ANALYST Q&A

Chris Jones

Chief Analyst,

Canalys

Peter Jarich

Head, GSMA Intelligence

Prakash Sangam

Founder and Principal, Tantra Analyst

Michele Mackenzie

Principal Analyst, Analysys Mason

Q: What will be the main talking points at MWC22?

Chris Jones (CJ) Hopefully, we'll quickly get past the pandemic chat with a view to a more optimistic future. Sustainability will be the most important, urgent talking point at MWC22. It must move from being a cost topic to a strategic one with substantial returns. Organisations must ensure they do not stand accused of greenwashing.

We will, of course, see devices with flexible displays showcased – but how close will the concepts be to the launched products? Web3 will be discussed at length, but can it prove its use beyond niche applications?

Peter Jarich (PJ)

One word: Metaverse. Of course, we know MWC22 will reflect the discussions taking place in the broader industry. That means we’ll hear plenty about 5G, telco cloud, edge computing, IoT, security and a myriad of other technologies. But, if CES22 is an indication, the metaverse will be one thing we all leave MWC22 talking more about. Unlike many of the other topics, the metaverse is a relatively new concept. This means there’s a lot of interest in defining it, evaluating it, understanding the opportunity for operators and determining everyone’s potential role in making it a success.

Prakash Sangam (PS)

The industry will cherish 5G’s success so far and focus on the enormous future potential, especially in transforming industry verticals. 3GPP’s recent branding of the next phase of 5G as 5G Advanced also plays into that narrative. Disruptive concepts such as virtual RAN and open RAN that have seen a lot of traction recently will be among the event's key themes. Private networks should attract some attention as well. With a lot of value moving to the edge of the network, there will be more focus on orchestrating, deploying and managing it.

Michele Mackenzie (MM)

I think a key theme will be turning what 5G networks can deliver into real business opportunities. We have talked a lot about 5G as a technology and its features (low latency, high reliability, etc), but much less about how this is packaged and sold by operators. More thinking is needed about this – hopefully we will see some at MWC.

Other hot topics will be private networks, network slicing, various forms of edge and the cooperation/competition between operators and the hyper-scalers.

Q: What are you most looking forward to from an in-person event in Barcelona?

CJ Quite simply meeting both new and established industry contacts again – scheduled or in chance encounters in the hall and walkways. We've all got used to attending virtual events and while the quality of those events has improved, nothing beats meeting people in person, experiencing the new products and solutions up close and being able to ask those challenging questions. The great feeling of coming away with an industry vision of the future, insights on how we might get there, tactical action items with clients and plenty of analysis to deliver!

Being with lots of smart people who are present – physically and mentally. By now, we’re all experts at connecting virtually with colleagues and the broader industry. And we all know how to keep busy streaming webinars and educational content on a nearly non-stop basis; I suspect many second screens are now used almost exclusively for this. But, in-person meetings and sessions promise a very different level of engagement as Outlook, Slack, barking pets, Amazon deliveries and (fill in the blank) take a backseat. When everyone is present – in the moment – the interactions drive incredible insights and value.

I’m really looking forward to meeting and talking to people face-to-face instead of watching talking heads on videos, which we have done for almost two years. I always get excited with the thought of holding new products in my hands and trying them out, as well as experiencing new technologies.

In terms of technologies and products, I am curious to hear the progress companies have made in using 5G for industrial IoT and use cases such as VR/AR/XR and drones. I would also be interested in hearing from global operators about their virtual and open RAN approach and their timelines.

Simply meeting people in real life for the first time in a long time.

Q: How has the pandemic changed the way the industry does business?

CJ We're so incredibly fortunate that there has been massive demand for technology products and services. Many industries and countless individuals have struggled. The way we do business has changed. Many will not want to go back to the grueling travel schedule and commuting of 2019, and indeed many CFOs will be unwilling to fund those budgets again. These changes will be permanent, but we still have a drive to be connected, which circles back to the technology opportunity that underpins it.

It’s often said that the pandemic didn’t create new industry dynamics, but simply accelerated existing trends. There’s the embrace of flexible working, virtual workshops and videoconferencing. Along with that, there’s a heightened appreciation of the value that mobility and mobile broadband bring. Particularly impressive, however, are shifts operators have made to meet new customer demands, particularly in retail. Click-and-collect. Locker pick-ups. Buy online, return in store. Increasingly, they form a part of how customers want to engage with operators. While the pandemic did not give birth to them, these practices are now part of the “new normal”.

Everybody has realised that connectivity is the lifeblood of society. Sadly, it took a pandemic for the community to embrace video telephony. Remote and online work, be it engineering or marketing, has become a norm now and will be in the future for almost every company. However, the cancellations or moving of significant events such as MWC to online has disproportionately impacted smaller companies. The bigger ones were still able to reach their audiences online, leveraging their marketing muscle and brand recognition. But the smaller ones, who solely rely on their physical presence, and face-to-face interactions, have sorely missed the shows.

I suspect people will be much less likely to jump on a plane for a meeting. Much more work will be done via Teams/Zoom. I think travel will stay much below previous levels – perhaps 50 per cent down.

Q: What are the biggest challenges our industry now faces?

CJ A non-technical challenge, but unprecedented and one every company in our industry faces, is supporting their employees, while ensuring they are driving productivity and results. Beyond that the ramifications of the “great resignation” are only just being felt. Staff retention and attracting new talent requires companies to apply more creativity, flexibility and resources than ever. Those that do not invest now will be left behind.

Without industry challenges, there wouldn’t be a need for industry analysts. To this end, I’m always prepped with a solid list. In 2022, that includes the rising profile of security threats, supply chain issues, disinformation, mobile internet usage gaps and more. The one I’m most focused on, however, is the challenge of capitalising on the value our industry delivers.

Near-term, we’ll see that if inflation outstrips the ability to raise service tariffs. Long-term, we’ll see that in the need for operators to execute on advanced 5G capabilities to pay off 5G investments and avoid becoming commodity connectivity providers.

For starters, I think one of the biggest challenges is fully delivering on the grand promise of 5G. Thanks to high-pitch marketing, there are extremely high expectations, and it’s not easy to fulfill them in the short timeframe the fast-moving industry demands.

The shrinking cellular infrastructure ecosystem, supply chain security and uncertainties created by geopolitical issues continue to plague the industry. The vRAN and open RAN approach could address this to some extent, but timing is still an open question. Virtualisation, open interfaces and cloudification are profoundly changing the cellular industry.

I actually think the outlook is quite promising, at least from an IoT perspective. The prospects for the economy look good – we should see strong growth in 2022. Lots of digital transformation type projects that were put on hold in 2020 are coming back to life. Plus, businesses are looking at better ways of doing things, typically using technology (such as connectivity and IoT). There are the usual challenges of pricing and competition and so on, but overall I’m optimistic.

Q: How has the component shortage impacted the overall industry and what's the outlook for 2022?

CJ The supply of critical components, specifically silicon-based, continues to impact the technology industry. It will be several quarters before the bottleneck is cleared. Covid-19 restrictions, natural disasters, port congestion, economic uncertainty and political instability are all part of the mix. Foundries will squeeze out extra capacity, but vendors and channels face allocation challenges. The prioritisation of lucrative devices and markets favours certain vendors and means emerging regions such as Africa and Latin America will be particularly underserved for devices in 2022.

We all know the reality. As demand for critical components outstripped supply, the impacts predicted by any introductory economics class came to pass: increased lead times, higher costs, downstream production impacts. At the same time, we cannot ignore the stellar way in which the industry responded. 5G rollouts and uptake continued at a blistering pace. 5G devices got increasingly affordable. The move to virtual and open networks did not stall. And, encouragingly, we saw new investments in component production to better guard against future shocks.

Although the chip shortage appeared as a major concern initially, it didn’t seem to have created a major crisis for end-users, especially from the smartphone market perspective. Many OEMs indicate their costs have gone up, but that didn’t reflect much in pricing. There were some hiccups in low-volume devices, such as mobile routers, especially during the spike in demand when all the work and schooling moved online. The adjacent sectors such as automotive were hit much more severely than mobile and smartphones.

The chip supply constraint should progressively ease in late 2022 and 2023.

The shortages are very sector specific and overall supply has held up well. The total number of semiconductors produced in 2021 was probably higher than in 2020 or 2019. The auto industry has been hit by shortages, which is impacting the number of new cars and therefore the number of connections. We certainly expect this to continue in the first half of 2022 but should ease later in the year and into 2023.

Q: Looking one to two years ahead, how do you see the mobile industry evolving?

CJ The metaverse will drive the next tech evolution wave, with all vendors seeking to get their piece of the device, infrastructure or service opportunity. The tech titans will not be able to resist trying to capture and monetise our attention even more by tethering us to this new world. On a tactical level, the next generation of smart devices must support quality virtual experiences. We will continue to see smartphone and PC brands place greater emphasis on cameras, displays, processors and software to support AR technology and experiences. The metaverse may yet overpromise and underdeliver, but ICT companies cannot afford to be left behind.

“Evolving” is the key word. It makes sense, then, to return to my expectations for what we’ll be talking about at MWC22: 5G, telco cloud, security, edge computing, IoT, the metaverse. Come MWC24, we’ll still be talking about these topics. What should be different, however, is that we will be talking less about what they are, and more about how they are enabling new experiences and new revenue streams, particularly as standalone 5G deployments scale and 5G-Advanced gets closer to being a reality (including plenty of metaverse-friendly features and capabilities baked in).

The industry will expand tremendously in the next few years. This will come in two dimensions: mobile user ecosystem expansion and infra ecosystem expansion. Since 5G is set to touch and transform almost every industry on the planet, the mobile user ecosystem will significantly grow and will be far more diverse, including large industrial houses and entertainment firms. Similarly, with virtualisation and cloudification, the infra ecosystem will swell as well, encompassing cloud giants, system integrators, enterprise players as well as small and innovative software companies, all competing and collaborating with traditional telecom players to get their fair share of the pie.

There’s lots of interesting things happening with advanced private 5G networks, but these are, relative to the mobile sector, pretty small. Public 5G networks have been rolled out, which mostly means more speed – something that most IoT applications don’t need. In the next year or two we should see these two things coming together, with the features of the private networks available in public 5G networks. With that, I think we will see many new applications start to emerge.

In terms of IoT, I think we are in something of a holding pattern right now.