The iStore is a perfect example of how we can make money – Vodafone

Many around the world will use Apple as a benchmark of how to successfully engage the digitally native consumer, though it’s the development of the iStore ecosystem which can be used as a model for the telcos.

Speaking at Light Reading’s Software Defined Operations and the Autonomous Network event in London, Atul Purohit from Vodafone Group pointed towards the slow-burning and long-term investments made in creating the app store as the way to make money in the digital economy. This is ultimately one question which will frustrate a lot of telcos, how will the vast expenses on 5G be recaptured over the next decade?

With 5G, MEC and IoT trends starting to make more concrete impacts on the real world, Purohit suggested a platform model should be built these technologies, with the telcos forming the centre of the ecosystem. This is not the blockbuster cash generator, a silver bullet to recoup lost billions, which some investors might want, but it is a sensible, sustainable business model. In fact, you can already see the benefits today.

Apple’s iStore and Google’s Play Store are excellent examples of careful development of an ecosystem and the rewards which can be realised when a segment matures, but the smart home is another. Most would have presumed the telco would be an excellent focal point for the smart home ecosystem, primarily because the router is already an accepted fixture in the living room, though the likes of Amazon and Google has imposed the smart speaker in its place.

This is an example of inaction than anything else, as the proactive internet giants wrestled the focus of the smart home away from the router and the cumbersome telcos, and onto the speaker. Services and products are being built around the smart speaker, and the financial rewards will be claimed by Amazon and Google. With personalised experienced and IoT trends of tomorrow, the telco still has an opportunity to stake its claim to be the focal point of these ecosystems.

This is a business model which will mature over time, requiring long-term investment and patience above all else, though it is a model proven successful time after time.

The edge will make us cash, but we need to be quick – DT

With telcos searching for elusive return on investment in a 5G world, edge computing could offer some relief.

Speaking at Total Telecom Congress in London, Arash Ashouriha, SVP of Technology Architecture & Innovation at Deutsche Telekom pointed towards the edge as a way to recapture the lost fortunes of yesteryear, but better move quickly or those crafty OTTs will swoop in again.

“With 5G, of course the consumer will benefit, but the challenges are mainly with enterprises; how you build specific solutions on one network, using network slicing,” said Ashouriha.

“What is the real opportunity for operators in avoiding becoming a dumb pipe? It’s going to be the edge. Whatever happens, only the operator can provide the next POP on the mobile phone, never forget that. Are we able to monetize this? If you want to achieve low latency, you have to process the traffic where it is being generated, not 100km away. From an operator perspective, this gives a huge opportunity to leverage the network.”

The theory here is simple. For those usecases which require near real-time transactions, autonomous driving or robotic surgery for example, low latency is critical. Unfortunately, the speed at which data can be moved has a limit, that is just physics, in order to guarantee low latency processing power has to be moved closer to the event. This is an excellent opportunity for the telcos to make money.

However, there is only a small window of opportunity, Ashouriha thinks it might only be two or three years. If the telcos do not take advantage and create a business to capitalise on the edge, the OTTs will swoop in and reap the rewards. All the likes of Google or AWS need to build such a business model is a partnership with one MNO in a market, then the cloud players can leverage the power of their cloud assets to build the case for low latency.

This is the challenge for the telcos; the opportunity is there and very apparent, but are they swift enough to capitalise on it? It certainly wasn’t the case for value added services and it seems the battle for control of the smart home has been lost, with Google and Amazon successfully positioning the smart speaker (not the router) as the centre of the ecosystem. The telcos need to react quickly, as you can guarantee the cloud players are eyeing up the opportunity.

One of the challenges, as Ashouriha points out, is industry collaboration. It doesn’t matter if you are the biggest, baddest telco around, no-one has 100% geographical coverage. To make this edge orientated service work, the telcos will have to develop some sort of framework where holes in connectivity can be plugged by competitors.

To tackle this challenge, DT has spun-off a business in Silicon Valley called MobiledgeX to create a platform where telcos plug in to create an always-connected experience for an ecosystem to build products and services on top of. It’s an interesting idea, and certainly a step in the right direction to capitalise on the edge opportunity.

With the billions being spent to develop 5G networks there is no single silver bullet to realise the ROI, but building a portfolio of services and business models will certainly get the telcos across the line. They just have to get better at capitalising on the opportunity when it presents itself.

Microsoft surges past $100bn in full-year revenues

Microsoft has unveiled its full-year financial results for 2018, with golden CEO Satya Nadella leading the company past the $100 billion revenue milestone for the first time.

It is now amazing to think this was a company which was struggling to adapt to the new world a few years back, but Nadella’s introduction and his stringent approach to cloud computing is paying dividends. He might not be the most charismatic leader in the technology world, but the numbers speak to themselves. $110.4 billion in revenues across 2018, a 14% increase, with the Productivity and Business Processes unit up 13%, Intelligent Cloud leaping 23% and More Personal Computing gaining 17%.

“We had an incredible year, surpassing $100 billion in revenue as a result of our teams’ relentless focus on customer success and the trust customers are placing in Microsoft,” said Nadella. “Our early investments in the intelligent cloud and intelligent edge are paying off, and we will continue to expand our reach in large and growing markets with differentiated innovation.”

Having taken a dominant position in the cloud market during the early days, Microsoft is continuing to tear-up trees at the front of the pack alongside AWS; over the course of the last 12 months the team expanded its global data centre footprint to 54 regions, claiming to be larger than any other competitor. Google might still be able to challenge, though the distance between the top two and everyone else is starting to look more apparent. Having re-established the company as a leader in the digital revolution, Nadella turning his attention elsewhere to build on the solid foundations; edge computing and conversational AI.

“I shared our vision for the intelligent cloud and intelligent edge a little over a year ago, a vision that is now quickly becoming reality and impacting every customer in every industry,” said Nadella during the earnings call. “Everything we have accomplished this year has been about accelerating our lead in this new era and the tremendous opportunity ahead. We focused on the right secular technology trends and growing markets and followed that up with solid roadmap execution.”

IaaS will continue to be the baseline business of the cloud business, though a restructuring of the sales team in recent months and accelerated focus on higher value services will be the cherry on top. The focus on AI and edge services will provide a new conversation with customers looking to capitalise on the connected era, which in turn requires additional storage and data, feeding the baseline cloud business once again. Utility is seen as a dirty word in some segments of the technology world, but it is very appropriate in cloud. Scale and accessibility is key in this business, a concept which Microsoft has grasped; the potential is almost limitless for the immediate future.

It might not be the sexiest part of the industry, but the public cloud is still an incredibly profitable and burgeoning area. Over the course of 2018, IDC predicts spending on public cloud services and infrastructure will reach $160 billion in 2018, a 23% increase from 2017. AWS might still be the leader in this space, though Microsoft is widely regarded as a clear second in the cloud race.

What is clear is the Microsoft strategy moving forward; the edge is critically important to the success of the business.

“I think vision that we have always had is that distributed computing in some sense will remain distributed. So, we don’t split this into, there is an edge computing, there is a cloud computing,” said Nadella. “The need for computing is on the secular basis going to increase. And as you need to reason over larger amounts of data, you need not only storage and compute to be co-located all over as the world get them embedded with computing, that’s what we are building for.”