Silicon Valley’s grip on innovation is loosening – KPMG

Silicon Valley is up there with Wall Street as a driver of US economic dominance, but this leadership position is increasingly coming under threat, including from those pesky Europeans.

As it stands, California still maintains that position as Utopia for technology enthusiasts and innovators. There are numerous reasons for this, ranging from culture to cash and climate, but this lofty position is no-longer looking as attractive as alternative cities woo the next generation of economic disruptors.

KPMG is one company which is predicting the downfall of Silicon Valley. After conducting a survey, the consultancy claims 58% of respondents believe the global centre of innovation will have moved out of Silicon Valley over the next four years. Other US cities are of course lodging a challenge, New York, Austin and Boston for example, though Europe and Asia are also having a poke.

Looking at the top ten alternatives which could lead a challenge, New York ranks first, while Beijing, Tokyo, London and Shanghai feature in the top five. Taipei, Singapore, Seoul, Boston and Austin complete the top ten, but there are several other European competitors floating around.

There are numerous factors which KPMG has taken into account, and some of these will start to play heavy on the Silicon Valley case. With 5G being hyped so considerably over the last few years, most of these cities will be on-par when it comes to infrastructure, but you also have to consider the local talent pool, immigration laws, cost of living, availability of private and public investment, mass transit systems and the attractiveness of a city to millennials.

A separate Medium post from investment manager Byrne Hobart is another which is predicting the downfall of Silicon Valley as the global centre of innovation. Hobart questions whether the culture of innovation is dying out in the region, with the money men seeking more stable and predictable investments, but another interesting point is the ‘cost of existing’ as he puts it.

“As long as higher rents raise the cost of starting a pre-revenue company, fewer people will join them, so more people will join established companies, where they’ll earn market salaries and continue to push up rents,” said Hobart.

Not only does the high cost of living prevent talent from joining start-ups, the preference for established companies and the lucrative salaries further pushes up rent, compounding the problem further. This also prevents lower-income earners in other segments living in the region (arts, fashion or media for example), restricting diversification and making it a less attractive region for liberally minded individuals, the type of person the success of Silicon Valley was built on.

When researching the availability of technology jobs across the US, there are of course numerous regions which are growing faster year-on-year than Silicon Valley, though this would be expected considering the overwhelming focus of tech in the Valley. However, cities like Seattle, Austin, Denver and Huntsville are increasingly home to more technology companies, and when you factor in the more proportionate cost of living, it might be an appealing alternative.

Another very interesting development over the last couple of weeks takes place in France. The French government has recently announced an overhaul of visas for employees working for a tech company, making it easier for talent to be recruited internationally. Considering the anti-globalisation and isolationist trends we are seeing in the US, this is development worth taking note of.

There are now 10,000 start-ups that meet the requirements to access the French Tech Visa and hire foreign employees more easily. These visas cost €368 in administrative fees, is valid for four years (and is renewable) and allows employees to switch jobs during this period. The visa also extends to family members. Just as the US is making it more difficult to hire talent, the French government is attempting to empower start-ups to go an seek the best innovators around and attract them to the country.

As far as a challenge to the Silicon Valley dominance, Europe is putting itself in a very strong position. Not only are many of the cities affordable, they are attractive to millennials (culture, arts, history) a key demographic for technology success moving forward. The European Union also creates a wider society and economy, helping organizations grow in multiple markets and source talent from a wider pool.

Another factor to consider is the focus of these regions. Another KPMG research note suggests US companies are looking towards AI as a market disruptor, while IOT is attracting the interest of European companies. Perhaps this suggests a split in the innovation pool, with AI hubs being focused in North America, while IOT dominance could be wrestled across the pond to Europe. R&D is driven by customer needs and demands, therefore this is not an impossible conclusion. Interestingly enough, Japanese companies are leading the demand for robotics, another potential fragmentation of the innovation pool.

Silicon Valley is not going to disappear, but its dominant position is not only being eroded domestically, but internationally. The technology ecosystem is of course going to evolve over the next few years, but who knows where the global hub of innovation will be; there are a lot of candidates putting their hands up.

Innovations from the left field of Mobile World Congress 2019

Innovations demonstrated at a fringe event outside of the sound and fury of MWC showed promise to solve some real-life problems.

MobileFocus, a long-running fringe event during the MWC week in Barcelona, brought about two dozen companies to showcase their innovations that may not hit the frontpage but are illuminating nonetheless. There were big companies, like Lenovo, which displayed a slew of its new PCs, but most exhibitors are single product small companies. Some of them promoted ideas as straightforward as Bluetooth speakers focused on design, or water-proof cases to take smartphones into the pool. Others are trying to address more sophisticated issues. At least three of them impressed.

MobileFocus Amber

Amber is an elegant looking private cloud datacentre. It is also a high-speed Wi-Fi router and in-home media casting centre (with DLNA), and other functions. This product would appeal to the users that are interested in saving their files in the cloud but are concerned with the security of public clouds (e.g. iCloud, which has been compromised in some high-profile cases). With this device physically located in the user’s own premise, hacking would become more difficult. It also has strong enough processing power (an Intel Dual-Core CPU) and embedded AI engine, so it can also do facial indexing and searching as the Google Photos offers. Trusted parties can also remotely (i.e. outside of the home environment) access files on the datacentre. Coming up next, the company will offer passive back-up on the company’s cloud, as a double security. By passive back-up, the company explained, it meant the files cannot be shared from the cloud. The California-based start-up expects the products to hit the market in the next month.

MobileFocus e-checkup

e-Checkup is designed to measure a user’s blood pressure with a set of sensors added on the back of a smartphone and the application to go with it. Although the wellness functions on smartphones and smartwatches will measure pulses, very few have offered blood pressure measuring, presumably because it is harder to get right. The company claimed that this is the world’s first accurate cuff-less and calibration-free blood pressure measurement system. The application gamifies the measuring processes by asking the user to keep pressing against the sensors to keep an on-screen water stream steadily pouring into a lake. Readings will be made when the water level rises to a defined bar. The Lausanne-based Leman Micro Devices expected that this technology could be cleared by the FDA for a Class II risk device category soon. That would be the same class as the latest Apple Watch. It is also in advanced discussions with unnamed smartphone OEMs to integrate the sensors in their upcoming phone models to make the testing experience more ergonomically pleasant (the mock-up on the top of the picture).

MobileFocus DeviceAssure fake Galaxy 9

DeviceAssure is a B2B security tool to detect counterfeit mobile devices. The service offered by the Dublin-based company can run both on-device and cloud-based test of the product down to chipset level to decide whether it is genuine. Three new “developments” in the counterfeit trade have made the detection job both more challenging and more pertinent. Counterfeiting techniques are much more advanced. This “Galaxy 9” looks very bit the part except that it is a $80 fake, and an ordinary user would find it hard to tell with his naked eyes.

Distribution is more efficient, helped by the online shopping channels. Last but not the least, the bloatware or even malware preinstalled on these phones are more sophisticated. The last of the three new trends makes it particularly desirable for the company’s corporate customers to be more vigilant against counterfeit end user devices. For example, corporate IT teams need to be able to block counterfeit devices from connecting to the corporate networks to defend against malware being distributed; or banks should be able to stop counterfeit handsets installing online banking applications as their customers’ security could be more easily compromised. The company representatives did admit, however, that it took them a while to understand why, out of all kinds of enterprise customers, telecom operators were the least concerned with counterfeit phones, so long as the users pay the phone bills.

Some of the companies also have a booth inside MWC, but most of them only attend fringe events like this. A few companies at MobileFocus also ride on the big themes like IoT security, but most of them start with solving a more concrete problem, which makes the fringe events more refreshing. Edinburgh Fringe has given us Stephen Fry, might MWC fringe give us tomorrow’s Steve Jobs?

Finland’s AI ambitions demonstrate real intelligence

Training 1% of the population is just one part of Finland’s push for AI. The business world and public sector are also fully leaning in.

Recently a story on Finland’s plan to train 1% of its population in Artificial Intelligence has been making the rounds. Starting as a private initiative jointly promoted by the University of Helsinki and the consulting firm Reaktor, an open, free online course, “Elements of AI” was made available to anyone who would be interested in understanding the basics of AI. The initiative was then embraced by the government and has been integrated into a national AI strategy.

By the end of 2018, half a year after the initiative started, more than 40,000 people had started taking the online training, more than 10,000 of them already completed the course. The 1% target implies a total of 55,000 will receive the training, but the number is set be surpassed very soon following the University’s recent release of the Finnish version of the course (earlier the content was only available in English). The University promises “Other language versions are on the way!”

But this is just a part of the Nordic country’s ambition for the so-called “data economy”. Outi Keski-Äijö, the Head of AI Business program at Business Finland, outlined for Telecoms.com the major steps the agency and other institutions have taken as well as their the near-term plans. Her public sector agency is tasked to both support enterprises inside Finland and promote Finnish business interest outside of the country. Over the past two years, the AI-focused team she leads has been working with start-ups and small and medium sized enterprises (SMEs), to drive innovation through funding as well as helping bridge them with business implementation.

On the funding side, Business Finland would invest up to €50,000 in promising projects that are focused on solving concrete problems. Finland’s total public-sector funding over a four-year period will be no less than €20 million, including €6 million in the first year. Business Finland is responsible for over half of the total budget.

When it comes to connecting innovations from start-ups and SMEs to implementation, many innovations have found their way to both the emerging sectors like smart transport management, and traditional industries like ship-building. The innovations in AI have also attracted international attention, hence the success of the second part of the agency’s mission. Companies in Asia and North America have already shown interest in taking on board some of the new output.

When asked how Finns see privacy protection vs. progress in AI, Keski-Äijö and her team introduced us to the work done by one of its sister organisations, the Finnish Innovation Fund (Suomen itsenäisyyden juhlarahasto, Sitra). Sitra is an independent fund overseen directly by the Finnish Parliament. One of its key programs now is to develop the principles, framework, and key components of what it calls “Fair Data Economy”, under the brand IHAN (Ihmislähtöinen datatalous-avainaluetta, literally means “people-centric data economy”).

With GDPR in place, theoretically consumers now have control over their data and can demand to know how their data is being stored and used by any companies. In practice however, it is hardly possible for an individual to chase every single service she uses. Also, as Sitra put it, “GDPR does not define the format, governance or method for consent-based personal data sharing.” As a result a consumer’s data is being managed and analysed in silos, and services provided to her are not necessarily optimised.

What IHAN aims to achieve is to provide a stamp of approval. Services certified by IHAN would be trustworthy for consumers to handle their private data. When enough services are certified the data shared between them will be able to deliver personalisation without comprising privacy. Here Finland’s big ambition kicks in. Sitra is looking to use IHAN as a model to drive EU-wide AI and data economy to a more competitive level. With Finland taking over the EU presidency in the second half of 2019, Sitra is set to promote IHAN more vocally beyond the Finnish borders.

There is nothing wrong with the thinking, but Sitra may find the idea not going down as well in other European countries. The anchor point of the IHAN concept is trust. The Finns, rightly or wrongly, put very high level of trust in the public and social institutions. For example, according to a poll done by TNS Gallup for Sitra in 2016, nearly 80% of Finns trust the police, two-thirds trust in the registration and statistical authorities, but only 14% trust the internet companies. The low level of trust in the internet companies may be indicative broadly across many countries, the high level of trust in the authorities may not.

Finns trust in public sector

The foldable phone will reportedly be with us next month

It’s been rumoured for months and an ambition of the industry for years, but it seems Samsung is almost ready to unveil a foldable phone in a few weeks times.

According to the Wall Street Journal, Samsung is set to reveal a foldable phone at various launch events around the world on February 20, a week ahead of the industry’s annual bonanza in Barcelona. Traditionally Samsung has launched new flagship devices at Mobile World Congress, but it appears the team is determined to beat Huawei to the punch, with the Chinese also rumoured to be pretty close with their own device.

Although Samsung still claims the number one spot for smartphone sales worldwide, it must be peering over its shoulder with Huawei’s recent momentum. Having overtaken Apple to secure the number two spot, Huawei is certainly on a good run, despite political pressure and suspicion over its relationship with the Chinese government.

A prototype of the device was showcased at a series of events last September, though people familiar with the matter claim three new, foldable devices will be hitting the shelves in March. There is yet to be any form of official confirmation as of yet, though it is also believed a fourth device will follow the initial launch; this model will be 5G compatible.

There are still a lot of questions surrounding the device, but one thing is clear; this is the sort of innovation the industry has been craving for years.

When you look at the reality of smartphones, there hasn’t been any genuine disruption for years. Each new flagship brings incremental advances in features and usability, a better screen or less battery intensive applications for example, but nothing could really be described as ground-breaking, despite what the manufacturers tell you. The last genuine disruption to the smartphone space was probably Apple ditching the keyboard a decade ago.

This stumbling period of innovation is probably one of the factors which contributed to the global slump in smartphone sales in recent years. Despite a lack of new features, manufacturers have been asking consumers to produce more cash, indirectly encouraging trends which have seen product lifecycles and the popularity of second-hand or refurbished phones increase.

Whether the phone will be any good remains to be seen, but one thing is for sure, this is a device which will certainly attract attention at Mobile World Congress next month.

Google wins FCC approval for gesture control tests

Google has finally won regulatory approval from the FCC to start testing the more advanced features of Project Soli, a radar-based motion sensor to allow the user to control devices through gestures.

The approval document, which you can read here, will allow Google’s Advanced Technology and Projects unit greater freedoms in testing the technology, which might look familiar if you are a fan of Tom Cruise’s Minority Report. Just when innovation is grinding to a halt in the smartphone segment, Google’s whacky scientists are working on something which could completely revolutionise the smartphone.

Project Soli initially came to be in 2015, though due to concerns the radar system would interfere with other spectrum users, power levels were limited. However, the waiver now allows Google to play with higher power levels while users can also operate the devices when on airplanes.

The idea is of course very simple. Radar sensors are in a small chip which features in the device, which detect hand and finger movements with high accuracy. Various different movements could be used to operate different features of a smart device, perhaps making the touch-screen redundant in the future. Check out the video at the bottom of the page for more details.

Interestingly enough, the FCC has not only decided Google is allowed to pursue this technology as there are no technical reasons not to do so, but also believes this project could be in the public interest.

“We further find that grant of the waiver will serve the public interest by providing for innovative device control features using touchless hand gesture technology,” the document states.

The last few years have been a bit of a baron time for smartphone innovation. Apple’s recent financial bombshell perfectly demonstrates this; not even Apple can rise above the mediocrity of innovation and grow revenues. This sort of innovation might just be what the smartphone segment needs.

And perhaps this is a sign of things to come; who knows what a smartphone or smart communications device will look like in the future. Maybe users will revert back to having two separate devices; one specialised for entertainment and the other for communications. With gesture control and voice recognition technologies, is there any need for a screen if communications is the purpose? And if you don’t need a screen, do you need such a big battery? Devices could become significantly smaller and much more power efficient.

Over the last 20 years, mobile communications devices have changed significantly. From big to small and back to big, foldable, slidable and closable, through colourful, sleek and offensive, the concept of the mobile device has always been changing. Who knows what it will actually look like in ten years’ time…

Telcos crave innovation, but start-ups find the maze impossible to navigate

If anything sums up the telco industry, it is the pursuit of innovation coupled with the failure to be a leader in emerging segments. The solution might well be working with more start-ups, but are they accessible enough?

To be fair to the telcos, this gripe is not solely one for the telecommunications industry. Navigating through the red-tape maze to engage any large, traditional business with a new idea or technology is a tricky task. But it is an issue none-the-less; it is incredibly difficult for start-ups to engage the right person and pitch the value of their technology to the business.

A couple of sessions in AfricaCom caught our attention. With the AHUB section of the conference specifically designed for start-ups and entrepreneurs, this rarely listened to segment of the digital ecosystem has a voice, and it raised one worrying issue; pitching telcos is an incredibly difficult task.

One start-up suggested there is a ‘take it or leave it’ attitude with some telcos, perhaps not rewarding the full value presented. Another said there is a risk of technology being copied or ripped off. But one gripe which was brought up several times was the difficulty in engaging telcos and presenting new ideas.

The main reason for this is the complexity of telco operations. This are usually massive businesses, with decision makers scattered all over the place, siloed departments without a cohesive objective, internal politics which can threaten any conversation, an insistence by some to maintain the status quo or a procurement process with levels of red-tape jam sandwich-enthusiasts in Brussels would find impressive. Irrelevant of the reason, the telcos are ultimately the ones which will be punished.

This is an industry which is crying out for innovation, because more innovative players are swooping in and stealing potential fortunes. It’s the story we’ve been hearing for years; telcos are building the connectivity foundations for the digital economy, but the OTTs are the ones who are reaping the greatest rewards. Something has to change for the telco industry, and the pursuit of innovation is feeding this desire.

While some of the larger vendors are very effective at producing new ideas and products, a lot of innovation comes from the start-up community. These are guys who play around with new concepts and explore dark corners not of interest to the major vendors until the value has been validated. This could be an advantage for the telcos, if only they were any good at engaging the little guys.

In terms of countering this trend, the general feedback went down two avenues. Firstly, have an innovation-enthusiastic management team. Many companies would suggest they do, though in reality most are focused on oiling the cogs as opposed to searching for new engines. Some certainly do, MTN Zambia was highlighted as a company with a particularly enthusiastic CEO who has embedded himself into the start-up community, though the majority do not.

Secondly, there are telcos who have created their own venture capitalist or technology research business units. Orange is one example, and in these cases the team explicitly and proactively searches for new technologies to incorporate into the machine. These are the telcos who will be making waves for years to come.

Whichever route is taken, the outcome is similar. There is a platform to engage start-ups and less established businesses who can help the telco remain relevant in the digital ecosystem. The big question is whether the telcos are open to change and disrupting their own business.

Silicon Valley was founded with family, this generation is killing the idea

With some of the tech industry’s biggest names acting incredibly irresponsibly, the friendly and welcoming reputation of Silicon Valley is fast becoming a thing of the past.

With each passing week, there seems to be a new scandal emerging from the dark corners of Silicon Valley. This week’s installment sees Google getting sued for trampling all over user privacy rights, as well as potentially misleading millions through underhanded practises and overly-complicated terms of use. Unfortunately, the Googlers are not alone in their mission to abuse the heritage of Silicon Valley.

Facebook’s Cambridge Analytica scandal was shocking enough to lure slumbering politicians away from a free lunch and start a #DeleteFacebook campaign on Twitter. Twitter somehow managed to find validity in the offensive and ridiculous ramblings of the lunatic who runs the Infowars website. And aside from violating privacy rights, Google has tried to apply its artificial intelligence smarts to bombs and also bowed to China’s censorship demands. LinkedIn sacrificed its principles of free-speech to penetrate the Great Firewall of China years ago. Tesla founder Elon Musk recently called a man instrumental in saying the lives of Thai children stuck in a flooding cave a paedophile because he didn’t like one of his designs. Qualcomm is constantly being investigated and sued for market abuses. And Apple seems to think loyalty translates to making its customers as poor as absolutely possible.

When you actually ignore the play-style offices, the expensive advertising campaigns and the gestures of goodwill, the activities of these businesses are occasionally far from desirable.

The idea of Silicon Valley is a simple one, and it attracts the interests of millions. Warm climates, sunny skies, liberal attitudes, friendly people and companies where the purpose is to serve the greater good. Ask someone who has never been to California what they imagine Silicon Valley is like. They will probably describe something similar to a university campus on a warm, spring day, with some people causally tapping away on laptops, drinking iced coffee, while a game of hacky-sack takes place in the background. This is an image which has been incredibly well crafted.

Even when you look at the companies themselves, the perception is reinforced. Google branding looks approachable, and the ‘Do No Evil’ mantra still floats around despite it being dropped years ago. The Apple logo, with a bite taken out, is cheeky, as are the adverts. The Facebook and Twitter stories are all about giving normal people a voice which everyone can hear. Tesla is all about being environmentally friendly and fulfilling childhood ambitions of being spacemen.

There are of course reasons for creating and maintaining this image. Products are much easier to sell to the mass market when there is a friendly vibe attached. The data sharing economy, with information as a currency, arguably wouldn’t exist without it. And recruiting exciting, young talent is made much easier when it looks like the companies are socially-conscious.

When a bright engineer leaves MIT or Stanford University, about to embark on a career, there are a huge amount of choices. Those who have advanced degrees in software engineering or data sciences are scarce commodities, and often command significant pay packets. But these graduates are often idealists. They have no idea of the working world and want to work for exhilarating organizations. There are plenty of exciting companies out there, but few offer the perks, casual work lifestyle and feel-good factor of some of the internet giants. This image of Silicon Valley helps attract the best and brightest, a critical component for future success.

But what should be worth noting is the image of Silicon Valley is not just an artificial one.

The technology heritage of Silicon Valley can be traced back to San Diego in the 1890s. As a major harbour, San Diego also became a hub for the early telegraph and radio industries. Charles Herrold began using the radio to broadcast a regular program to listeners in San Jose as early as 1909, arguably becoming the first radio station. Some might suggest this is one of the first steps towards democratising free speech for the masses.

From humble beginnings in radio, the Valley moved towards what we would call technology today. In 1956, Shockley Semiconductor Labs was founded in Mountain View, an unusual location but chosen so its founder, William Shockley, could live closer to his sick mother. Admittedly, there was a lot more to happen in the middle, but Shockley was the first to propose using silicon not geranium in processors, a massive step forward.

Elsewhere, professors and students in Stanford University were tinkering around with some new technologies. The government funded programme eventually led to the creation of ARPANET, the forefather of what we would call the internet today. These examples are excellent foundations for Silicon Valley to build the friendly and liberal image of the region today.

The perception of Silicon Valley is a carefully curated one, and employees do seem to believe it, at least in the first instance before that youthful vigour is eroded after years sitting at a desk. Google employees revolting over the decision to work with the Defense Department on its missile guidance system, or the creation of a censorship-friendly version of its news app are two example of employees still believing in the ‘Do No Evil’ mantra.

Unfortunately, as the scandals listed at the top of this article indicate, the core principles of the business do not match those of the employees or the prescribed perception of Silicon Valley. This is not to say scandals are a new thing to the Valley, but the frequency has sky-rocketed recently. Perhaps the management teams of these firms are simply artificially creating this image and the values died years ago, before money-hungry kids, with no concept of tradition and only ambition for disruption, started dominating the board rooms.

But does it matter if Silicon Valley companies are no better than the bankers who caused the financial crash of 2008?

From a recruitment perspective it will become more difficult to attract the best talent. With the edge gone, the hippy persona, other companies will be on a level playing field. To get talent to relocate, the battle will be with paycheques. In terms of getting cash from the consumer, they’ll become far less frivolous when the sunny perception of these companies is made gloomier.

The US is the dominant force in the technology world because of Silicon Valley, and Silicon Valley is in its current position partly because of its heritage, plus its ability to attract the best talent. With the teenagers flailing around the streets (Facebook is 14 years old after all) violating consumers trust, over commercialising platforms, not sorting out the fake news problem and facilitating hate speech, Silicon Valley’s influence on the world will only decline as people look elsewhere.