BARCELONA, Spain--While speaking with numerous vendors just prior to and during the Mobile World Congress in Barcelona, one thing that struck me was the need they have to continue doing more because their customers demand it.
Consumers and enterprises demand always-on voice and data and integrated services from their mobile operators, which in turn demand service management and software solutions from what were formerly just their hardware providers, which in turn demand complete packages of features and services from their silicon vendors. And there are hundreds, if not thousands of permutations of that trend all along the value chain.
"We see very intense activity on our side as a supplier because people want (more advanced capabilities) but they don't have the technology to do it and that drives a lot of innovation from us," Scott Aylor, general manager of chipmaker Freescale's wireless access division, told me.
"If we take our customers' customer--that is, the mobile operator--we see that more and more of their focus is moving away from developing and deploying the network and into services they can provide. So then our customers are attempting to migrate up the food chain as well," he said, noting that large infrastructure OEMs now make money not just from selling base stations and hardware but also from maintaining and supporting that equipment so the operator doesn't have to.
"We feel the pull in that those folks (the infrastructure vendors) are telling us, 'Don't just provide us the silicon. Provide us the software, provide us the engineering, provide us the solution,'" Aylor said. The bottom line is that vendors across the value chain "increasingly feel the pull into what used to be their customers' market space," Aylor continued.
The benefit of this trend is that suppliers gain a deeper understanding of their own customers' business and therefore produce more valuable products for their customers. "But there is a learning curve associated with that," Aylor said.
This need to constantly provide more is what drives out many smaller product suppliers, or at least drives them into the arms of larger suppliers through mergers and acquisitions, because vendors at every level must maintain vast resources in order to deliver the complete solutions that their customers expect. The situation is getting even more complicated thanks to mobile broadband, which requires multi-mode technologies, innovative traffic management solutions and a whole host of new, real-time, always-on services and capabilities.
"I believe that scale will be very important. Semiconductor companies are going to be expected to be the provider of most of the R&D for devices," said Christiano Amon, senior vice president of the cellular products group at Qualcomm (NASDAQ:QCOM). He noted device chipmakers must be able to support multiple OSes, a large number of OEMs and have an entire ecosystem across the chips and multiple industry segments.
Amon noted that Qualcomm last year introduced an entry-level reference design for OEMs to create smartphones in China. "We came out with over 100 apps and services preloaded. That shows how we are working directly with applications developers, making sure they have those applications ready and working on our chip and our platform. So when we go to the market, the OEMs require less R&D and less time to bring their product to the market," said Amon.
Clearly, it takes a huge company with lots of reach to be able to pull off such a feat. That got me thinking as I perused the smaller product vendors' booths at MWC, wondering which ones would be exhibiting next year, which would be acquired by larger companies and which would simply cease to exist because, even if they have an amazing product, they might not possess the resources needed to compete.
Of course, the same can be said of even the largest product vendors, the ones that seem too big to fail but do anyway. It's a constant battle to be all things to all customers, but the wireless industry increasingly demands exactly that of suppliers up and down the entire value chain. No wonder only the strong survive. --Tammy
P.S. Here are some tidbits about this week's show in Barcelona:
- Hans Vestberg, CEO and president of Ericsson, displayed a Copenhagen Wheel during his keynote Wednesday night. It's a bicycle that is smartphone-controlled and "allows you to capture the energy dissipated while cycling and braking and save it for when you need a bit of a boost. It also maps pollution levels, traffic congestion, and road conditions in real-time," according to this Web site.
- Barcelona was the site of several anti-capitalism protests that targeted, in part, attendees at the Mobile World Congress, causing many of us to walk several blocks out of our way at day's end on Wednesday to reach accessible subway stations because the regular one outside the Fira convention area was blocked. Once I exited the Metro, I could see that my hotel near the city's university zone appeared to have escaped the protesters' wrath, but a bank down the block and the immediate area surrounding it featured new coats of freshly sprayed red graffiti full of condemnations.
- Speaking of my hotel, if the Wi-Fi experience I suffered through there is indicative of how well Wi-Fi offloading is going to work for mobile operators, then we've got problems.
- One of my favorite quotes from this year's Mobile World Congress came from Sunil Mittal, chairman and managing director of Bharti Airtel, when he discussed launching mobile services in the emerging market of India despite facing incredible odds and noted, "Aspirations have to be greater than resources." Mittal also said mobile broadband can bring great advances to developing countries in the form of financial services and mobile health care. "Broadband, which was a game changer for Europe and America, is a life changer in my country," he explained.
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