IDC forecasts $522B semiconductor market in 2021; robust growth in 5G; Samsung #1

Worldwide semiconductor revenue grew to $464 billion in 2020, an increase of 10.8% compared to 2019, according to the Semiconductor Applications Forecaster (SAF) from International Data Corporation (IDC). IDC forecasts the semiconductor market will reach $522 billion in 2021, a 12.5% year-over-year growth rate. IDC anticipates continued robust growth in consumer, computing, 5G, and automotive semiconductors.

Supply constraints will continue through 2021. While shortages initially occurred in automotive semiconductors, the impact is being felt across the board in semiconductors manufactured at older technology nodes. Much like a traffic jam and the ripple effect, a disruption on the semiconductor supply chain operating close to capacity will impact across the supply chain. The industry will continue to struggle to rebalance across different industry segments, while investment in capacity now will improve the industry’s resiliency in a few years. Looking forward to 2021, IDC sees continued strong growth in semiconductor sales worldwide as adoption of cloud technologies and demand for data and services remain unchanged. Global fiscal and monetary policy remain accommodative and will provide a tailwind for continued capital investments in long term infrastructure.

The market for semiconductors in Computing systems, such as PCs and servers, outpaced the overall semiconductor market, growing 17.3% year over year to $160 billion in 2020. “Demand for PC processors remains strong, especially in value-oriented segments,” said Shane Rau, research vice president, Computing Semiconductors. “The PC processors market looks strong through the first half and likely the whole year.” IDC forecasts Computing systems revenues will grow 7.7% to $173 billion in 2021.

Growth in Mobile Phone semiconductors was resilient in 2020. “Mobile phone shipments fell by more than ten percent in 2020, but mobile phone semiconductor revenues grew by 9.1% due to a shift to higher priced 5G semiconductors, more memory per phone, sensors, and RF support for more spectrum bands,” said Phil Solis, research director for Connectivity and Smartphone Semiconductors.

“2021 will be an especially important year for semiconductor vendors as 5G phones capture 34% of all mobile phone shipments while semiconductors for 5G phones will capture nearly two thirds of the revenue in the segment.” IDC forecasts mobile phone semiconductor revenues will grow by 23.3% in 2021 to $147 billion.

The Consumer semiconductor market segment rebounded in 2020. Robust sales of game consoles, tablets, wireless headphones and earbuds, smart watches, and OTT streaming media devices fueled segment growth by 7.7% year over year to $60 billion. “Apple, AMD, and Intel showed exceptional growth as consumers upgraded their digital spaces at home,” said Rudy Torrijos, research manager, Consumer Semiconductors. “New gaming consoles from Microsoft and Sony, continued strong sales of wearables from Apple, and the rise in smart home networks managed by Amazon Alexa and Google Assistant will accelerate growth in 2021 to 8.9% year over year.”

“Automotive sales recovered in the second half of 2020, but the supply constraints for the automotive semiconductor market for some products will last through 2021 as fires and fab shutdowns further impacted the automotive semiconductor market and it takes time for chips to move through the automotive ecosystem, specifically in the U.S. and Europe,” said Nina Turner, research manager, Automotive Semiconductors. For 2021, IDC forecasts that automotive semiconductor revenue will grow 13.6%.

“Overall, the semiconductor industry remains on track to deliver another strong year of growth as the super cycle that began at the end of 2019 strengthens this year,” said Mario Morales, program vice president, Semiconductors at IDC. “The markets remain narrowly focused on shortages across specific sectors of the supply chain, but what is more important to emphasize is how critical semiconductors are to every major system category and content growth that remains unabated.”

The IDC Worldwide Semiconductor Applications Forecaster (SAF) database serves as the basis for IDC’s semiconductor supply-side research, including our market forecasts and custom market models. This database contains revenue data collected from over 150 of the top semiconductor companies for 2015-2020 and forecasts for 2021-2025. Revenue for over twenty semiconductor device areas, five geographic regions, seven industry segments, and more than 65 end-device applications are included in the database and pivot tables.

For more information about the SAF, please contact Nina Turner at nturner@idc.com

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Separately, IC Insights believes that Samsung will again replace Intel as the leading semiconductor producer beginning in the second quarter of this year.

Intel was the world’s top semiconductor manufacturer from 1993 through 2016. However, after nearly a quarter of a century, the semiconductor industry saw a new number-one supplier beginning in 2017 when the memory market surged and Samsung displaced Intel. This unseating marked a milestone achievement not only for Samsung, but also for all other competing semiconductor producers who had tried for years to supplant Intel as the world’s largest supplier, according to IC Insights.

Samsung held the leading semiconductor supplier spot for six quarters before the memory market collapsed in late 2018 and Intel once again became the leading IC supplier in the fourth quarter of 2018, IC Insights indicated. The memory market plunge was so steep in late 2018 and early 2019 that Samsung went from having 17% more revenue than Intel in third-quarter 2018 to having 18% less sales than Intel just two quarters later. Intel endured its own sales slump in the first quarter of 2019, although it was nowhere near the decline exhibited by the memory producers.

With the DRAM market on the rise and the NAND flash market forecast to gain momentum in the second half of the year, it appears likely that Samsung will once again position itself at the number-one semiconductor supplier for the full year 2021, IC Insights said.

References:

https://www.businesswire.com/news/home/20210506006015/en/Worldwide-Semiconductor-Revenue-Grew-10.8-in-2020-to-464-Billion-Growth-Will-Accelerate-This-Year-Despite-Market-Shortages-According-to-IDC

https://www.icinsights.com/news/bulletins/Samsung-Expected-To-Recapture-1-Semi-Supplier-Ranking-In-2Q21/

https://www.digitimes.com/news/a20210505PR201.html

 

FCC permits Verizon to test 5G and carrier aggregation in CBRS spectrum band

The Federal Communications Committee (FCC) has given Verizon Wireless permission to conduct a series of tests in the 3.55 to 3.7GHz CBRS spectrum band using three radio stations in Minneapolis, Minnesota.  Verizon said the tests will involve 5G and carrier aggregation technology. The FCC grant reads as follows:

Verizon Wireless is working with 5G base station and mobile device equipment vendors to
conduct product testing of 3.5 GHz in outdoor locations listed below.

Station Locations:
1. Minneapolis (HENNEPIN), MN – NL 44-48-26; WL 93-22-29; MOBILE: within 0.75 km
radius of center point location, within 0.75 km, centered around NL 44-48-26; 
2. Minneapolis (HENNEPIN), MN – NL 44-48-24; WL 93-22-29; MOBILE: within 0.75 km
radius of center point location, within 0.75 km, centered around NL 44-48-24; 
3. Minneapolis (HENNEPIN), MN – NL 44-48-24; WL 93-22-29; MOBILE: within 0.75 km
radius of center point location, within 0.75 km, centered around NL 44-48-24.

“Verizon and partners plan to conduct the proposed 5G tests using pre-commercial equipment in prototype form,” Verizon said in its FCC application. The operator did not name the device or network equipment partners it will be working with for the tests.

PCMag reported that Verizon has only been using CBRS spectrum only for 4G – LTE.  In Jackson Heights (Queens, NY), the CBRS-enhanced 4G clocked 456Mbps, while 5G DSS at the same times and similar locations hit 232Mbps.  The PCMag author previously observed Verizon’s 5G Ultra Wideband at about3.2Gbps.

Therefore, the move to 5G over CBRS is significant.  Verizon added that it plans to evaluate “intra-band and inter-band carrier aggregation between 3.5GHz and licensed (and/or unlicensed) bands,” including its licensed 700MHz, PCS and AWS bands.  [Carrier aggregation technology can be used to bond together transmissions across different spectrum bands, thus dramatically increasing users’ connection speeds.]

Light Reading’s Mike Dano says that Verizon has been adding support for the 3.5GHz CBRS spectrum band to its network for years. And last year Verizon spent $1.9 billion to purchase CBRS spectrum licenses across the country in an FCC auction.

Verizon’s tests roughly coincide with the operator’s three-year, $10 billion program to put its C-band spectrum licenses into use.  Verizon succeeded in more than doubling its existing mid-band spectrum holdings by adding an average of 161 MHz of C-Band nationwide paying $52.9 billion including incentive payments and clearing costs.

References:

https://apps.fcc.gov/oetcf/els/reports/GetApplicationInfo.cfm?id_file_num=0461-EX-ST-2021

https://apps.fcc.gov/oetcf/els/reports/STA_Print.cfm?mode=current&application_seq=106415

https://apps.fcc.gov/els/GetAtt.html?id=273078&x=.

https://www.lightreading.com/5g/verizon-aims-to-test-5g-carrier-aggregation-in-35ghz-cbrs-band/d/d-id/769336?

https://www.fiercewireless.com/operators/verizon-boosts-lte-speeds-philly-via-cbrs-spectrum

https://www.verizon.com/about/news/verizon-announces-c-band-auction-results

T-Mobile 5G hype vs Craig Moffett: “We’re not in the 5G era yet”

T-Mobile US reported total revenues of $19.8 billion and service revenues of $14.2 billion in the last quarter.  T-Mobile’s gain of 1.2M post-paid net additions was solidly ahead of Wall Street consensus of 1.0M, and was similar to last year’s pro forma gain of 1.3M.  The company  added 773K post-paid phone subscribers, dramatically better than last year’s pro-forma gain of just 104K, and blowing away consensus of 475K.

T-Mobile’s 773,000 postpaid phone customer additions during the first quarter handily beat AT&T’s 536,000 and Verizon’s loss of 178,000 customers, according to Walter Piecyk, a financial analyst at LightShed Partners.   They continue to take market share. Their annual post-paid subscriber growth rate of 3.9% marks a sharp acceleration from the 2.7% growth rate reported last quarter.

T-Mobile has already migrated 20% of Sprint’s customers, and 50% of Sprint’s traffic (a doubling from
last quarter), to the much more robust T-Mobile network. The vast majority of Sprint customers
are already enjoying service benefits from access (even with legacy handsets) to T-Mobile’s
lower frequency spectrum bands.

T-Mobile: America’s Largest, Fastest and Most Reliable 5G Network Extends its Lead

  • Extended Range 5G covers 295 million people across 1.6 million square miles, 4x more than Verizon and 2x more than AT&T
  • Ultra Capacity 5G covers 140 million people and on track to cover 200 million people nationwide by the end of 2021
  • Majority of independent third-party network benchmarking reports show T-Mobile as the clear leader in 5G speed and availability
  • Network perception catching up to reality with a nearly 120 percent increase in consumers who view T-Mobile as “The 5G Company” since Q3 2019

Image Credit: T-Mobile

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On the company’s earnings call, T-Mobile US CEO Mike Sievert said that “discerning customers” are choosing T-Mobile’s new Magenta Max pricing plan, which offers few limits in the amount of 5G data that customers can consume. T-Mobile’s new Magenta Max customers consume 40% more data than its other 5G customers, and fully 70% more data than T-Mobile’s average 4G LTE customers.

“The take rate has just been amazing,” T-Mobile CFO Peter Osvaldik said of Magenta Max. “There are premium customers that are attracted to this premium network.”

“We’ve never been able to outrun the insatiable demand that customers have,” Sievert said of Internet service providers in general. “So when you provide the industry’s only true, unlimited plan, they do what they do, they use it up.”

According to Sievert, that indicates that T-Mobile’s 5G network will be a big winner. “We’re really starting to pull away from the pack.  T-Mobile is positioned to maintain our 5G leadership for the duration of the 5G era.”

In a great example of braggadocio, Sievert said:

“We have again demonstrated that our unique winning formula and balanced approach enables us to grow share while delivering strong financial results. In our increasingly connected world, we recognize our role as stewards of this profitable company and industry, while continuing to use our Un-carrier DNA to bring change to wireless and broadband alike, to disrupt the status quo and ultimately benefit customers. And this quarter was no exception.”

T-Mobile said it now covers fully 140 million people with its 2.5GHz network, which it calls “ultra capacity.” By the end of this year, the company said that number will increase to 200 million people. Meantime, speeds available on that network will rise from an average of 300 Mbit/s today to up to 400 Mbit/s by the end of this year, the operator said.  5G speeds will continue to rise after that, according to T-Mobile’s network chief Neville Ray. “2022 is going to be even better,” he said.

Analyst Craig Moffett (who participated in the earnings call) put somewhat of a damper on all that 5G hype by stating: “But we’re not in the 5G era yet. We’re not even a year into the first generation of 5G iPhones. Less than 10% of Americans have 5G-enabled phones, and half of those probably only got a new phone because they needed a replacement. 5G isn’t really driving handset selection, or service provider selection, yet.”

“That T-Mobile continues to take share even in the twilight of the LTE era is reassuring.  In a world of roughly comparable networks, they are competing on the basis of price alone… and they are taking share rapidly. In 5G, they will compete not only on the basis of the industry’s lowest prices, but also the industry’s best network. As we’ve said before, T-Mobile’s ‘worst to first’ story is a generational one. Networks don’t achieve advantage overnight, and they don’t lose it overnight, either. Ten and twenty-year cycles in telecom aren’t unusual.”

“T-Mobile’s brand, and its network, have been ascendant for years. But they have, up to now, achieved only parity. Their path to network superiority is potentially even longer, and, we suspect, even brighter.”

T-Mobile continues to increase market share even in the twilight of the LTE era is reassuring. In a
world of roughly comparable networks, they are competing on the basis of price alone… and they
are taking share rapidly.  In 5G, they will compete not only on the basis of the industry’s lowest prices, but also the industry’s best network.

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References:

https://www.t-mobile.com/news/business/t-mobile-reports-strong-first-quarter-2021-results

https://investor.t-mobile.com/news-and-events/events-and-presentations/event-details/2021/T-Mobile-1Q-2021-Earnings-Call/default.aspx

https://seekingalpha.com/article/4424340-t-mobile-us-inc-tmus-ceo-mike-sievert-on-q1-2021-results-earnings-call-transcript

https://www.lightreading.com/5g/does-5g-make-difference-t-mobile-says-yes/d/d-id/769256?

 

Gartner: Global public cloud spending to reach $332.3 billion in 2021; 23.1% YoY increase

According to Gartner, global public cloud spending is forecast to reach $332.3 billion in 2021, increasing by 23.1% from $270 billion in 2020.  Growth in cloud spending can be attributed to increased adoption in technologies such as virtualization, edge computing and containerization.

“The events of last year allowed CIOs to overcome any reluctance of moving mission critical workloads from on-premises to the cloud,” said Sid Nag, research vice president at Gartner. “Even absent the pandemic there would still be a loss of appetite for data centers.

Table 1. Worldwide Public Cloud Services End-User Spending Forecast (Millions of U.S. Dollars)

  2020 2021 2022
Cloud Business Process Services (BPaaS) 46,131 50,165 53,121
Cloud Application Infrastructure Services (PaaS) 46,335 59,451 71,525
Cloud Application Services (SaaS) 102,798 122,633 145,377
Cloud Management and Security Services 14,323 16,029 18,006
Cloud System Infrastructure Services (IaaS) 59,225 82,023 106,800
Desktop as a Service (DaaS) 1,220 2,046 2,667
Total Market 270,033 332,349 397,496

BPaaS = business process as a service; IaaS = infrastructure as a service; PaaS = platform as a service; SaaS = software as a service     Note: Totals may not add up due to rounding.

Source: Gartner (April 2021)

As organizations mobilize for a massive global effort to produce and distribute COVID-19 vaccinations, SaaS based applications that enable essential tasks such as automation and supply chain is critical. Such applications continue to demonstrate reliability in scaling vaccine management, which in turn will help CIOs further validate the ongoing shift to cloud.

“It’s important to note that the usage and adoption of cloud that served enterprises well during the ongoing crisis will not look the same in the coming years,” said Mr. Nag. “It will further evolve from serving pedestrian use cases such as infrastructure and application migration, to those that combine cloud with technologies such as artificial intelligence, the Internet of Things, 5G and more.

“In other words, cloud will serve as the glue between many other technologies that CIOs want to use more of, allowing them to leapfrog into the next century as they address more complex and emerging use cases. It will be a disruptive market, to say the least.”

Driven by demand for composable applications, software-as-a-service (SaaS) will account for the largest market segment to reach $122.6 billion in 2021. Gartner cited that SaaS-based applications will be instrumental in countries’ efforts to produce and distribute COVID-19 vaccinations, in areas such as automation and supply chain. These applications will help CIOs validate the shift to cloud.Desktop-as-a-service will experience the highest growth at 67.7% to reach $2 billion, while infrastructure-as-a-service will grow by 38.5% this year to reach $82 billion. In 2022, growth in these areas is expected to slow down.
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Cloud Computing Fuels Revenues and Profits for Big 3 Cloud Companies: 

Amazon’s market-leading AWS cloud business grew revenue 32% in the first quarter, a faster pace than analysts had expected and accelerating from 28% growth in the fourth quarter.  Microsoft’s revenue has skyrocketed since it invested billions of dollars to build a massive, interconnected cloud computing platform.  Revenues for its Azure cloud offering were up 50% in the quarter. Meanwhile, revenues at Google’s Cloud business grew 46% this past quarter.  However, Google continues to be a distant third to Amazon and Microsoft in the cloud business.

All three cloud providers are making a big push into edge computing and 5G “cloud native” core networks.   That effectively makes them leaders in those new tech markets, with the traditional network providers playing a subservient role.  For example, Dish Network will build its 5G core network using the AWS cloud infrastructure and services.

These big three cloud businesses are in reality massive cloud (i.e. Internet) resident data centers with high-speed interconnections (Data Center Interconnects). There’s no reason to think growth will slow any time soon. Were they stand-alone businesses, they would be the three largest enterprise-software entities in the world.  And they design their own compute servers, making them the world’s largest global computer companies too!

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While cloud services boomed in the past year, Gartner suggests that spending on cloud might take a different note in 2021 and 2022 as enterprises shift away from infrastructure and application migration towards advanced applications integrating AI and IoT and 5G.

In the first quarter of 2021, research and analytics firm Canalys reported that global cloud services infrastructure spending grew to $41.8 billion to represent a 35% year-on-year increment and 5% quarter-on-quarter growth.

References:

https://www.gartner.com/en/newsroom/press-releases/2021-04-21-gartner-forecasts-worldwide-public-cloud-end-user-spending-to-grow-23-percent-in-2021

https://www.telecomreviewasia.com/index.php/news/industry-news/2325-global-public-cloud-spending-to-reach-332-3-billion-in-2021

Curmudgeon/Sperandeo: Technology Fab Five Biggest Winners from Covid-19 Pandemic

 

Vodafone and Google Cloud to Develop Integrated Data Platform

Vodafone and Google Cloud today announced a new, six-year strategic partnership to drive the use of reliable and secure data analytics, insights, and learnings to support the introduction of new digital products and services for Vodafone customers simultaneously worldwide.

In a significant expansion of their existing agreement, Vodafone and Google Cloud will jointly build a powerful new integrated data platform with the added capability of processing and moving huge volumes of data globally from multiple systems into the cloud.

The platform, called ‘Nucleus‘, will house a new system – ‘Dynamo‘ – which will drive data throughout Vodafone to enable it to more quickly offer its customers new, personalized products and services across multiple markets. Dynamo will allow Vodafone to tailor new connectivity services for homes and businesses through the release of smart network features, such as providing a sudden broadband speed boost.

Capable of processing around 50 terabytes of data per day, equivalent to 25,000 hours of HD film (and growing), both Nucleus and Dynamo, which are industry firsts, are being built in-house by Vodafone and Google Cloud specialist teams. Up to 1,000 employees of both companies located in Spain, the UK, and the United States are collaborating on the project.

Vodafone has already identified more than 700 use-cases to deliver new products and services quickly across Vodafone’s markets, support fact-based decision-making, reduce costs, remove duplication of data sources, and simplify and centralize operations.  The speed and ease with which Vodafone’s operating companies in multiple countries can access its data analytics, intelligence, and machine-learning capabilities will also be vastly improved.

By generating more detailed insight and data-driven analysis across the organization and with its partners, Vodafone customers around the world can have a better and more enriched experience. Some of the key benefits include:

  • Enhancing Vodafone’s mobile, fixed, and TV content and connectivity services through the instantaneous availability of highly personalized rewards, content, and applications. For example, a consumer might receive a sudden broadband speed boost based on personalized individual needs.
  • Increasing the number of smart network services in its Google Cloud footprint from eight markets to the entire Vodafone footprint. This allows Vodafone to precisely match network roll-out to consumer demand, increase capacity at critical times, and use machine learning to predict, detect, and fix issues before customers are aware of them.
  • Empowering data scientists to collaborate on key environmental and health issues in 11 countries using automated machine learning tools. Vodafone is already assisting governments and aid organisations, upon their request, with secure, anonymised, and aggregated movement data to tackle COVID-19. This partnership will further improve Vodafone’s ability to provide deeper insights, in accordance with local laws and regulations, into the spread of disease through intelligent analytics across a wider geographical area.
  • Providing a complete digital replica of many of Vodafone’s internal support functions using artificial intelligence and advanced analytics. Called a digital twin, it enables analytic models on Google Cloud to improve response times to enquiries and predict future demand. The system will also support a digital twin of Vodafone’s vast digital infrastructure worldwide.
  • In addition, Vodafone will re-platform its entire SAP environment to Google Cloud, including the migration of its core SAP workloads and key corporate SAP modules such as SAP Central Finance.

Johan Wibergh, Chief Technology Officer for Vodafone, said: “Vodafone is building a powerful foundation for a digital future. We have vast amounts of data which, when securely processed and made available across our footprint using the collective power of Vodafone and Google Cloud’s engineering expertise, will transform our services, to our customers and governments, and the societies where they live and serve.”

Thomas Kurian, CEO at Google Cloud, commented: “Telecommunications firms are increasingly differentiating their customer experiences through the use of data and analytics, and this has never been more important than during the current pandemic. We are thrilled to be selected as Vodafone’s global strategic cloud partner for analytics and SAP, and to co-innovate on new products that will accelerate the industry’s digital transformation.”

Revenues at Google’s Cloud business grew 46% this past quarter.  However, Google continues to be a distant third to Amazon and Microsoft in the cloud business.

Technical Notes:

All data generated by Vodafone in the markets in which it operates is stored and processed in the required Google Cloud facilities as per local jurisdiction requirements and in accordance with local laws and regulations. Customer permissions and Vodafone’s own rigorous security and privacy by design processes also apply.

On the back of their collaborative work, Vodafone and Google Cloud will also explore opportunities to provide consultancy services, offered either jointly or independently, to other multi-national organizations and businesses.

The platform is being built using the latest hybrid cloud technologies from Google Cloud to facilitate the rapid standardization and movement of data in both Vodafone’s physical data centers and onto Google Cloud. Dynamo will direct all of Vodafone’s worldwide data, extracting, encrypting, and anonymizing the data from source to cloud and back again, enabling intelligent data analysis and generating efficiencies and insight.

References:

https://prnmedia.prnewswire.com/news-releases/vodafone-and-google-cloud-to-develop-industry-first-global-data-platform-301281936.html

https://cloud.google.com/press-releases/2021/0503/vodafone-google-cloud (video)

 

Strand Consult: The 10 Parameters of Open RAN; AT&T memo to FCC

Strand Consult is attempting to determine if, when, and how Open RAN (TIP project) and O-RAN (Alliance) will replace conventional RAN on a 1:1 basis without compromising the network quality, security, energy efficiency, and other important factors. Mobile operators have little ability to raise price, so operators must compete on network quality, coverage, and other factors. Here are few things to keep in mind.

In general, mobile ARPU is falling. In many countries, operators are trying to shift the focus away from price by competing on innovation and quality. For example, US mobile operators compete on the quality and coverage of their 4G and 5G networks. Mobile operators are focused on rolling out technology quickly, maintaining customer satisfaction, and ensuring quality of experience and other key performance indicators (KPIs). Chief technology officers, network managers, and other technical staff are laser focused on these KPIs and are loath to make changes to which would negatively impact these indicators.

In general, Strand Consult observes that what public affairs officials say about OpenRAN differs significantly from what network managers say.

Strand Consult’s 10 parameters to evaluate OpenRAN:

Strand Consult’s investigation has been guided by 10 parameters or questions to determine the value of OpenRAN. Here is what we’ve learned.

  1. Whether OpenRAN is a technical standard. The O-RAN Alliance is a private organization that develops technical specifications for OpenRAN.  It should not be confused with the OpenRAN Policy Coalition which is a public affairs organization. The O-RAN Alliance is not a standards development organization (SDO), but rather an industrial collaboration that builds solutions on top of 3GPP specifications. While industrial cooperation is important, there can be no mobile networks the 3rd Generation Partnership Project (3GPP), an umbrella term for many standards organizations which develop protocols for mobile telecommunications and define the technological inputs for cellular networks. Companies like Rakuten develop their own corporate and proprietary concepts for OpenRAN. These concepts that do not necessarily follow a particular standard (3GPP) or O-RAN Alliance specification.
  2. Whether OpenRAN can replace Chinese equipment. Some mobile operators have suggested that OpenRAN is the way to avoid Huawei and ZTE in mobile networks. However other Chinese companies are deeply involved with OpenRAN technical specifications, product roadmap, and strategy. One founding member of the O-RAN Alliance is China Mobile, a state-owned company and the world’s largest mobile operator with 950 million subscribers and 450,000 employees. The O-RAN Alliance has more than 40 Chinese member companies, many of which government-owned and military aligned (See Strand Consult’s research note 44 Chinese companies have joined the OpenRAN effort, a strategy to reduce Huawei’s presence in 5G). The Chinese members of 0-RAN Alliance outnumber the Europeans. China Mobile’s Chih-Lin has veto power over the organization. China Mobile leads or co lead 8 of the 9 O-RAN Alliance’s working groups either as chairman or vice-chairman.
  3. OpenRAN and 5G innovation. OpenRAN proponents claim it will have a revolutionary impact on 5G, however reports suggest that large scale deployment of OpenRAN won’t happen until 2025. This means that OpenRAN cannot replace existing RAN on a 1:1 basis today.  The 5G networks rolled out today use the standards from 3GPP Release 15 with increased functionality forthcoming in Releases 16 and 17 within two years. There are more than 144 3GPP-5G commercial networks deployed but only one proprietary OpenRAN 5G network (Rakuten). If OpenRAN is to increase 5G innovation, it must evolve faster than 5G itself. Presently it is not on par with the 5G standards defined years ago. It is difficult to see how OpenRAN can catch up when the significant resources already supporting the 3GPP standards timeline.
  4. OpenRAN and 5G deployment. Today mobile operators are rolling out 5G at a faster than 4G and even fast than 3G. In practical terms, 5G networks already built in 2019 and 2020 and those to be built in 2021 and 2022 already have the standards roadmap in place. If OpenRAN can’t catch up by 2025, operators have only two choices, delay 5G until 2025 (when 6G will start to take root) or replace their 5G equipment in 4 to 5 years. OpenRAN may be too little, too late for 5G operators.
  5. OpenRAN and vendor diversity. OpenRAN proponents claim that it will create more competition in the network equipment market. The 5G network equipment vendor market has many vendors and segments. Omdia details more than a dozen full-service providers with additional providers in segments for antennas, basebands, remote radios, small cells, macro cells, phase shifters and so on. This idea that there are not many vendors for 5G equipment was likely created by Huawei to deter the security reviews and subsequent restrictions imposed on the military-aligned company. If anything, the restrictions on Huawei have helped to open the door to new equipment vendors which could not compete because of Huawei’s predatory pricing and anti-competitive tactics. For example, Samsung has quickly gained market share and is supply 5G rollouts in the US, Australia, and other countries.
  6. OpenRAN and network equipment cost. OpenRAN proponents suggest that it can lower the cost of network equipment. The cost competitiveness of OpenRAN versus RAN is not yet known. It may be that some OpenRAN providers can offer equipment more cheaply on some parameters, but the cost advantage may not be significant when considering all the costs such as supply, availability, energy consumption, security, warranty, network integration, equipment matching, new contracts and service level agreements etc. However, operators frequently reduce their number of vendors so that they can enjoy lower unit costs with volume purchasing, the company BUYIN is a great case. For an operator’s perspective, check out the comments from Neil McRae, Managing Director and Chief Architect at BT (Scroll to minute 51 minute in the video). McRae explains that when he took his job, he inherited a network portfolio with 50 vendors. He subsequently reduced it to 4 vendors and saved £1 billion in 3 years. He observed that too many vendors not only increased cost, it increased complexity. He is wary of notions of “open architectures” which require managing portfolios of 5-50 vendors. He noted that vendor reduction increased shareholder value and that he would pursue the same strategy again.
  7. OpenRAN and security. OpenRAN proponents suggest that OpenRAN technology and the “unbundling” of 5G hardware and software is the means reduce reliance on Huawei and hence greater security. However, it is not clear how trading one known insecure Chinese vendor for 50 unknown Chinese vendors is the path to greater security. The issue of backdoors is omnipresent on all Chinese hardware given the country’s disposition and associated intelligence and surveillance policies. Moreover, it is not clear how security is improved when network owners must vet not one, but multiple new OpenRAN vendors. The time and cost to perform this review would seem to be multiplied by the number of vendors the operators takes on.
  8. OpenRAN and energy efficiency. Energy efficiency is an increasingly important issue for mobile operators which expect to compete on carbon reduction strategies. Naturally if OpenRAN could offer a greener solution, that would be an advantage.  However, it is reported that many OpenRAN installation use the Intel X86 processor, which is less efficient than specialized RAN chips.  If anything, energy consumption could increase if signals must traverse a multitude of mix and match components instead of a single end-to-end system designed with energy efficiency in mind.  To reduce energy, Apple developed tits own processer as an alternative to Intel X86.
  9. OpenRAN and Rakuten. The media has promoted a supposed Rakuten success story with OpenRAN success. However, Rakuten is not offering open-source tools, but rather proprietary OpenRAN solution. It offers this through a freemium model in which free service is offered for a period, and operators pay down the line. Some companies have success with freemium and loss leader models, but typically they need scale.
  10. OpenRAN and the indigenous movement. OpenRAN has been promoted as a way to support domestic innovation like India or Brazil or what Germany’s Economic Minister calls for European-only actors in 5G. Curiously many of these calls are coupled with operator strategies to keep Huawei equipment in place because OpenRAN will not be ready for some years. Policymakers have also pursued subsidies and other financial incentives to support local OpenRAN startups which may design the equipment in their respective country but manufacture it in China. Unfortunately, production in China and with Chinese partners could compromise security, as the Supermicro case demonstrates.

Conclusion

The many problems that OpenRAN is purported to solve is impressive. In fact, I have to go back to 3G in 2000 to find the level of hype observed today with OpenRAN. Indeed, the Huawei problem is so serious that people are desperate for a solution. However, in the enthusiasm for the OpenRAN solution, too many want to look past  the inconvenient reality that China is shaping much of the Open RAN future particularly through the O-RAN Alliance.

It is important to develop secure alternatives to Huawei, but this is not a reason to oversell OpenRAN. While it may be commendable to pursue the goals proffered by OpenRAN proponents, the actual impact of OpenRAN must be measured by real world facts and experience.

The questions remain how OpenRAN will affect the CAPEX and OPEX mobile operators in the short, medium and long term and whether operators will buy OpenRAN as a serious 1:1 alternative to standard RAN in Paris, London, Berlin, Madrid, New York, Sao Paulo and Copenhagen. It seems that OpenRAN is falling short of expectations.

Fact vs Fiction: The 10 Parameters of OpenRAN

Separately, AT&T told the FCC it plans to begin adding open RAN-compliant equipment into its network “within the next year.”

That puts AT&T on roughly the same timeframe as Verizon. Verizon’s SVP Adam Koeppe told Light Reading earlier this year that the operator’s 5G hardware vendors – Ericsson, Samsung and Nokia – will begin supplying open RAN-compliant equipment starting later this year. And he expects that the bulk of their equipment shipments to Verizon will comply with open RAN specifications by next year.  AT&T told the FCC it expects to implement similar changes into its own network.

“The challenge for an operator shifting to any open network architecture, including but not limited to O-RAN, will be maintaining network reliability, integrity and performance for customers during the transition,” the operator wrote in a filing. “For our part, AT&T serves multiple customer groups, with varied and often complex, service requirements. As we introduce O-RAN into our network, our goal will be maintaining the same high level of performance at scale. We are actively working in this direction.”

References:

https://www.lightreading.com/open-ran/atandt-to-launch-open-ran-by-next-year/d/d-id/769199?

AT&T to FCC: Promoting the Deployment of 5G Open Radio ) Access Networks – GN Docket No. 21-63
https://ecfsapi.fcc.gov/file/1042871504579/AT%26T%20Comments%20to%20FCC%20NOI%20(04.28.21).pdf

Analysis of Dish Network – AWS partnership to build 5G Open RAN cloud native network

On its Q1-2021 earnings call, Dish Network Chairman and Co-founder Charlie Ergen did not provide any specifics regarding Dish’s deal with Amazon/AWS or its overall plan to build a nationwide 5G Open RAN, “cloud native” core network.  Are you a bit tired of cliché’s like this:

“We’re building a Netflix in a Blockbuster world.” All Netflix did was put video on the cloud. Instead of going to a physical store, you put it in the cloud. Right. All the business plans in the world, all the numbers, all the thought if they just did something simple they put it in the cloud and the technology was they were a little ahead of the technology but the technology got there. All we’re doing is taking all those towers that you see as you drive down the highway, we basically put them in the cloud. And so instead of driving to physical store and rent a movie, you’re going to get all your data and information and automation everything from the cloud. And so it’s a dramatic paradigm shift in the way network is built and it should and it’s an advantage over legacy carriers who have 30-year-old architecture.”  Of course, that’s incorrect as almost all 5G carriers plan to build a 5G cloud native core network.

Dish is planning to build the world’s first standalone, cloud-based 5G Open Radio Access Network (O-RAN), starting with the launch of a 5G wireless network for enterprise customers in Las Vegas, NV later this year.

Dish says it will leverage AWS’s architecture and services to deploy a cloud-native 5G network that includes O-RAN—the antennas and base stations that link phones and other wireless devices to the network. Also existing in the cloud will be the 5G core, which includes all the computer and software that manages the network traffic. AWS will also power Dish’s operation and business support systems.

“Amazon has made massive investments over the years in compute storage transport and edge, [and] we’ll be sitting on top of that and as we tightly integrate telco into their infra, then we can expose APIs to their development community, which we think makes and enables third-party products and services to have network connectivity, as well as enterprise applications,” said Tom Cullen, executive VP of corporate development for Dish, explaining some of the technical details of the arrangement during Thursday’s earnings call.

Ergen reiterated Dish’s plan to spend up to $10 billion on its overall 5G network and provided milestone date for completion of the first phase of the 5G build-out.

“All of that $10 billion isn’t spent by June of 2023, which is our major milestone,” Ergen said, pointing to the company’s agreement with the U.S. government to cover at least 70% of the population with 5G no later than June 14, 2023.  However, Ergen has an escape hatch:

“The agreement we have [with the FCC] recognizes that [there could be] supply chain issues outside of our control, and that the timelines could be adjusted. But we don’t look at it that way internally. There is always unforeseen circumstances, and this one might be particularly acute. But we’re not going to let anything stop us. We’re focused on meeting our timelines, and regardless of what the challenges are. And we’ll have to reevaluate that from time to time, but we’re focused right now on Las Vegas and we’re focused on the 20% build-out by June of next year.”

“We’re not going to let anything stop us, he added.  The $10 billion “does take us through the complete (5G) buildout.”

On the 5G cloud native aspect, Ergen said:

“Yes, we anticipated a cloud native network from the beginning, he said. “So the $10 billion total build-out cost that we announced a couple of years ago–I think people are probably still skeptical … But you can see where we’re headed. Most of your models will probably take a lot of capex off the board when you understand the architecture, and we’re not going to go through all the architecture in this call, but it’s certainly has a material impact on capex.”

Dish said last week it plans to run all of its network computing functions inside the public AWS cloud – a plan that represents a dramatic break from the way most 5G networks around the world run today.  Many analysts think that’s a huge cyber-security risk as the attack surface is much greater in a virtual, cloud based network.

Marc Rouanne — Executive Vice President and Chief Network Officer:

“Yeah, the way to think of our cloud native network is a network of networks, that’s the way it’s architected. So when a customer comes to us, it’s easy for us to offer one sub network, which we can call it private network and there are techniques behind that like slicing, like automation, like software defined, so I’m not going to go into the techniques, but natively the way to think of it is really this network of networks. Right. And then, as Stephen, you’ve seen that you plan this to the postpaid customers and telling you how they would shake lose sub networks.”

Stephen Bye — Executive Vice President, Chief Commercial Officer

“Absolutely, yeah. No, I think we’ve talked to a number of customers across multiple verticals in different industry segments and is an increasing appetite in demand for the kind of network that we’re building, which is really to enable them to have more security, more control and also more visibility into the data that’s coming off the devices, so that they can control their business more effectively. So we’re seeing a terrific demand. And the network architecture, we’re putting in place actually enables and unlocks that opportunity for those enterprise customers and it’s again not restricted to any specific vertical.

We’re touching a lot of different companies and a lot of different vertical segments across the country and the other aspect of the opportunity that we see for ourselves is that while we build out a nationwide network, we are in the process of working with customers and prospective customers on private networks that are not limited by the geography of our national footprint. So we can deploy those within their environments to support their business operations as well. So the demand we’re seeing is terrific and we’re already engaged with a number of customers today.”

Ergen chimed in again:

“The cloud infrastructure as it existed a couple of years ago, really didn’t handle telco very well, there has been a lot of R&D and investment that they’ve had to make to transform their network into something that where a telco can operate in the cloud, because it’s a little bit different than their traditional IT infrastructure. And then today they are, they were best in class room for what we needed and whether it be their APIs and the documentation and discipline and vendor at the — community that supports them and their — the developers and then of course obviously reach into the enterprise business. So it was — so that’s the first and foremost.

And then the second thing I think is, is the company committed? I’m not going to put words in Amazon’s mouth, I’ll let them talk to their commitment, but they’ve done a lot of work for us to help us without knowing where they have the deal or not and very appreciative that it. I think it’s helpful that Andy will become the CEO because he’s owned this project from the start and he can — he will be able to move all the pieces within Amazon to focus on this. And so I think at the end of the day, I think we’re going to be their largest customer in cloud and I think they’re going to — they may be the largest customer in our network. I mean, but we have to build a network and prove it, and they have to build and prove it. I think that all other carriers around the world will, including the United States will look at Amazon as a real leader here because we’re just doing something different.”

Stephen Bye — Executive Vice President, Chief Commercial Officer

“Yeah. So just in terms of what the Las Vegas build looks like. I think there are several attributes that are really important to what we’re doing to build on Charlie’s comment. One is we are building a cloud native infrastructure. We are using an Open Radio Access architecture. But it’s also a 5G native network. We’re not trying to put 5G on top of 2G, 3G and 4G, the infrastructure that we’re deploying is optimized for 5G and the way we’ve designed the network from an RF perspective and a deployment perspective is to take advantage of the 5G architecture as well as the 5G platform. And so, what does that look like?

It’s basically a new network, it’s new infrastructure, it’s designed using all of the spectrum bands that we have and the RF is optimized to take advantage of that. So we’re on a path to launching that in the third quarter, but it’s one of a number of markets we have coming on. We just have announced those markets through the end of the year, but it’s the first, obviously a number that we have in flight today and we’ve got activity going on across the country to actually build out this network. So it will be the first one that people can touch and feel and get the experience, but it is really a 5G native network and we’ve proven that O-RAN from a technology perspective can work compared to that at the end of last year. Now we are in the execution phase, now we’re in the deployment phase and so you know Vegas will have to be the first one that it will be a fully deployed market that people will be able to touch and feel and experience.”

Bye added that the 5G build-out will be done in phases but the network is designed to support all customers across all segments.

5G Network End-to-End Architecture.   Image courtesy of AWS.

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In a note to clients, analyst Craig Moffett said that Dish was purchasing services from AWS rather than Amazon investing in Dish’s 5G network:

“It was a purchase agreement, albeit one freighted with lots of rather fuzzy jargon, and nothing more. Notably, Verizon already has its own relationship with AWS, and theirs does call for AWS to co-market Verizon services to AWS’s enterprise customers. By contrast, the Dish agreement calls only for Dish to market AWS services to Dish’s customers, not the other way around. Objectively, it is Verizon, not Dish, that has the more strategic relationship.

Amazon isn’t likely to market a service to its customers unless they are highly confident that its quality is first rate and that its staying power is assured. Perhaps Dish will get there. But it won’t be clear that they have arrived at that point until their network is successfully serving customers… without the safety net of the T-Mobile MVNO agreement. That’s not until 2027. That feels to us like a long time to wait.”

Regarding Dish Network’s new business model, Craig said “It is now fair to say that Dish’s core business is wireless rather than satellite TV. Not by revenues, of course; the wireless business is today but the modest reseller stub of what once was Boost (Mobile). But certainly by valuation….What does matter, however, is the extent to which the satellite TV business can serve as a source of funds for financing the wireless business.”

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References:

https://www.fool.com/earnings/call-transcripts/2021/04/29/dish-network-corp-dish-q1-2021-earnings-call-trans/

https://www.nexttv.com/news/dishs-aws-deal-to-put-5g-in-the-cloud-like-netflix-in-a-blockbuster-world-ergen-says

https://d1.awsstatic.com/whitepapers/5g-network-evolution-with-aws.pdf

https://www.lightreading.com/service-provider-cloud/ergen-hazy-on-dish-aws-deal-financials-5g-buildout-costs/d/d-id/769152?

https://www.lightreading.com/service-provider-cloud/dishs-5g-network-architect-explains-new-amazon-deal/d/d-id/768933

https://docs.aws.amazon.com/whitepapers/latest/cicd_for_5g_networks_on_aws/5g-networks-on-aws.html

 

 

 

Omdia and IDC: Samsung regains lead in global smartphone market

The global smartphone market climbed 28.1% year on year to reach total shipments of 351.1 million units in the first quarter of 2021, according to preliminary data from Informa owned Omdia. That gain consolidates the smartphone market’s recent recovery after it posted its first annual growth since Q3 2019 in the final quarter of 2020.  However, Omdia said 2021 is set to be a year of transition with Huawei’s role continuing to change, LG exiting the market and a severe semiconductor shortage affecting sales.

Samsung took over the top spot from Apple in the first 3 months of 2021, shipping 76.1 million units, up 29.2 percent year on year, to reach 22 percent of the market. The company was able to increase shipments by 22.8 percent from Q4 2020 thanks in part to an early update to the Galaxy S line as well as the launch of its latest range of devices in the A series.

Apple followed its blockbuster Q4 2020 with another significant year on year growth of 46.5% to reach 56.4 million units shipped in the quarter, equivalent to 16% of the market, followed in third place by Xiaomi with 14% after shipping 49.5 million units, up 78.3% year on year.

Two more Chinese smartphone brands – Oppo and Vivo – continue to battle for fourth and fifth place in the global rankings and remain tied on 11 percent of the market. Vivo shipped 38.2 million units, just above the 37.8 million units Oppo shipped in Q1.

Year on year, Vivo grew shipments by 95.9 percent and Oppo by 85.3 percent, as they overtook Huawei, which slipped out of the top 5 global smartphone OEM ranking after shipping 14.7 million units, some 70 percent less than in Q1 2020, not including the 3.6 million units shipped by its sub-brand Honor, which is now an independent entity.

Top 10 Shipments per manufacturer

Rank OEM 1Q21 4Q20 1Q20 QoQ YoY
Shipment (m) M/S Shipment (m) M/S Shipment (m) M/S
1 Samsung 76.1 22% 62.0 16% 58.9 21% 22.8% 29.2%
2 Apple 56.4 16% 84.5 22% 38.5 14% -33.3% 46.5%
3 Xiaomi 49.5 14% 47.2 12% 27.8 10% 4.9% 78.3%
4 vivo 38.2 11% 34.5 9% 19.5 7% 10.7% 95.9%
5 Oppo 37.8 11% 34.0 9% 20.4 7% 11.1% 85.3%
6 Huawei 14.7 4% 33.0 9% 49.0 18% -55.5% -70.0%
7 Motorola 12.6 4% 9.8 3% 5.5 2% 28.6% 128.1%
8 Realme 11.4 3% 14.3 4% 6.1 2% -20.3% 86.9%
9 Tecno 8.2 2% 7.7 2% 3.5 1% 6.5% 133.4%
10 LG 6.8 2% 8.4 2% 5.4 2% -18.9% 26.2%
Others 41.3 12% 46.4 12% 41.1 15% -11.0% 0.6%
Total 353.0 100% 381.8 100% 275.7 100% -7.5% 28.1%

Gerrit Schneemann, principal analyst at Omdia commented: “The smartphone market continues to show resiliency in the face of multiple challenges. The global component supply shortage is looming large over the market. On the other hand, two well-known smartphone brands will disappear from the global smartphone market this year, in Huawei and LG, opening the door for other brands to reach new markets and buyers.”

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Separately, International Data Corporation (IDC) said that the smartphone market accelerated in the first quarter of 2021 (1Q-2021) with 25.5% year-over-year shipment growth.

According to preliminary data from the (IDCWorldwide Quarterly Mobile Phone Tracker, smartphone vendors shipped nearly 346 million devices during the quarter. The strong growth came from all regions with the greatest gains coming from China and Asia/Pacific (excluding Japan and China). As the two largest regions globally, accounting for half of all global shipments, these regions experienced 30% and 28% year-over-year growth, respectively.

“The recovery is proceeding faster than we expected, clearly demonstrating a healthy appetite for smartphones globally. But amidst this phenomenal growth, we must remember that we are comparing against one of the worst quarters in smartphone history,1Q20, the start of the pandemic when the bulk of the supply chain was at a halt and China was in full lockdown,” said Nabila Popal, research director with IDC’s Worldwide Mobile Device Trackers. “However, the growth is still very real; when compared to two years ago (1Q19), shipments are 11% higher. The growth is coming from years of repressed refresh cycles with a boost from 5G. But above all, it is a clear illustration of how smartphones are becoming an increasingly important element of our everyday life – a trend that is expected to continue as we head into a post-pandemic world with many consumers carrying forward the new smartphone use cases which emerged from the pandemic.”

As the smartphone market is recovering, a major shift is happening in the competitive landscape. Huawei is finally out of the Top 5 for the first time in many years, after suffering heavy declines under the increased weight of U.S. sanctions. Taking advantage of this are the Chinese vendors Xiaomi, OPPO, and vivo, which all grew share over last quarter landing them in 3rd, 4th, and 5th places globally during the quarter with 14.1%, 10.8%, and 10.1% share, respectively. All three vendors are increasing their focus in international markets where Huawei had grown its share in recent years. In the low- to mid-priced segment, it is these vendors that are gaining the most from Huawei’s decline, while most of the high-end share is going to Apple and Samsung. Samsung regained the top spot in 1Q21 with impressive shipments of 75.3 million and 21.8% share. The new S21 series did well for Samsung, mainly thanks to a successful pricing strategy shaving off $200 from last year’s flagship launch. Apple, with continued success of its iPhone 12 series, lost some share from their very strong holiday quarter but still shipped an impressive 55.2 million iPhones grabbing 16.0% share.

“While Huawei continues its decline in the smartphone market, we’ve also learned that LG is exiting the market altogether,” said Ryan Reith, program vice president with IDC’s Worldwide Mobile Device Trackers. “Most of LG’s volume was in the Americas with North America accounting for over 50% of its volume and Latin America another 30%. Despite the vendor losing ground in recent years, they still had 9% of the North America market and 6% of Latin America. Their exit creates some immediate opportunity for other brands. With competition being more cutthroat than ever, especially at the low-end, it is safe to assume that 6-10 brands are eyeing this share opportunity.”

Top 5 Smartphone Companies, Worldwide Shipments, Market Share, and Year-Over-Year Growth, Q1 2021 (shipments in millions of units)
Company 1Q21 Shipment Volumes 1Q21 Market Share 1Q20 Shipment Volumes 1Q20 Market Share Year-Over-Year Change
1. Samsung 75.3 21.8% 58.4 21.2% 28.8%
2. Apple 55.2 16.0% 36.7 13.3% 50.4%
3. Xiaomi 48.6 14.1% 29.5 10.7% 64.8%
4. OPPO 37.5 10.8% 22.8 8.3% 64.5%
5. vivo 34.9 10.1% 24.8 9.0% 40.7%
Others 94.1 27.2% 103.0 37.4% -8.7%
Total 345.5 100.0% 275.2 100.0% 25.5%
Source: IDC Quarterly Mobile Phone Tracker, April 28, 2021

Notes:

  • Data are preliminary and subject to change.
  • Company shipments are branded device shipments and exclude OEM sales for all vendors.
  • The “Company” represents the current parent company (or holding company) for all brands owned and operated as a subsidiary.
  • Figures represent new shipments only and exclude refurbished units.

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Closing Comment:

“Globally, the top five vendors combined took a 76% market share in Q1 2021, up from 71% a year ago. Chip shortages and supply side constraints did not have a significant impact in Q1 among the top 5 brands,” said Linda Sui, senior director, Strategy Analytics. Samsung’s newly launched A series 4G and 5G phones, and the earlier launched Galaxy S21 series combined drove solid performance in the quarter. Xiaomi maintained strong momentum in both India and China, and the expansion in Europe, Latin America and Africa region also started to bear fruit.

Note: Strategy Analytics said the global smartphone shipments were 340 million units in Q1 2021, up over 24% (year-on-year) representing the highest growth since 2015. The smartphone market rebound was driven by the healthy demand of consumers with aging devices and a phenomenal 5G push from Chinese smartphone vendors.

References:

https://omdia.tech.informa.com/pr/2021-apr/global-smartphone-market-grows-28

https://www.idc.com/getdoc.jsp?containerId=prUS47646721

https://www.idc.com/tracker/showproductinfo.jsp?containerId=IDC_P8397

https://www.businesswire.com/news/home/20210419005789/en/Strategy-Analytics-Global-Smartphone-Shipments-Surge-to-340-Million-units-Up-24-YoY-in-Q1-2021

Verizon Explores Sale of Media Assets; Wake up Call for AT&T?

According to the Wall Street Journal, Verizon Communications is exploring a sale of its media assets including Yahoo and AOL, as the telecommunications giant looks to exit an expensive and unsuccessful bet on digital media. The sales process, which includes private-equity firm Apollo Global Management Inc. (which owns Cox Media Group) could lead to a deal worth $4 billion to $5 billion, according to people familiar with the matter—assuming there is one.

Verizon splashed out billions of dollars assembling a portfolio of once-dominant websites, including AOL and Yahoo. Verizon bought AOL in 2015, and Yahoo in 2017. It then merged them into a new venture called Oath, paying more than $9 billion in total to acquire the pair.  So the rumored sale would be a huge loss for Verizon, based on what it paid for those two media outlets.

The digital-media business ultimately failed to reach its target of $10 billion in annual revenue by 2020, and Verizon in 2018 wrote down about $4.5 billion of its value. Verizon has cut jobs in the unit, and in November agreed to sell its HuffPost news division to BuzzFeed Inc. That followed a 2019 agreement to sell the Tumblr blogging platform for a nominal sum to the owner of WordPress.

Verizon’s media business, which also includes Yahoo Finance and Yahoo Mail (used by AT&T-Yahoo Internet subscribers) as well as news sites TechCrunch and Engadget, generated $7 billion of revenue in 2020, down 5.6% from the previous year due to a sharp advertising pullback during the early months of the coronavirus pandemic. Business picked up in the second half and the unit has logged two consecutive quarters of double-digit growth, including a boost of 10%, to $1.9 billion, in the first quarter.

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SIDEBAR — Message to AT&T:

If the Verizon media sales go through, it should send a clear message to AT&T, which went heavily into debt when it purchased Time Warner (and to a lesser extent DirecTV).  AT&T has already spun off off its TV assets. AT&T agreed to create a new company for its U.S. video business unit together with private equity firm TPG Capital.  The company will be called New DirecTV and include:  today’s Direct TV, U-verse TV and AT&T TV (AT&T’s OTT video service).  Closing the TV units “sale” will reduce their observed rate of decline.  In the most recent quarter, video revenue shrank by 9.2%. That hemorrhage will stop once the video sale is complete.

It’s incomprehensible to this author, that AT&T’s wireline Internet subscribers (actually AT&T-Yahoo Internet) are dependent on Yahoo support for email and any other content issues, including log-in.  When you click on https://att.net you are redirected to https://currently.att.yahoo.com/.  Since the 2017 Verizon acquisition of Yahoo, there is no tech support from AT&T on any email or content issues you might have with your AT&T-Yahoo internet account.  AT&T will only troubleshoot wireline connectivity issues- NOT email or internet content problems its subscribers might experience.

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By selling now, Verizon could raise needed cash at a time when valuations of similar assets are enjoying an upswing. The company this year committed about $53 billion to secure spectrum licenses that will support its ultrafast fifth-generation wireless network.

Indeed, Verizon was by far the biggest spender in January’s record-breaking FCC C-Band spectrum auction. The carrier bid nearly $45.5B, well ahead of still-heavy spending AT&T which paid $23.4B for that spectrum.  Of course, there are huge additional build-out costs to actually deploy 5G over C-Band spectrum!

Verizon executives recently told investors that capital spending (CAPEX) this year on network equipment, fiber optic cables and the like could reach up to $21.5 billion.

Verizon has focused much of its recent attention lately on partnerships with streaming-video services like Disney+ and Hulu that can be bundled with its wireless and home-Internet plans.

Analyst Craig Moffett recently wrote in a note to clients:

“Verizon has, until now, taken a “wait-it-out” stance, perhaps out of confidence that AT&T’s (cellular network) promotional stance had to be transitory. Verizon’s short term results have suffered during this wait-it-out period; subscriber results have been weak.

Faced with AT&T’s ongoing  retention marketing promotion, Verizon faces a lose-lose choice: either continue to lose subscribers (and face something still worse, when 5G comes around), or respond and their subscriber growth will recover, but their profitability will decline.  There are no good options.

With longer term concerns about competitive positioning in 5G looming ever closer, we are
downgrading Verizon to Neutral.”

References:

https://www.wsj.com/articles/verizon-explores-sale-of-media-assets-11619642003

https://www.reuters.com/article/verizon-divestiture/verizon-explores-sale-of-media-assets-including-yahoo-and-aol-wsj-idUSL4N2ML5AK

OneWeb receives investment from Eutelsat Communications; LEO satellite constellation for global internet service

OneWeb, the satellite communications network provider [1.], announced today that it has secured $550 million in funding from Eutelsat Communications (one of the world’s leading satellite operators). That brings OneWeb’s total funding to $1.9 billion in fresh equity since it emerged from bankruptcy.

Note 1.  OneWeb is a global communications network powered by a constellation of 650 Low Earth Orbit (LEO) satellites. Headquartered in London, OneWeb is enabling high-speed, low latency connectivity for governments, businesses, and communities everywhere around the world. OneWeb’s satellites, together with a network of global gateway stations and a range of User Terminals, will provide an affordable, fast, high bandwidth, low-latency communications service connected to the IoT future, and a pathway to 5G for everyone, everywhere.

This investment is a vote of confidence in OneWeb and underscores the arrival of Low Earth Orbit (LEO) satellites into mainstream long-term growth planning for major operators.

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OneWeb’s 648 LEO satellite fleet will deliver high-speed, low-latency global connectivity. It’s partnership with Eutelsat, a global geostationary satellite operator, will enhance both companies’ commercial potential, leveraging Eutelsat’s established commercial reach to governments and enterprise customers in addition to its strong institutional relationships, recognized technical expertise and global fleet.

OneWeb’s ability to address multiple applications requiring low latency and ubiquity will also allow both companies to explore GEO/LEO configurations for future service integrations and packages.

OneWeb’s mission is to deliver broadband connectivity worldwide to its customers, to bridge the global digital divide by offering data connectivity, facilitating linkage to the Internet of Things (IoT) future and a pathway to 5G. OneWeb’s LEO satellite system includes a network of global gateway stations and a range of user terminals for different customer markets capable of delivering affordable, fast, high-bandwidth and low-latency communications services.

Yesterday, OneWeb successfully launched another 36 satellites into its constellation bringing the system to 182 satellites. The company has only two more launches left in its ‘Five to 50’ programme that will cement the company’s ability to start connectivity services to the United KingdomAlaskaNorthern EuropeGreenlandIceland, the Artic Seas and Canada, with global service available next year.

After OneWeb completes the full deployment of the constellation, the company anticipates annual revenues of approximately $1 billion in year three or soon thereafter, thanks to its partnership driven, wholesale business plan.

OneWeb Mini-satellite Constellation for Global Internet Service

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Sunil Bharti Mittal, Founder and Chairman of Bharti Enterprises said: “We are delighted to welcome Eutelsat into the OneWeb family.

“As an open multi-national business, we are committed to serving the global needs of governments, businesses and communities across the world. Together we are stronger, benefitting from the entrepreneurial energy of Bharti, the extensive global outreach of the UK Government and the expertise in the satellite industry at Eutelsat. OneWeb, with its innovative and disruptive approach, is poised to take a leading position in LEO broadband connectivity.”

Business Secretary Kwasi Kwarteng said: “Today’s investment is another giant leap forward for OneWeb in realising their ambition to provide global broadband connectivity around the globe.

“Eutelsat brings over forty years of experience in the global satellite industry and this exciting new partnership puts OneWeb on a strong commercial footing, and the UK at the forefront of the latest developments in low Earth orbit technology.

“This comes alongside yesterday’s exciting news that a further 36 satellites were launched into space and demonstrates the momentum behind OneWeb and the promising efforts to provide connectivity to some of the world’s most remote places.”

Neil Masterson, Chief Executive Officer of OneWeb, said: “We are delighted with the investment from Eutelsat, which validates our strategy, technology and commercial approach. We now have 80% of the necessary financing for the Gen 1 fleet, of which nearly 30% is already in space. Eutelsat’s global distribution network advances the market entry opportunities for OneWeb and we look forward to working together to capitalise on the growth opportunity and accelerate the pace of execution.”

Commenting on the agreement, Rodolphe Belmer, Eutelsat’s Chief Executive Officer, said: “We are excited to become a shareholder and partner in OneWeb in the run up to its commercial launch later in the year and to participate in the substantial opportunity represented by the LEO segment within our industry. We are confident in OneWeb’s right-to-win thanks to its earliness to market, priority spectrum rights and evolving, scalable technology. With over 40 years’ expertise in the global satellite industry, we look forward to working alongside the UK Government, Bharti and the other shareholders to open new opportunities and market access to ensure OneWeb maximizes its potential.”

Editor’s Notes:

  • OneWeb, based in the UK, filed for Chapter 11 bankruptcy at the end of March 2020 after failing to secure $2 billion financing from lead shareholder SoftBank.
  • In January, Japan’s SoftBank Group and Hughes Network Systems LLC had invested $400 million in OneWeb.
  • The UK government and Bharti Global invested $500 million each to acquire OneWeb under a bankruptcy resolution process.
  • OneWeb plans to start high-speed internet services in India by mid-2022.
  • In November, Mittal told Mint that OneWeb will boost rural broadband connectivity in India and other developing countries, including those in Africa.
  • For 5G wireless service, satellite network could play an important role as it will reach areas where fiber and radio airwaves cannot penetrate.  However, there are no standards for satellite based 5G networks (IMT 2020 and 3GPP specs are for terrestrial wireless operation).
  • Also, the cost of using a satellite network is the highest among the three mediums, and thus, fiber and terrestrial wireless spectrum will be the preferred modes of transmission of data wherever they will be available, he added.

References:

https://prnmedia.prnewswire.com/news-releases/oneweb-secures-550-million-in-new-funding-eutelsat-to-take-significant-equity-stake-in-the-company-863239352.html

https://www.livemint.com/companies/news/eutelsat-communications-invests-550-million-in-oneweb-11619542837285.html