The second day of MWC is demonstrating a show that’s seemingly polarizing between appliances and tiny cells. Obviously the trends are linked, and obviously the industry’s long-term health and direction may depend on how—and how well—the marketplace manages to link them.
We’re seeing an explosion in tablet sizes as vendors try to figure out what the optimum device might look like, but the only real advance in the tablet space may come from Huawei, who has its own quad-core chip in its own Android tablet now. And Huawei’s numbers just came out; they hit $32 billion, which is half-again as much as Alcatel-Lucent and nearly as much as market-leader Ericsson. And Huawei is everywhere in equipment, and equipment is what’s driving the market, even if it’s not the old traditional kind.
The tablet is what I think holds the real story in the appliance space. Unlike phones, tablets are still struggling to find a real mission for themselves, and the mission of the tablet may be the determinant of overall market direction. As consumers shift to social networking (Facebook, recall, is the first social-network keynote at MWC) they shift to social-mediated communication and that undermines the normal voice and SMS revenues of operators. Tablets are not equipped with TDM or traditional voice at all, and so voice on tablet is creating an alternative approach even for those who want to talk. Video/voice of course is a totally new model, and despite talk by people like AT&T that we need to have special facilities for pairwise video calling, everyone knows in their hearts that’s not going to happen.
The problem or challenge is that tablets can’t easily be held up to your ear. Reviewers of large form-factor phones said they felt dorky using the gadgets to talk; imagine even a seven-inch tablet! But equip a tablet with Bluetooth and you could carry one and still talk. Will people do that? We don’t know. Will the increased horsepower and screenpower of the tablet be enough to overcome the difficulties using one while moving, and create a polarization of behavior that preserves a separate phone/tablet space? Where will the boundary be, and how will it impact operator monetization?
Cisco may be hinting at its own take on this. Chambers talked about the cloud and wireless, a topic we think could be critically important if one linked it with the whole mobile/behavioral transformation and the potential the cloud and mobility have to combine to redefine the way workers do their jobs. It’s too early to know if Cisco is going to make any announcements of substance in the functional blending of the cloud and mobile, but it seems likely that they intend to blend their cloud model with their RAN and offload model. That suggests two things; first that Cisco knows you need to be a RAN player to have any credentials in the mobile broadband revolution, and second that Cisco knows that the mobile broadband revolution will be defined by what we DO with the combination not by how the bits are pushed around.
All of this could be good news for Alcatel-Lucent, and even decent news for NSN, who has just said it will continue to sell off non-critical assets and slim down into a mobile broadband player. That’s a great idea if you can provide everything the mobile broadband ecosystem needs, but NSN doesn’t have the equipment scope that Alcatel-Lucent has. If NSN is to take on Cisco, Ericsson, and Huawei, it needs to have an optimum play where it plays, because it plays on a more narrow front than the others. Where will NSN try to optimize? It can’t just claim a better RAN, it doesn’t make its own transport gear for the most part. But it does have a good mobile services strategy and a good multi-screen content strategy. Can it add cloud and become whole, market-scope-wise? We’ll see.
