Editor's Note: Maravedis is a research and consulting firm that often contributes Industry Voices for FierceBroadbandWireless. In this special look back at 2011, the firm pointed to the biggest trends to affect the industry--and what they mean for the future.
Consolidation and Struggle among Wireless Infrastructure Providers
Nokia Siemens Networks (NSN) was finally able to close its acquisition of Motorola's network infrastructure assets in May of 2011, following legal objections in China. However, the combined Nokia-Siemens-Motorola entity now holds a much smaller market share than Nokia and Siemens did, prior to their 2006 merger, and NSN has yet to make a profit. In late November the company announced it would begin a round of massive layoffs and spin-outs to reduce headcount by 17,000 people (almost a quarter of its workforce). Both NSN and Alcatel-Lucent continue to struggle to achieve profitability as they are squeezed between the aggressive pricing and increasing technological capability of Huawei on one hand, and the technological and marketing leadership of Ericsson on the other.
NSN is focusing its activities on mobile broadband networks and shedding divisions such as its microwave systems group, sold to Canadian upstart Dragonwave. Alcatel-Lucent plays up its strength in China and its new technology base stations. Both companies are having some success growing their managed services business where profits are fatter. But it's not clear that they can hold on as independents, although how this will play out is difficult to foresee. Acquisition of such iconic national champions appears unlikely, particularly in the case of Alcatel-Lucent, but it is possible that they could continue for a while yet, until a crisis pushes them over the edge, much as the financial crisis of 2008 finally did Nortel in. The merger trend could also continue, with Nokia Siemens Networks and Alcatel-Lucent joining forces to form a third powerful group. How does NSNALU sound?
In the wings are players like ZTE, still growing, and Samsung along with other Asian companies such as NEC that have previously been restricted to national and regional markets. Times change, and the rise of the new economies, particularly from Asia, has not finished changing the network infrastructure vendor landscape.
The Rise of HetNets
HetNets, although still on the horizon, drew a little nearer in 2011. The list of technologies making up the HetNet is long, but of the myriad available technologies, two made clear technological progress in 2011: Cloud RAN (promoted by CMRI - the China Mobile Research Institute); and small cells such as Metro cells. In the case of cloud RAN, vendors such as Ericsson began to publicly announce their success in deploying centralized base band processing; chipset vendors such as TI joined the fray with specialized base station SoC solutions to take on general purpose processors; while network infrastructure vendors (particularly Alcatel-Lucent) wowed trade show crowds with their ever-smaller remote radio heads. Cloud RAN promises new efficiencies in terms of power consumption, hardware utilization, and interference coordination, and operators seem comfortable and willing to incorporate the technology into their networks. Maravedis' research showed that all vendors report good uptake of their initial remote radio head technologies. Metro cells, on the other hand, are still somewhat farther down the road. As femto cells continue to make steady progress, their technological underpinnings are being re-cycled and improved upon to make metro cells possible. A rash of small cell silicon announcements in the second half of 2011 (TI, Picochip, Qualcomm, and Mindspeed, among others) point to the future. Maravedis' research points to improving silicon maturity as one of the driving forces behind a likely expansion of the Metro cell market in 2012.
Video over Mobile Broadband
The importance of video in mobile broadband was shown by Cisco's industry benchmark study Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2010-2015, which indicates that mobile video traffic was 49.8 percent of total mobile data traffic at the end of 2010, and will account for 52.8 percent of traffic by the end of 2011.
Examples of the video capabilities announced by wireless infrastructure vendors in 2011 include:
- Ericsson/Akamai Partnership: Ericsson will be deploying a node in the mobile network to interface to Akamai's Content Delivery Network, and ensure that quality-enabled content is locally cached in the mobile network and receives appropriate Quality of Service handling through the mobile network.
- Huawei Cloud/Video solutions: Huawei is developing entire cloud video solutions to store, encode, and deliver video content in fixed and mobile networks. As part of its base core network platform, Huawei incorporates Deep Packet Inspection (DPI) capability to identify high and low priority traffic and deal with it accordingly across the mobile network.
Operators such as Videotron in Canada, who have access to broadcast and film content are rushing to offer high-quality video as a premium service through their mobile broadband networks, relying on advanced HSPA+ technology to deliver the bandwidth and QoS required. Clearly, video offers a way to monetize mobile broadband that does not require waiting for LTE.
Mobile Cloud Trends 2011 Highlights
The mobile cloud market is forecasted to grow exponentially during the next five to 10 years, but the market opportunity is uncertain as operators, partners and competitors all aim to control the most profitable segments of the mobile cloud services value chain.
In 2011, the over-the-top (OTT) players, including Google and Apple, continued to put pressure on mobile operators' business models as mobile data traffic grows with the adoption of smartphones and tablets.
The demise of mobile operators by way of the dumb-pipe syndrome has been debated for 10 years as the intersection of mobile devices, 3G networks and the Internet disrupted a fairly predictable industry in terms of business models, time to market, and the competitive environment. To support the rapid uptake of data consumption and oncoming of cloud-based offerings, operators are investing heavily in 4G LTE and 4G WiMAX as the next major infrastructure milestone.
However, at this inflection point, mobile operators have to be extremely cautious to avoid fixing their ‘dumb pipe' problem with a ‘dumb cloud' solution by racing into commodity cloud services that provide very low margins and lack unique telecom-related differentiation. Further, many operators and their vendors and partners are focusing their mobile cloud efforts on the enterprise business market, which is expected to represent the largest opportunity for mobile operators to create sustainable differentiation and profitable growth.