the MVNO market across the APAC region, while also addressing the impact of regulation and market liberalisation, and how relationships with network operators are evolving in different domestic and sub-regional markets.

Download the full report and get a more in-depth analysis of four key markets from across the region and insights from top industry analysts with their ear to the ground – including Renato Reis from Acqua Telecom, Futoshi Sasaki from Internet Initiative Japan, and Gary Bhomer from Tel-Consult.

Interested in the MVNOs market in the APAC region? Then MVNOs Asia is the event for you. Join us at the only dedicated MVNO event for the Asia Pacific region.

S9 halts Samsung run of progress but semiconductors stand strong

Samsung’s run of reporting record quarterly results has come to an end as sluggish sales for its flagship S9 device hit a wall.

Analysts had been predicting this would be a tough quarter for the device, some believing this would be the weakest launch for years, and it appears the fears have become reality. With sales of roughly $52.1 billion for the three months, a decline of 4% year-on-year, Samsung at least offered somewhat accurate guidance in a note a couple of weeks ago.

“Second quarter revenue fell due to softer sales of smartphones and display panels, despite robust demand for memory chips,” said Samsung in the earnings statement. “The continued strength of the Company’s memory business contributed to the higher operating profit. Net profit was little changed from a year earlier due to higher income tax.”

While this is certainly not an ideal situation for the business, at least it is not alone. The iPhoneX has also been experiencing sluggish sales, as the continued trend of flat innovation and limited differentiation continues. Apple might have been able to avoid the dip over the last couple of years, selling on its brand more than product innovation, but it seems not even the iLifers can continue to blindly follow the iChief down the trail of mediocrity any more. No-one is permanently exempt of global trends.

For the short-term future, the story is unlikely to change significantly, but there is a light at the end of the tunnel. With 5G networks set to be switched on over the next couple of years, manufacturers will soon be able to begin a refreshment cycle of devices, with flagship products being marketed as ‘5G Ready’. The consumers insatiable appetite for data and the need for speed will likely spur on the need to update devices.

This might not be the best time for the devices division, Samsung does at least have the burgeoning, if not as sexy, semiconductor unit. The NAND and DRAM markets continued to be big earners for Samsung, despite commenting on weak seasonal demand. With global cloud trends continuing to surge, front-line suppliers to the data centre industry are not going to be going hungry any time soon.

For servers, demand for SSD for data centres is forecast to remain strong, while for enterprise, adoption of high-density server SSD over 8TB is expected to continue. The adoption of SSD is expected to expand into more sectors and all product segments are projected to use more high-density eStorage, perhaps explaining the South Korean drive for innovation in the semiconductor market.

According to Yonhap News Agency, the South Korean government has pledged roughly $1.34 billion to the semiconductor industry over the next ten years, to support the country’s position in the global standings, but also to capitalise on the expected growth in the segment. The semiconductor space is considered to account for roughly 20% of the country’s exports.

“In order to have South Korea maintain its reputation as the world’s top semiconductor powerhouse, we will support the development of the chip industry by focusing on three strategies,” said Paik Un-gyu, Minister of Trade, Industry and Energy.

The three pillars of the strategy are the development of next-generation materials that will replace existing memory chips, the seeking of combined growth of fabless and foundry businesses, and hosting production lines of global semiconductor companies. Samsung will almost undoubtedly benefit from government interest in this area.

Samsung’s flagship business unit, its smartphone division, has had a rough couple of years, owing to a global slowdown on devices and also its own engineering ‘difficulties’, but this decline is not something which we should be surprised at; the writing has been on the wall as consumers start to favour refurbished or second devices, while also extending the lifecycle of their current devices. But on the positive side, Samsung is collecting profits through diversification.

Investors will moan about the deficit in sales and profits, but a burgeoning semiconductor division and a device refreshment cycle on the horizon, it could be in a worse position.

MWC Shanghai: Co-creation and collaboration becoming the new buzz of 5G

Buzzwords are nothing new to the telecoms and tech space, but 2018 is starting to see the rise of a few more; co-creation and collaboration

In most cases, vendors and telcos use tech-orientated buzzwords to dazzle, amaze and confuse customers, but this is a new type of euphoria. Its softer, less tangible and more acute. Co-creation and collaboration are necessary aspects of developing the digital economy, but purely by the flexible nature of the concepts, the buzz-bending, hype-escalating PR ‘gurus’ of the industry are going to have some fun here.

The definition and application of the two words are relatively simple on the surface. 5G can potentially take telcos beyond the realms of connectivity utility, providing an opportunity to become more of a consultative service provider. Instead of selling SIMs, telcos will be able to evolve offerings to be more than connectivity for enterprise customers. This means solutions which can proactively improve the efficiency of business operations.

Think of intelligent factories, smart cities or autonomous vehicles. In these examples, connectivity can be used to enhance the business, instead of just making it work. But before this dream of new revenues can be realised, the business needs to be transformed and new solutions need to be imagined.

This is where co-creation and collaboration comes into play. Telcos cannot simply knock on the door of a customer with a 5G offering and say ‘here you go, have come capacity, bandwidth and latency’, a solution specific to the industry, or the individual business, has to be created. It is a different type of business model.

One company which is taking this approach is NTT Docomo. Speaking during MWC Shanghai, CEO of Docomo Beijing Labs, Lan Chen told us the team now has more than 1400 industry partners, with plans to continue to grow. Chen said each of the partners were working with the Docomo research team to create products specific to industry, whether it would be AI-driven taxi solutions which predict demand or virtual assistants which are contextually aware. These partners range from technologists in enterprise organizations, to the internet giants like Baidu, as well as academic researchers. The point is they have experience in building services and products specific to the verticals.

Docomo is defining this research as co-creation, and there are already examples of services in the real world. Chen said there are several taxi companies working in Japan and China to hone the predictive demand service, and while it is not perfect, progress is certainly being made.

Elsewhere on the agenda, Intel had the chance to beat its chest and declare how collaborative it is. Robert Topple, GM of the 5G Advanced Technologies group, pointed to the work the team is doing with operators around the world to discover the future benefits of 5G.

“Important thing about 5g is the need to focus on scale not speed,” said Topple. “When you architect, it’s important that you build the foundation for bigger ideas in the future.

“Need to be software defined, virtualised wherever they are, but also built for the use cases of tomorrow. 5g is not about today.”

Looking at the R&D work, in Sydney the team is working with Telstra and Ericsson to use 5G to support eSports. This is something which is very unique; gamers can become content creators inside the game as opposed to linear content platforms of the past. This impacts the way in which you build 5G for gaming. In Japan there is work with Docomo applying mobility concepts into vehicles. The need here is to make sure an effective handoff between base stations and radio heads occurs, while also maintaining the experience. With autonomous vehicle the environment will change from a cockpit to passenger experience, which Topple highlighted changes the way which we need to think about connectivity and engagement.

Other projects included drones in China for maintenance of the Great Wall of China, an initiative with AT&T in the US for create wireless networks to support 4K video content and smart mining projects in Estonia with Telia. Each of these examples build the case for collaboration.

A final example is a conversation with Jane Rygaard, Head of 5G Marketing at Nokia. Rygaard pointed to the development of 5G networks and Bristol is Open as a great of example of where collaboration can work brilliantly. In Bristol, the initiative has evolved into a mish-mash of university academics, the local authorities and private industry all collaborating with the aim of making 5G accessible and successful for the digital economy. It accounts for different perspectives, ultimately making connectivity more useful.

Bristol is fast becoming one of the most technologically advanced cities in Europe, but it pales in comparison to some of the Asia metro areas. Bristol has a population of roughly 450k, which allows for some interesting PoCs, but China has 120 cities with a population of more than one million people. The scale, should collaboration be done effectively, offers great opportunity to apply variables on PoCs and collect mountains of data to hone models and services.

Collaboration and co-creation might seem like a simple idea, but the foundations of the telco business need to be sturdy and thorough. Such practices need a new structure and external contributions to be a success, something which is starting to catch on in Europe now. That said, the Asian telcos are miles ahead.

Walking around the exhibition floor, the industrial use cases were clear. Almost every stand had elements of enterprise emblazoned on the temporary walls and stacked high in the marketing literature. Asia has been thinking about this evolution for some time, adapting business models, moulding the ecosystem and liaising with external partners to create a more fluid and innovative environment. Industrial applications, the solutions and the communication strategies to engage customers are much more mature.

Collaboration and co-creation might seem like fluffy buzzwords which can fuel the lofty ambitions of creative PR powerhouses, but there is substance to the claim. Those who genuinely embrace the fundamental changes to business which collaboration demands will find themselves in an attractive position to reap the rewards of the enterprise connectivity game. Those who simply use the buzz to empower the marketing department will soon be found out.

China Telecom and Liquid tie up in search for scale

China Telecom Global and Liquid Telecom have announced a new collaboration to extend their respective network coverage in the African and Asian markets.

The partnership will allow both of the telcos to offer additional network solutions and services to enterprise and wholesale customers, as well as increasing coverage across two challenging regions. China Telecom Global has already established a Point-of-Presence (PoP) at Liquid Telecom’s East Africa Data Centre in Nairobi, though this will be extended facilities in Johannesburg and Cape Town.

“With more than 50 countries in the region, Africa is nonetheless the booming new market with the highest development rate just after Asia, and a very important market for CTG,” said Changhai Liu, Managing Director of China Telecom, Africa and Middle East. “This collaboration will enable both CTG and Liquid Telecom better serve our customers and explore untapped business potential for further development. Under this partnership, we are well positioned to enhance the connectivity and network infrastructure in both regions.”

“This partnership with China Telecom Global reflects the strong global demand for world-class network services across Africa. Our combined service and network capabilities will be of great value to multinationals operating in some of the fastest growing economies across Africa and Asia-Pacific,” said Willem Marais, Group Chief Business Development Officer at Liquid Telecom.

Partnerships like this should be encouraged in regions where investments can be challenging to justify. While telcos in more developed markets can build business cases around investment in network infrastructure, the difference in economics between the developed and developing nations mean the rules are not the same. Telcos in developing nations aren’t even playing the same game, as economy of scale becomes much more difficult to realise.