Industry Voices—Raynovich: Winners and losers from Mobile World Congress

Industry analyst Scott Raynovich breaks down the winners and losers from last week's Mobile World Congress in Barcelona. (Pixabay)

I've been attending Mobile World Congress (MWC) for 17 years. It's hard to believe. The show has grown substantially since its early days as a niche event with meetings on yachts in Cannes, France. This year's record crowd of 100,000-plus attendees sought big answers to the next big potential bubble in technology: 5G technology.

Why are so many people targeting 5G? Well, the industry always loves the next big thing. The GSMA, which runs MWC, believes that 5G connections will reach 1.4 billion by 2025 and that the number of global internet of things connections will triple to 25 billion by 2025, while global IoT revenue will quadruple to $1.1 trillion.

Many companies bet huge amounts of energy and money on MWC. Millions of dollars are spent on booths, companies line up important product launches, and partnerships are forged. So who succeeded this year in ratcheting up the hype in the communications and networking market?

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As an analyst or journalist, the job is tough. We are bombarded with hundreds of press releases and signed up for dozens of briefings and meetings. Personally, I hit 30 meetings at this show. There are challenges with jet lag and mental and physical fatigue.

All this aside, I usually wait a week before I collate my notes and reflect again on what happened. I think it's useful to think about who won and who lost at MWC. So here's my take on the MWC winners and losers.

Winners

Ericsson and Nokia—I’m grouping these two Scandinavian rivals in the winner category with some reservations. But, given years of pain and restructuring, there is no doubt that the 5G story gives them fresh life to invest and build networks for a new mobile infrastructure. And, for the first time in years, their stock prices are rising.

Both companies announced real deals. Ericsson announced deals with Etisalat, Ooredoo, Saudi Arabia Telecom, US Cellular, Telefonica, and Zain. Nokia announced deals with Rain, STC, Telekom Egypt, Optus, and Rakuten.

Ciena—The more I think about it, the more the optical networking market stands to be the lowest-risk play on 5G. Networking traffic will continue its steady march upward, with or without 5G, and if even a fraction of the applications of 5G come to fruition, the optical core and metro edge will need to be upgraded. Ciena has done well throughout the optical networking consolidation, keeping its leadership position, and its recent launch of a 800 Gig story set the stage for it to benefit by backhauling 5G bits.

Edge startups—Flashy startups with Edge compute infrastructure or applications flourished. Some of these included Affirmed Networks, Kaloom, Pluribus Networks, MobiledgeX and Vapor IO. 5G virtualized infrastructure player Affirmed Networks, for example, announced a new $38 million funding round. I believe all of these players have a chance to flourish as the investment in infrastructure shifts to the edge and the cloud domain.

I had the opportunity to meet up with Jason Hoffman, the CEO of MobiledgeX, who is quickly making a name for himself as the iconoclast of the edge. Hoffman is a bit, well, edgy. His proclivity for colorful language and strong opinions was a breath of fresh air for an analyst surviving hours of marketing pitches. Let’s hope MobiledgeX does well, because its story of building new cloud apps at the edge is becoming a litmus test of the 5G story.

Rakuten—Raku-who? Other than fans of international football, where Rakuten is well known for sponsoring the FC Barcelona club, not many people know Rakuten, a startup Asian carrier building a virtualized mobile infrastructure. But the mobile service provider found itself featured in many press releases and analyst roundtables as infrastructure providers rushed to claim they were part of the network. This cloud-based model for delivering mobile services will be interesting to watch.

VMware—The virtualization leader, which has been one of the successful cloud infrastructure players of the past 10 years, jumped on the 5G opportunity to pledge a renewed interest in going after the service-provider market. With its integration of software-defined wide-area-network player VeloCloud, which it acquired, VMware now has a strong story to tie together networks across clouds and across carrier networks, providing secure virtual infrastructure for 5G. This will be a story to watch.

Losers

The major carriers—Major service providers across the board, including AT&T, Deutsche Telekom, Telefonica, Telstra, and Verizon, among others‚ appeared to be grasping at straws when trying to impress audiences with how 5G will boost their business and profitability. None pledged large capital spending increases—perhaps indicative of a slow and cautious rollout of 5G. More importantly, it’s not clear whether 5G helps or hinders them in their battle against cloud players. I would argue that they face even more risk now from the Amazons and the Microsofts in the world of 5G, where networks and applications will become more cloud-based.

The major carriers were a bit of a downer. In one panel, a Telstra executive reminded the audience that the return on investment for 4G was in the single digits. The 5G apps that were touted included connected manufacturing, multiplayer gaming, and virtual reality. But we have seen all of these before, and there’s no evidence that they are taking off or boosting the bottom line of the carriers.

Huawei—Huawei is still a world leader in telecommunications infrastructure. But the Chinese company was a constant topic of discussion in the context of growing resistance from governments and service providers around the world to adopt the Chinese company’s equipment. Huawei, of course, argues that this is not fair. But the media and the audience fed on this story, and Huawei could do little to shake it during the MWC news cycle.

This week, Huawei hit back with a story about the development of a new security testing center in Brussels, a good PR move that maybe is a long time coming, and one that might have been better launched in the run-up to MWC.

To be fair, Huawei had its share of wins too. It announced deals with VIVA, Rain, Sunrise, and STC. And its new Mate X foldable 5G phoneavailable for an estimated $2,600 retailwon a best of show award.

Virtual Reality—If I have to endure one more virtual reality demo, I think I may pukeliterally. The hackneyed demos of VR don’t appear to have evolved from last year's. The question to ask: When’s the last time you saw somebody using a VR headset in the real world? The headsets are bulky and feel beta-like, the software is not mature yet, and the games and applications still don’t feel ready for prime time.

That's it for my takeaways on the winners and losers of MWC 2019. That's just one analyst's opinion, and I look forward to be proven right or wrong when we return to Barcelona in 2020 for the next MWC.

R. Scott Raynovich is the founder and chief analyst of Futuriom. For two decades, he has been covering a wide range of technology as an editor, analyst, and publisher. Most recently, he was VP of research at SDxCentral.com, which acquired his previous technology website, Rayno Report, in 2015. Prior to that, he was the editor in chief of Light Reading, where he worked for nine years. Raynovich has also served as investment editor at Red Herring, where he started the New York bureau and helped build the original Redherring.com website. He has won several industry awards, including an Editor & Publisher award for Best Business Blog, and his analysis has been featured by prominent media outlets including NPR, CNBC, The Wall Street Journal, and the San Jose Mercury News. He can be reached at [email protected]; follow him @rayno.

Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceTelecom staff. They do not represent the opinions of FierceTelecom.

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