Vodafone makes flying 5G plug

Vodafone has announced the launch of a 5G trial in Manchester Airport, the first of several travel-related 5G initiatives to run over the coming months.

Vodafone 5G masts are now in place at the airport, one pillar of the 5G rollout across the city. Passengers at Manchester’s Terminal One were given a free Entertainment Pass on streaming service Now TV, with the telco promising download speeds which are 4X faster than what could be achieved on 4G.

“We all love to catch up on our favourite TV shows, play games or finish off some work when travelling,” said Nick Jeffery, CEO of Vodafone UK. “5G, with its fast speeds and quick response times, will make that quick and easy, even in busy locations. We are proud to be the first provider to bring 5G to an airport and will be adding more major travel hotspots to our 5G network throughout the year.”

“We are delighted to support Vodafone’s 5G trial at Manchester Airport,” said Brad Miller, COO at Manchester Airport. “As we progress with the design and delivery of our £1bn transformation programme, we are constantly exploring how new innovations and technology can be applied to improve the airport experience.”

While the earliest handsets will not be available for a few months, Vodafone has installed a ‘Gigacube’ in the airport, effectively a hotspot, to allow passengers to connect and experience the 5G euphoria. Trials to date have made use of Massive MIMO technology to create a fixed wireless access experience for devices connected to the hotspot.

Although the 5G buzz has been accelerating elsewhere around the world at a much faster pace, the UK telcos are beginning to catch on. This trial will be one of several transport related usecases around the UK for Vodafone, Snow Hill railway station in Birmingham is another, EE has seemingly been targeting the East London hipsters, while Three recently plugged its own fashion-orientated trial.

The UK was always going to be one of the fast followers when it came to 5G, though this is not necessarily a bad position to be in. The US and South Korea might be streaming ahead, though what should be noted is the limited expanse of these initiatives. Another important factor to take into account is the assault on enterprise organizations.

As it stands, there are few usecases built for the consumer 5G ambitions, aside from downloading movies in a fraction of the time. Telcos will struggle to justify the expense of 5G with the consumer alone, but whoever most effectively engages enterprise will reap the promised rewards. For Vodafone, this means IOT, most notably the connected cow which has been paraded about tradeshows over the last couple of months.

We’ve been waiting for years, but the 5G craze is finally starting to hit the UK shores.

Who’s got the stones to buy Netflix?

Apple, Disney, Microsoft or Apple; one of the biggest questions which has circled the technology industry over the last couple of years is who could possibly acquire Netflix?

The streaming giant, Wall Street’s darling, has almost constantly been talked up as an acquisition target. However, another year has passed and it’s another year where no-one managed to capture the content beast. You have to start to wonder whether it will ever happen, but here we’re going to have a look at who might be in the running.

Netflix numbersWith subscriptions totalling more than 148 million, 2018 revenues exceeding $15.7 billion and operating income up to $1.6 billion, Netflix would certainly be a useful addition to any company. However, with market capitalisation now roughly $143 billion and debt which would make your eyes water, an acquisition would be a scary prospect for almost everyone.

First and foremost, let’s have a look at some of the players who might have been in the equation, but alas, no more.

Disney has been a rumoured acquirer for almost as long as Netflix existed. This is an incredibly successful company, but no-one is immune to the shift tides of the global economy and consumer behaviour. Getting in on the internet craze is something which should be considered critical to Disney, and Netflix would have given them a direct-to-consumer channel. However, there was always a feeling Disney would develop its own proposition organically and this turned out to be the case.

AT&T is another company which might have been in the fray, but its Time Warner acquisition satisfied the content needs of the business. All telcos are searching to get in on the content cash, developing converged offerings, and AT&T is a company which certainly has a big bank account. As mentioned above, the acquisition of Time Warner completes rules this business out.

There are of course others who might have been interested in acquiring the streaming giant, but for various reasons they would not be considered today. Either it would be way too expensive, wouldn’t fit into the company’s objectives or there is already a streaming service present. But now onto the interesting stuff, who could be in the running.

Microsoft logo

Microsoft

From doom to gloom, CEO Satya Nadella has certainly turned fortunes around at Microsoft. Only a few years ago, Microsoft was a shadow of its former self as the declining PC industry hit home hard. A disastrous venture into the world of smartphones was a slight detour but under the cloud-orientated leadership of Nadella, Microsoft is back as a lean, mean tech heavyweight.

Alongside the cloud computing business, Microsoft has also successfully lead the Xbox brand into the digital era. Not only is the platform increasingly evolving into an online gaming landscape, but it also lends itself well to sit alongside the Netflix business. If Microsoft wants to compete with Amazon across the entire digital ecosystem, both consumer and enterprise, it will need to expand the business into more consumer channels.

For Netflix, this might be an interesting tie up as well. Netflix is a business which operates through a single revenue stream at the moment, entertainment, and might be keen to look at new avenues. Gaming and eSports are two segments which align well with Netflix, opening up some interesting synergies with Microsoft’s consumer business.

“Microsoft is at a crossroads,” said independent telco, media and tech analyst Paolo Pescatore. “Its rivals have made big moves in video and it needs to follow suit. The acquisition addresses this and complements its efforts with Xbox. The move also strengthens its growing aspirations in the cloud with Azure, firmly positioning itself against Amazon with AWS and Prime video.”

However, while this is a company which could potentially afford to buy Netflix, you have to wonder whether it actually will. The Netflix culture does not necessarily align with Microsoft, and while diversification into new channels is always attractive, it might be considered too much of a distraction from the cloud computing mission. Nadella has already stated he is targeting the edge computing and AI segments, and considering the bounties on offer there, why bother entertaining an expensive distraction.

Apple Store on 5th Avenue, New York City

Apple

Apple is another company which has billions floating in free cash and assets which could be used to leverage any transaction. It is also a company which has struggled to make any effective mark on the content world, excluding iTunes success. With Netflix, Apple could purchase a very successful brand, broadening the horizons of the business.

The last couple of months have shown Apple is not immune to the dampened smartphone trends. Sales are not roaring the same way they were during yesteryear, perhaps because there has been so little innovation in the segment for years. The last genuine disruption for devices probably came from Apple a decade ago when it ditched the keyboard. Arguably everything else has just been incremental change, while prices are sky-rocketing; the consumer feels abused.

To compensate for the slowdown, CEO Tim Cook has been talking up the software and services business unit. While this has been successful, it seems not enough for investors. Netflix would offer a perfect opportunity for Apple to diversify and tap into the recurring revenues pot which everyone wants to grab.

However, Netflix is a service for anyone and everyone. Apple has traditionally tied services into Apple devices. At CES, we saw the firm expand into openness with new partnerships, but this might be a step too far. Another condemning argument is Apple generally likes to build business organically, or at least acquire to bolster existing products. This would stomp all over this concept.

Alibaba Logo

Alibaba

A Chinese company which has been tearing up trees in the domestic market but struggled to impose itself on the international space, Alibaba has been hoping to replicate the Huawei playbook to dominate the world, but no-where near as successfully.

Perhaps an internationally renowned business is exactly what Alibaba needs to establish itself on the international space. But what is worth noting is this relationship could head the other direction as well; Netflix wouldn’t mind capitalising on the Chinese market.

As with any international business a local business partner is needed to trade in China. Alibaba, with its broad reach across the vast country, could prove to be a very interesting playmate. With Netflix’s Eastern ambitions and Alibaba’s Western dreams, there certainly is dovetail potential.

However, it is very difficult to believe the current US political administration would entertain this idea. Aside from aggression and antagonistic actions, the White House has form in blocking acquisitions which would benefit China, see Broadcom’s attempted acquisition of Qualcomm. This is a completely different argument and segment but considering the escalating trade war between the US and China, it is hard to see any tie up between these two internet giants.

Google Logo

Google

If you’re going to talk about a monstrous acquisition in Silicon Valley, it’s difficult not to mention Google. This is one of the most influential and successful businesses on the planet with cash to burn. And there might just be interest in acquiring Netflix.

Time and time again, Google has shown it is not scared of spending money, a prime example of this is the acquisition of YouTube for $1.65 billion. This might seem like pocket change today, but back in 2006 this was big cash. It seemed like a ridiculous bet for years, but who is laughing now?

The issue with YouTube is the business model. Its advertiser led, open to all and recently there have been some PR blunders with the advert/content alignment. Some content companies have actively avoided the platform, while attempts to create a subscription business have been unsuccessful. This is where Netflix could fit in.

“Google has made numerous failed attempts to crack the paid online video landscape,” said Pescatore. “Content and media owners no longer want to devalue their prized assets by giving it away on YouTube. Acquiring Netflix gives Google a sizeable subscriber base and greater credibility with content and media owners.”

Where there is an opportunity to make money, Google is not scared about big cash outlays. Yes, Netflix is a massive purchase, and there is a lot of debt to consider, but Google is an adventurous and bold enough company to make this work.

However, you have to question whether the US competition authorities would allow two of the largest content platforms to be owned by the same company. There might not necessarily be any direct overlap, but this is a lot of influence to have in one place. Authorities don’t generally like this idea.

Verizon Logo

Verizon

Could Verizon borrow a page from the AT&T playbook and go big on a content acquisition? Perhaps it will struggle to justify the expense to investors, but this one might make sense.

Verizon has been attempting to force its way into the diversification game and so far, it has been a disaster. While AT&T bought Game of Thrones, Verizon went after Yahoo to challenge the likes of Google and Facebook for advertising dollars. A couple of data breaches later, the content and media vision looks like a shambles. Hindsight is always 20/20 but this was a terrible decision.

However, with a 5G rollout to consider, fixed broadband ambitions and burnt fingers from the last content acquisition, you have to wonder whether the team has the stomach to take on such a massive task. Verizon as a business is nothing like Netflix and despite the attractive recurring revenues and value-add opportunities, the integration would be a nightmare. The headache might not be worth the reward.

You also have to wonder whether the telco would be scared off by some of the bold decisions made from a content perspective. Telcos on the whole are quite risk-adverse organizations, something which Netflix certainly isn’t. How many people would have taken a risk and funded content like Stranger Things? And with the release of Bandersnatch, Netflix is entering the new domain of interactive content. You have to be brave and accept considerable risk to make such bets work; we can’t see Verizon adopting this mentality.

Softbank Logo

Softbank Vision Fund

Another with telco heritage, but this is a completely different story.

A couple of years back, Softbank CEO Masayoshi Son had a ridiculous idea which was mocked by many. The creation of a $100 billion investment fund which he would manage seemed unimaginable, but he found the backers, made it profitable and then started up a second-one.

Son is a man to knows how to make money and has the right connections to raise funds for future wonderful ideas. Buying Netflix might sound like an absurd idea, but this is one place we could really see it working.

However, the issue here is the business itself. While Son might be interested in digital ventures which are capable of making profits, the aim of the funds have mainly been directed towards artificial intelligence. Even if Son and his team have bought into other business segments, they are more enterprise orientated. There are smaller bets which have been directed towards the consumer market, but would require an investment on another level.

Tencent Logo

Tencent

Another Chinese company which has big ambitions on the global stage.

This is a business which has been incredibly successful in the Chinese market and used assets effectively in the international markets as well. The purchase of both Epic Games and Supercell have spread the influence of the business further across the world and numerous quarterly results have shown just how strong Tencent’s credentials are in the digital economy.

Tencent would most likely be able to raise the funds to purchase the monster Netflix, while the gaming and entertainment portfolio would work well alongside the streaming brand. Cross selling would be an option, as would embedding more varied content on different platforms. It could be a match made in heaven.

However, you have to bear in mind this is a Chinese company and the political climate is not necessarily in the frame to consider such as transaction. Like Alibaba, Tencent might be viewed as too close to the Chinese government.

No-one

This is an option which is looking increasingly likely. Not only will the business cost a huge amount of money, perhaps a 30-40% premium on market capitalisation, the acquirer will also have to swallow all the debt built-up over the years. There will also have to be enough cash to fuel the content ambitions of Netflix, it reportedly spend $7.5 billion on content last year.

Finally, the acquirer would also have to convince Netflix CEO Reed Hastings, as well as the shareholders, that selling up is the best option.

“If I was a shareholder or Reed Hastings, I’d be wondering whether it is better to be owned by someone else or just carry on what we’re doing now,” said Ed Barton, Practise Lead at Ovum.

“These guys are going down in business school history for what they have done with Netflix already, do they need to sell out to someone else?”

Netflix is growing very quickly and now bringing in some notable profits. The most interesting thing about this business is the potential as well. The US market might be highly saturated, but the international potential is massive. Many countries around the world, most notably in Asia, are just beginning to experience the Netflix euphoria meaning the growth ceiling is still years away.

What this international potential offers Netflix is time, time to explore new opportunities, convergence and diversification. Any business with a single revenue stream, Netflix is solely reliant on subscriptions, sits in a precarious position, but with international growth filling the coffers the team have time to organically create new business streams.

Ultimately, Hastings and his management team have to ask themselves a simple question; is it better to control our own fate or answer to someone else for a bumper payday? We suspect Hastings’ bank account is already bursting and this is a man who is driven by ambition, the need to be the biggest and best, breaking boundaries and creating the unthinkable.

Most of these suitors will probably be thinking they should have acquired Netflix years ago, when the price was a bit more palatable, but would they have been able to drive the same success as Hastings has done flying solo? We suspect not.

Garmin has a go at reigniting smart watch enthusiasm

To date, it seems only the fitness brands can make the smart watch segment work for them, and while attention might have been diverted elsewhere recently, Garmin is having another crack.

Despite the fact revenues are increasing, shipments are increasing, and the usability of the devices are constantly improving, this segment has never really taken off. All positive steps forward have been small rather than industry shaking. Perhaps this was a product which was just ahead of its time, waiting for other technological advancements to catch up. One of these advancements is featuring prominently in the new Garmin launch.

“The vívoactive 3 Music with 4G LTE connectivity gives you everything you need from your phone – safety features, text messaging and the ability to download and listen to music – now on your watch, so customers can leave their phones behind with confidence,” said Dan Bartel, Garmin VP of Global Consumer Sales.

“Designed for customers who lead an active lifestyle, we’re excited to introduce these new safety and communication features to the Verizon-connected vívoactive 3 Music to give added peace of mind on the go, so leaving your phone at home can be a choice instead of a cause for panic.”

This new device, the vívoactive 3 Music, will be priced at $299.99 (the north-end of affordability for mass market) and will run on Verizon’s 4G network. The device will feature the same fitness and tracking capabilities as previous generations, as well as a contactless payment solution enabled by FitPay and the ability to download playlists from from third-party music services like Deezer and Spotify. Battery life is up to five days in smart watch mode or four hours when running the GPS.

While it has now been addressed, standalone connectivity was the first barrier to adoption for the smart watch segment. Why would you bother having a smart watch when you had to carry your phone around with you? It tells you the time, so does your phone. It plays music, so does your phone. It took phone calls and replied to messages, so does your phone. If the watch is tethered to your phone, what was the point in it?

In years gone, the fitness niche found success. Fitness tracking, both geographical and health monitoring, was an area of success allowing companies such as Garmin and Fitbit to make profits while others who focused on communications features or attempting to appeal to the fashion conscious struggled to make any notable progress. What Garmin and Fitbit did was not to compete with traditional watchmakers or smartphone manufacturers but create an additional segment. It might have been niche but has been growing steadily over the last couple of years, alongside the much slower (but increasingly more prominent) mass market acceptance of smart watches on the whole.

When you look at the smart watch segment, there certainly has been growth. IDC forecast the worldwide wearables market to ship 122.6 million units in 2018, up 6.2% from the 115.4 million units in 2017, and estimates growth in this segment to hit total shipment volumes of 190.4 million units by 2022. While this is progress, these are not revolutionary sales numbers or even growth which suggests the segment is about to take off.

Nowadays standalone connectivity is not a new thing, however Garmin has an established (and successful) brand in the smart watch segment, as well as a loyal customer base to push the new features onto. Whether this is enough of a pull to take smart watches to the next level remains to be seen, but if experience is anything to go by, the niche players will certainly help validate the smart watch in today’s society.

Facebook hit with Italian fine as share buy-back ramps up

The Italian watchdog is the latest to slap a fine on Facebook for misleading and abusing consumer confidence.

The Autorità Garante della Concorrenza e del Mercato (AGCM) has imposed a €10 million fine on Facebook after a lengthy investigation which begin in April. The watchdog has come to the conclusion the social media giant has violated articles 21 and 22 of the Consumer Code, misleading the consumer on how data would be collected, what information would be sourced and the commercial purpose.

To rub salt into the wounds, the AGCM also believes articles 24 and 25 of the Consumer Code were also ignored. These violations are a bit more nefarious as the AGCM has stated Facebook implemented an aggressive practice as it “exerts undue influence on registered consumers, who suffer, without express and prior consent”. A rather devilish picture is being painted by the Italian watchdog, with Facebook portrayed as the antagonist of a fair and transparent society.

For Facebook, this is simply another example of a government turning against it. It wasn’t that long-ago Facebook was a business every government wanted to get into the good books of and a brand which was admired by the majority of consumers. The Cambridge Analytica scandal has sent the reputation of the social media giant into freefall, pulling back the curtain on the terrifying complexities of the data economy. The difference between how the machine functions and how these billionaires have educated the masses who provide the fuel is quite staggering.

Despite the world turning against Facebook, it seems the management team is embracing the phrase ‘no such thing as bad publicity’.

Last week, an 8-K filing was made by David Kling, Facebook’s General Counsel and Secretary, to the Security and Exchange Commission, which authorises an additional $9 billion in the share buy-back scheme which commenced in 2017. This is the second time the management team has bolstered the chest, taking advantage of a decline in share price to seemingly take back more control of the business from investors.

Facebook Shareprice

As you can see from the image above (courtesy of Google Finance), Facebook share price has fallen by almost 37% since the summer, as the fallout of the Cambridge Analytica continues to scare investors. The management team clearly believe Facebook shares are being undervalued by the market, pumping cash into the share buy-back scheme perhaps to dilute the influence external shareholders can have on the business.

There are of course numerous reasons a company would repurchase shares. It might believe there is simply too much exposure on the market, it might be trying to reduce the influence on the business from external factors or it might not know what else to do with the free cash which it has available.

With Facebook increasingly coming under scrutiny by regulators and governments, it makes sense the management team want fewer shares on the exchanges. This minimises the damage which can be struck by negative press and unfavourable regulations, but also reduces the scrutiny which can be placed on decisions and future strategies. The management team have been under pressure recently for, what the market believes are, poor growth prospects.

However, there is a downside. Sometimes investors might consider the ramping up of a share buy-back scheme as a lack of ideas from the firm. Firstly, it is trying to protect itself for future earning calls, and secondly, it perhaps indicates the business does not know what to do with free cash, of which Facebook has a lot of.

Facebook has not been an innovative company for some years now. Most of the ‘new’ products and services introduced by the team are reinventions of something which already exists with the Facebook brand slapped on (marketplace, enterprise communications etc.), or are a blatant rip-off of a competitor’s idea. The Stories feature on Facebook and Instagram is clearly an imitation of the My Story feature on Snapchat. Some believe share buy-back programmes are evidence a firm has run out of new ideas.

Facebook is increasingly coming under pressure from consumers, governments, regulators and investors, though little is being done to reverse this trend. Posters have been displayed across the major cities promising the consumer it does care, and while executives have been meeting with governments, the answers being provided are increasingly unsatisfactory. The release of 250 Facebook emails and memos by the UK government has shed further light on the deception, though the response has been on par with Facebook’s form.

It’s almost like Zuckerberg and his cronies don’t care anymore. Instagram seems to be offsetting (at least partially) the decline in engagement on the Facebook platform, so there are still prospects to participate in the digital economy. The image of the company which is being created right now is one of arrogance. Facebook seems to think it is untouchable, and perhaps €10 million fine demonstrates it is.

How long will it take Mark to pay off this fine? Is Facebook actually going to be held accountable for wrong-doing?

BT hatches a cunning new multiplay plan

UK operator group BT has unveiled a bunch of initiatives for its consumer business unit, focusing on a new ‘BT Plus’ converged plan.

The point is apparently to offer BT punters the best combination of services across its three UK consumer brands: BT, EE and Plusnet. It’s all about keeping them connected regardless of the brand and the connectivity method – whatever gets the job done. There’s also a fair bit of posturing about customer service and improved retail.

“BT runs the UK’s most advanced mobile and broadband networks, but our customers demand better connections, and the best service no matter where they are,” said BT consumer CEO Marc Allera. “We’re investing across BT, EE and Plusnet so that we can provide our customers with the widest choice of products and services, on the best networks, and with the best service in the UK.

“We’re beginning our journey to create one converged, smart network built on our world-leading fixed and mobile networks – going beyond 4G, 5G, wifi and ultrafast broadband to seamlessly connect our customers wherever they are to the things that matter most to them.”

All this amounts to ‘the UK’s first converged, smart network’ apparently, a process BT expects to complete by 2022. In practice this seems to be the stitching together of a few initiatives that were already underway, including fibre rollout, improved 4G coverage and an expanded public wifi footprint.

BT Plus groups broadband and mobile into one plan – something that has been anticipated ever since BT bought EE. “The announcement of BT Plus marks the launch of the UK’s first fully converged service offering,” said Paolo Pescatore of CCS Insight. “Positioned as a premium offering, it is a modest start but we expect more competitive offers to emerge. The slew of more than 20 announcements was impressive and reinforced BT’s commitment to be a leader in converged offerings delivering innovative services.”

Pescatore was especially moved by some of BT digital partnership announcements. “Arguably, the biggest partnership announcement is with Amazon,” he said. “BT will be the first UK telco to offer Amazon Prime video to its customers. The move to support Amazon Prime video positions BT TV as an aggregator of content services including Netflix and Now TV from next year.  We believe that this will turn around its fortunes given that BT TV has recorded losses for the last two quarters and subscriber growth over the last couple of years has been lacklustre.”

This set of announcements seem designed to offer a narrative of Allera having an immediate impact as overall head of consumer at BT. It also needed to generate some positive vibes after the recent announcement of redundancies, etc. BT has an enviable array of assets and products at its disposal and if Allera can get the best out for them in terms of consumer offering, that could go a long way to improving the company’s fortunes.

Look, a vid.

 

Consumers not convinced by the price-point of new smartphones – report

The smartphone is central to our lives, but it doesn’t seem like we are being bought by the latest fads as easily anymore.

According to research from Counterpoint (first spotted by the Wall Street Journal), the idea of buying a refurbished or second-hand smartphone is becoming more attractive to consumers, while refreshment cycles are getting longer. Such news could not be worse for a segment which is struggling with profitability and sluggish sales already. The report indicates one in ten devices now being purchased are refurbished models.

Of course Apple is generally excluded from such misery, though there have been rumours that the new iPhone X didn’t meet internal expectations. This is a brand which is usually able to contort it customers into all sorts of uncomfortable positions, but it seems not even the iCultists could swallow the $1000 price tag. This might be a worry for other brands who don’t have the luxury and robust brand positioning of Apple.

According to the research, refreshment cycles are up from two years, pushing towards three, while additional research from Baystreet Research suggests Equipment Installment Plans could also be a contributor to the misery. As these payments are hidden in monthly plans the consumer is less aware of how much a new device actually costs. With telcos becoming less inclined to push the subsidized device model nowadays, more consumers are leaning towards buying devices outright and perhaps getting a shock at the price. Realistically, refurbished or second-hand devices are almost as good, while substantially cheaper. It seems consumers are starting to accept this trade-off.

The iPhone X at $1000 is very expensive, as is Samsung’s Galaxy S9 at $840 which was launched at MWC this year, but what do customers actually get. There are few revelations when it comes to new flagship devices so what is the point in spending such extortionate amounts of cash. Refurbished devices are pretty much the same, unless you are a photograph buff but we question how many people there are who care that much about exceptionally detailed photos and videos.

The slump device manufacturers are in is perfectly demonstrated by the euphoria at MWC this week. Samsung might have launched its device, but HMD’s re-release of the banana phone, grabbed a lot of attention. This is the second year in a row where nostalgia have triumphed over the new and adequately demonstrates our point.

When we were at the event, Heavy Reading Analyst Steve Bell pointed towards graphene batteries which can be charged quicker and last longer as possibly the next big buzz for devices, while Light Reading’s Dan Jones is keeping an eye on the on-device storage improvements. Improvement to batteries is long overdue in the space while improved storage could drastically change the way content is consumed, stored and cached. Both areas could drastically improve performance of the devices.

These are two areas which could reinvigorate the refreshment cycle and get consumers excited again, but right now the trends are going the wrong direction for manufacturers who want to charge more for less value.

All systems Go for Amazon bricks-and-mortar consumer IoT move

The opening of an Amazon physical retail store is cruel irony for its competitors and an inflection point for consumer IoT.

As if it’s not enough that Amazon has taken massive chunks of business from pretty much every retailer in countries where it operates, the etail giant now fancies a go at the one area it doesn’t currently dominate: bricks-and-mortar shops. It’s called Amazon Go and the first one has just opened its door in Seattle.

Amazon has decided not to issue a PR about the store, perhaps because it opened a year later than originally planned, but did invite plenty of media. Somehow Telecoms.com fell off the invite list, for which Jeff Bezos is presumably remorseful. Some reports lazily reflected on the irony of there being queues to a shop that is supposedly designed to eliminate queues, but most were cautiously excited at this fork in the consumer IoT road.

The big deal about Amazon Go is that it’s cashier-free. You simply enter the store, grab what you want, and leave. It’s all about your smartphone and sensors: you scan your Amazon Go app to enter the store and then a bunch of cameras and sensors that would make Big Brother green with envy track what you grab and walk out with. Your Amazon account is then automatically charged for what was in your possession when you leave.

The smartphone bit is pretty straightforward, although this does mark a milestone in the use of it as a physical shopping tool. The tricky bit is knowing exactly what you walked out with. The use of cameras and shelf sensors has the feel of an interim technology until consumer IoT ramps up and becomes affordable at scale. Once every product has its own embedded sensor then cameras will presumably be needed only for security and dispute resolution.

CNBC gave the store a go and found that one of the items it walked out with didn’t appear on the subsequent Amazon bill. They confessed the error immediately to Amazon, which knew a PR opportunity when it saw one and said ‘don’t worry about it’, as did the brand concerned.

This store is clearly designed as a prototype and a dress rehearsal. There will be flaws and the only way to fully stress test a new technology is to introduce it into the field. Giving away one or two yoghurts is one thing, but that error rate needs to be as close to zero as possible.

This also serves as a very conspicuous illustration of the concerns around automation. If this concept takes off then a lot of retail cashiers are going to lose their jobs and it’s not immediately obvious what fresh employment opportunities might be generated. A lot of the shelf stacking at Amazon warehouses is already done by robots so maybe that will be the case in bricks-and-mortar stores too, before long.

Orange outlines the grand plan for connected devices

With Christmas fast approaching, Orange might not have chosen the worst time to capitalize on the IoT buzz which is beginning to sweep the consumer world.

After launching three new consumer IoT assaults (a 360 degrees camera, a VR headset and a drone), we have a chance to chat with Fabien Dallot, Director of Connected Objects Portfolio at Orange, who outlined the future ambitions of the telco.

“As an industry, we’re not at the level we thought we would be (connected devices penetration), but over the course of next year and 2019 we believe the market will take off,” said Dallot.

And he isn’t wrong. Although Orange’s VR offering has seen considerable growth over the course of 2017 compared to the previous year, mass market penetration has not been as enthusiastic. That said, Orange’s consumer IoT team has seen sales growth of 45%, compared to an industry average of 28%. The team must be doing something right.

When you look at the bigger picture, it is still small fish for the moment though. In the latest quarterly results, ‘other revenues’, which includes the various differentiation ventures such as connected devices and banking, accounted for €138 million of the €4.529 billion in France. But it is the beginning of the curve.

In Orange’s ‘Essentials 2020’ strategy, its cunning plan to make millions and billions, banking and IoT are the two areas which are supposedly going to create the extra mile on the spreadsheets. It’s more than just being a telco, with these extra areas Dallot pointed out the team plan to be major players in several segments, most notably value added services, connectivity and content distribution. In short, Orange doesn’t want to be limited to your smartphone anymore.

The consumer IoT team will factor into several areas, and while there isn’t a direct link to the convergence business right about now, it is logical. As the connected devices become more prominent in the consumer world, the trends will add fuel to the desire for e-SIM and multi-SIM contracts. Offering pricing benefits to the consumer over multiple areas will only increase Orange ‘stickiness’ and reduce customer churn.

This is obviously a long-term ambition of the team, as the consumer IoT market is still embryonic right now. The market is still in the discovery stages in terms of using these new breakthrough technologies, whether it would be VR or drones or 360 cameras. The role of Dallot and his team is to facilitate this learning. Offering content to demonstrate the value of VR or platforms to host and enable user generated content.

It’s a sensible strategy which is built on patience, and in that sense it is very unlike anything telcos usually come out with. It does sound eerily similar to something one of the OTTs would say. Prove the value of something today to monetize it tomorrow. It worked for the likes of Facebook, so why shouldn’t it work for the telcos as well?

But a good plan will only get a company so far. To make a difference in this brave, new world, Orange will have to prove it can play outside its traditional market and create good products in the hardware world; easier said than done. It also has to figure out the economics of scale as well, as right now VR, drones and 360 cameras are pricing a lot of people out of the market.

The right steps do seem to have be put forward. For its camera, Orange is working with Giroptic, an award winning camera manufacturer, and on the VR front, it has made promising steps forward from its first headset release last year. The VR2 device, as Dallot described it, is 30% lighter and also cheaper, while the team is releasing more content as well. There does seem to be a bit of a loss leader approach right now, but, as mentioned previously, proving the value and then thinking about money later is a proven strategy.

As with the bank, Orange is making the positive and patient steps towards the connected devices world. Whether the team can continue to separate financial targets and business vision in the early days might prove to be the game changer here. A lack of long-term ambition, if short-term financial ambitions become too heavy, could result in disaster, but only time will tell.

Vodafone reckons it has nailed consumer IoT

Four new connected gadgets, a dedicated SIM and a new consumer sub-brand are intended to showcase Vodafone’s IoT expertise.

The brand is called ‘V by Vodafone’, apparently a somewhat ambitious attempt to align its gadget brand with the fashion industry. Google any letter of the alphabet followed by ‘by’ and the auto-complete will reveal a clothing or fragrance brand already had this bright idea. In fact clothing site Very has already got a ‘V by’ so that could be awkward.

The big idea seems to be to offer a device that comes with a special SIM for Vodafone’s IoT network, thus allowing regular punters to live the IoT dream for the first time. The general theme seems to be to introduce plug-and-play IoT functionality (tracking, remote access via an app, etc) to every-day consumer stuff. Here are the four new shiny things.

  • V-Auto – The dongle can apparently be easily installed by the end-user and then offers the kind of ‘eCall’ functionality, that automatically makes a call to the car owner if they’re in an accident, that will be manadatory in all new cars sold in the EU from next year. It also enables owners to track their car if it gets nicked and even provides driving performance data if you’re into that sort of thing.
  • V-Pet uses the mobile network and GPS to track where your pet is and even sends an alert if they stray from a designated area. That cool be pretty cool for seeing what cats get up to. Inevitably is also offers handy health hints to tell you if Fido has been sitting around the house too much.
  • V-Camera allows continuous remote video monitoring anywhere there is Vodafone coverage. It also alerts you when it detects movement, so you don’t have to constantly stare at your phone and provides seven days of cloud storage for recordings.
  • V-Bag is an IoT bag clip that, surprise surprise, lets you track what your bag is up to. Are you noticing a trend here? Not only that but it will set off an alert if someone has nicked your bag but you haven’t noticed yet. It does this with the same ‘designated area’ functionality as the cat-tracker, but that doesn’t seem anywhere near as useful in this case.

“V by Vodafone makes it simple to connect a wide range of IoT-enabled devices, helping customers keep everyone and everything that matters to them safe and secure,” said Vodafone Group Chief Exec, Vittorio Colao. “We look forward to applying our world-leading expertise in IoT to help consumers make the most of the next phase of the global digital revolution.”

All this cutting-edge gear is only available to Vodafone customers for now and, on top of the cost of the device itself it will cost them £4 per month to stay connected. That’s likely to put V by Vodafone in the early adopter category, but it’s still not a bad effort at taking on the very tricky consumer IoT market. Vodafone UK seems to be on a bit of a roll at the moment.

Not to be out-done, Orange has coincidentally announced three new connected devices today too. A 360 camera for smartphones, a VR headset and a drone indicate Orange is focused less on IoT than other emerging tech buzzwords.