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Thursday, February 24, 2011

1000th post - a retrospective. What I've got right, and what I've got wrong....

I started this blog about five and a half years ago, in October 2005. At the time, I said that "I specialise in looking for "failures of consensus" - either positive or negative" - and that is still true now.

Having watched various areas of the telecoms and IT industry for almost 20 years, it saddens me that that there is still a tendency towards "groupthink". I genuinely enjoy the speed of technological progress, yet it often amazes me that huge amounts of time and money are wasted going down obvious blind alleys. Too often, nobody stands up and says "No! You're all wrong!" - or just points out that a seemingly good idea will encounter a huge stream of "gotchas" that will derail its progress.

Conversely, there are sometimes new trends and truly disruptive opportunities that remain unexploited.

Flattening the "hype cycle"

We're all familiar with the famous Gartner "hype cycle" about technologies. I'd like to flatten it out, by alerting people to the inevitable "second order" problems well in advance, rather than suffering delays and disappointments because those issues are not pre-empted. They're not all predictable - but many of the most disruptive are, especially if you look at adjacent sectors and parallel trends.

Hype costs money. The whole process of innovation ---> unrealistic expectations ---> disappointment ---> renaissance ---> eventual success is deeply inefficient. It is driven by many understandable human psychological effects, especially around the fear of missing out on something. Yet this same herd-mentality and refusal to assess future problems can be catastrophic - especially if upcoming substitutes are evolving faster. 

I've got a few standard questions I use in my research, to see how clearly ideas have been thought out. For example: "will it work indoors?", "what's the impact on the battery?", or "does that proposition make sense for prepay users?". But sometimes there are bigger issues that are lurking like elephants in the room.

Five years ago, for example, I wrote a research report examining why the notion of using IMS for next-generation operator-controlled mobile services would likely fail, because nobody had worked out what an IMS-capable handset was, or had recognised the scale of the challenges involved in creating one. When the wheels finally started turning a few years later, it was fairly obvious that the RCS variant was also lacking both technically and in terms of user appeal. In the meantime, Facebook has 200m mobile users, while mobile IMS has (essentially) zero.

(Incidentally my most-read, most-circulated post is the one in which I re-wrote the script of the famous Monty Python Dead Parrot sketch as a discussion about IMS and LTE - it's here)

My 2005 predictions and their outcomes

I'm a big fan of looking back at the accuracy of predictions. I reckon I've scored quite a lot of "I told you so's" over the years, although I've called a few things wrongly as well. Going back to my very first post, I said that the following were over-hyped and wouldn't live up to expectation, as at late-2005. Let's see how I fared. (2011 comments in italic)

Overhyped in 2005 #1) UMA (unlicenced mobile access)  - Yes, absolutely spot-on. Never got traction outside T-Mobile US and Orange France. Still trickling on with Kineto's WiFi offload client.

Overhyped in 2005 #2) Cellular operator IM - With a couple of niche exceptions, again absolutely on-the-money. RCS is just the latest version of failure here.

Overhyped in 2005 #3) Near-term massmarket WiMAX - Yes. 'Nuff said

Overhyped in 2005 #4) Free wireless VoIP - Also true. Starting to happen more now (as predicted in my VoIPo3G report in 2007), but has been a distraction not major cannibalisation.

Overhyped in 2005 #5) Dual-mode WLAN/cellular phones - OK, I got this one rather wrong, at least in the mid-term after the iPhone's launch 18 months later. Although that said, globally WiFi is probably present in less than 30% of new shipped handsets because of the sheer volumes of low-end devices.

Overhyped in 2005 #6) Wireless presence - Yes. Still very little use of PC-style presence engines on phones. A bit of Skype, maybe the next rev of Facebook on mobile. RCS failure unsurprising.

Overhyped in 2005 #7) Smartphones - Sort of. In terms of 2005-era definition of smartphones, as just phones with an open OS, I wasn't too far wrong - as the Nokia/Microsoft deal has proven. The *new* definition of smartphones that act as part of an ecosystem had not been invented at that point, and only started to become *really* important from 2008 onwards.
Overhyped in 2005 #8) "Seamless" roaming (especially WiFi to cellular) - Correct. We're still talking about it today as if WiFi / 3G (or 3G / LTE) handover is some sort of magical Holy Grail. Classic case of technologists solving the wrong problem, and not realising that "seams" are actually important.

Conversely, at the time I thought some other things were being *under-hyped* and would get more attention from vendors, investors or operators in coming years:

Underhyped in 2005 #1) PBX/cellular integration - Fair. A lot more attention, but still never really got to the stage I'd hoped. Too much futile focus on cellular substitution of PBXs instead, with a variety of pointless and niche hosted "mobile PBX" solutions.

Underhyped in 2005 #2) Poor indoor performance of 3G, WiMAX and other services - Absolutely right. I said in 2005 that nobody paid attention to indoor coverage, especially for data. It was indeed a problem that has since had much more attention...

Underhyped in 2005 #3) Novel in-building wireless coverage solutions - ... especially around innovations such as femtocells, which I was the first analyst to discuss and cover.

Underhyped in 2005 #4) "Single-mode" (non-cellular) VoWLAN phones - OK OK, I was flat out wrong on this. So much for DECT-replacement spurring demand for cheap cordless WLAN phones in-building. Although there *is* a lot of VoIP over WLAN from PCs and now tablets.

Underhyped in 2005 #5) Impact of VoIP on cellular pricing - Difficult to distil out the impact of VoIP vs. impact of regulation vs. market saturation. But there's certainly be a broad decline in per-minute pricing, especially for roaming. I think that VoIP will impact cellular telephony pricing more from now on, as it enables "non-telephony voice" applications to substitute for expensive proper phone calls.

Underhyped in 2005 #6) Upgrading cellular network backhaul - Absolutely right. Easily identifiable as a bottleneck in 2005, even with HSDPA still only just appearing over the horizon.

Underhyped in 2005 #7) Difficulty of integrating & testing new features on mobile handsets - There *still* isn't a proper IMS-capable phone. And Apple proved that good integration/testing was *hard* and expensive if done right. Getting much easier now with Android and Appstores, but 6 years ago nobody (especially network vendors) appreciated how much of a tough problem the little UE box on the end of the chart actually was.

Underhyped in 2005 #8) The impact of a lack of "email portability" on FMC business models - I had to look this one up & remind myself what I was talking about. Essentially I was saying that the stickiness of ISP email addresses would mean a reluctance to switch ISP to one offering an FMC-style voice service. I hadn't accounted for the fact that FMC-style services would be so poor, that few people got to a decision point around email anyway.

Underhyped in 2005 #9) The role of "service enabled" home gateways for FMC - True up to a point. Again, 2005-era voice FMC as espoused by the UMA or SIP voice advocates, never really took off. The home gateways, like email, weren't really the weak points of the proposition - it was the business model. On the other hand, the gateway/STB market has certainly evolved to support some cool services such as IPTV and FON.

More recent "I told you so" and "OK, mea culpa" moments

Looking back at some other predictions from the past 1000 posts, I've got quite a few other things spot-on - but I've also made a couple of howlers as well.

Back in 2006, I noted that operators'  "pipe" revenues from mobile broadband were going to be much more important than other supposed value-added services such as content downloads or mobile TV. Other analysts at the time were advising against open-Internet access, while my view was that it was an inevitable consequence of consumer demand.

Also in 2006, I laughed at the notion of the phone as "mobile wallet" . It still hasn't happened in the last 5 years, and phones still won't replace cash in the next 5 either, no matter how hard some other analysts blow that NFC-enabled trumpet.

On the other hand, I wasn't a believer of the Amazon Kindle in 2007.  It's been moderately successful, especially in more recent versions, so I'll hold my hands up and admit I mis-judged the e-book phenomenon a bit.

More accurate was my prediction about "multiplicity" - that people would have multiple SIMs, multiple devices, multiple service providers and so on. It's a theme I've expanded upon several times and is why I have such as negative view on concepts like "family plans" for mobile. The future is going to get more heterogenous, not consolidated.

Later in 2007, I published a report which suggested that by end-2012, I was expecting to see as many as 250m users of mobile VoIP over 3G/LTE networks. Given that there are now various 3G-capable VoIP clients for Android, Symbian and iPhone - plus heavy use of VoIP among dongle-connected laptop users - and likely more coming in the next 2 years of LTE, I reckon the top-level numbers were prescient. On the other hand, I'd been expecting operators to have developed a workable carrier-grade LTE VoIP solution by now, as long as they had got some "practice" in tuning it on older HSPA networks first. I also suggested they should work with Skype, Fring and others in the meantime, getting experience in real-world mobile VoIP. It hasn't happened, and so one of my predicted scenarios is now happening - Skype, Google and others will take the lead, not the operators. The operator community's over-focus on slow-moving standards like IMS and VoLTE/MMTel allows swifter alternatives to gain a foothold.

In 2008, I pointed out that while embedded-3G notebooks and netbooks seemed to be "elegant", the business model and economics didn't stack up. Users prefer the flexibility of dongles (which can be prepaid as well as contract), PC OEMs don't want to wear the cost of a module which costs a sizeable % of the device gross margin, and retailers would much rather stock a 3-inch stick than a large laptop box in their store-rooms. Today, only a small % of laptops have 3G built-in, and only a small % of those are actually activated ("attach rate").

My predicted timing on femtocell market evolution has been pretty decent as well, despite more bullish forecasts from some of my peers. From early 2008 "Some niche success, but practicalities will mean it's H2'09 or 2010 before massmarket deployment."

One topic where I have to admit defeat is in my effort to get the telecoms industry to abandon the term "Over the top" (OTT) to refer to Internet or other access-independent service providers. I still think it's a stupid and derogatory term for companies that should be considered as respected and equal peers, or potential partners/customers. In my view, this attitude symptomises the problems of the traditional telecoms industry today. It's also utterly hypocritical, given that virtually ever operator is developing its own portfolio of OTT-style services. Meanwhile, there is a larger threat emerging from "under the floor" providers such as wholesale networks or vendor-outsourced infrastructure.

The next 1000 posts

I'm obviously not going to go through every post I've made to date, and it's certainly possible to find more examples of things I've got wrong. But on balance, I'm pretty pleased with the calls I've made - but somewhat saddened that I have not managed to stop some of the more predictable mistakes.

Going forward, I can see other imminent issues with technology and business models. I think that current forms of mobile video optimisation are likely to face severe push-back from regulators, customers, content companies and competitors. There is a huge amount of wishful thinking about "monetising" and "personalising" services based on the network trying to decode application flows and treat them differently. They won't work - the network doesn't and cannot understand applications from a user's perspective, and they are inherently game-able.

The industry still isn't thinking about the big-picture impact of Moore's Law (hints: intelligence moves to the edge, while applications-oriented standards reduce in importance as inter-working boxes improve in capability). There is also too much legacy thinking about links between access and service - operators should be spending more effort on creating their own OTT-style services, and less on vertical integration. There is still a "them and us" stance between traditional operators and new incumbents such as Google and Facebook. They are competitors, yes - but also peers, and equally deserving of customer respect even if they do not own (or pay for) physical networks.

I hope that my next 1000 posts help to flatten out the telecoms hype curve in coming years. I'm intending to continue giving early warning of avoidable problems - and highlight new opportunities that have not been addressed. I will call out bad ideas - or ineffective companies - even if they are my clients. And I'll try and add a dose of humour, irreverence and fresh air. And maybe even another Pythonesque satirical post....

The sales pitch

While I enjoy writing and being opinionated anyway, the main reason I write this blog is to drive consulting & advisory business for my company Disruptive Analysis and its partners. The blog posts illustrate areas of knowledge and expertise, as well as the type of research, critical thinking and challenging stance I employ.

Much of Disruptive Analysis' consulting work involves critiquing business plans & propositions, or helping firms find new addressable markets and business models that fit with their capabilities. Often, I will "stress test" ideas against plenty of possible "gotchas".

Similarly, my published research tends to focus on contrarian themes - there's a ton of larger research houses looking at mainstream and uncontroversial topics and I see little value in adding my own "me too" reports.

If you find this blog interesting & useful, then please get in touch with me. As well as in-depth consulting assignments, I also do more free-form brainstorm workshops and public presentations.

Email information AT disruptive-analysis DOT com

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