Analyst Blogs

Of Oculus, Crowdfunding, and New Rules of Innovation

March 26, 2014, 10:53 a.m.
Aapo Markkanen, Principal Analyst

Facebook’s acquisition of Oculus VR is big news on many fronts. My fellow analysts are deconstructing it as we speak, whereas in this post I want to share a few words on what the purchase tells us about the future of innovation. Its symbolic significance is quite striking, and I’m not only talking about how symbolically it will bring together two innovator generations from different decades under one roof in a new decade. For someone who experienced entertainment being reshaped by the 1990s PC games and social life being redefined by the 2000s social networks, the fact that John Carmack and Mark Zuckerberg will be now working together is significant by its own merit. But it’s not as significant as that other thing I’m referring to.

That other thing is crowdfunding, and I can’t stress enough how big a deal it is in this context. Oculus is the first billion-dollar company to take off from a crowdfunding platform (Kickstarter), but you can be dead sure that it won’t be the last. The way crowdfunding is democratizing access to finance will send some very fundamental shockwaves across the entire technology market, and that is particularly the case with anything that relies on hardware. Oculus Rift is a perfect example: its bet on virtual reality is so experimental that it most probably (would have) had a hard time trying to get enough seed funding from VCs to turn its concept into a product, at least on favourable terms. The VC money kicked in once the developer version of Rift was available, but its first crucial productization steps were taken thanks to the Kickstarter backers. It’s easier to impress with a proof of concept than a mere concept.

The thing is that in hardware the leap of faith from the concept to the product tends to be quite much more dramatic than in software. In today’s platform economy a start-up can largely create software out of toil, tears and sweat (let’s not include blood in there), and thus have something reasonably viable and impressive ready when it goes knocking on VC’s doors. That is not the case with hardware, which requires purchasing physical goods before anything concrete can happen. If the product is “connected”, “smart”, etc. then those goods can be prohibitively expensive for people who operate without external funding. That’s where a crowdfunding campaign can really make a difference. Importantly, besides providing access to funding it can also be an invaluable market research exercise, as the start-up will get some kind of sense of how many of the prospective customers might actually be willing to put their money where their mouth is. It’s all about derisking the productization process.

All this will also make crowdfunding a major enabler for IoT, which involves a plethora of invented and reinvented physical products. I’m currently conducting a study about the IoT developer landscape, and that enabling effect is indeed one of my main premises. In addition to Kickstarter and Indiegogo, the two leading crowdfunding platforms, makers and IoT start-ups can nowadays also turn to alternatives that specialize namely in hardware products, such as Crowdrooster and Dragon Innovation. These players curate their campaigns quite closely, and besides the funding platform provide incubating support (e.g. by way of workspace, marketing, design) to the covered entrants. 

What it means to the big picture is that hardware is about to get an extra shot of innovation in its arm. More and more of the new game-changing products will in future come from younger, scrappier and more experimental companies, instead of large corporations that have traditionally been the ones able to stomach the old productization risk. It’s a fascinating change, really, with many implications on the market.

Enterprise Mobility and IoT

March 25, 2014, 1:56 p.m.
Jason McNicol, Senior Analyst

The enterprise mobility market and IoT could see a very fruitful collaboration in the years to come. Enterprise mobility has been popularized with key terms being thrown around like ‘consumerization of IT’, BYOD, MDM leading to BYO’X’ and M’X’M variations. Workspace solutions (i.e., containers, app wrappers, virtualized containers) are the current buzzwords but it still feels like enterprise mobility has only begun to scratch the surface of true capabilities and efficiencies. IoT, the Internet of Things, is at a similar point in progression as it seeks to build upon CES 2014 and MWC 2014 exposure where new technologies are being displayed to connect this new technological world.

The reason why enterprise mobility and IoT has attracted my eye is due to the possibilities that the marrying of the two brings. Enterprise mobility has been focusing on securing content and providing access to secure content via mobile devices.  IoT looks to build upon existing capabilities as communication between connected devices leads to big data analytics and real-world interaction. The trick becomes marrying these two components to facilitate new workflows that employees are creating by mobilizing.

 

Employees creating new workflows with real time information from IoT could be a wealth of efficiencies and capabilities development, but it still needs security. By marrying enterprise mobility with IoT, mobile security becomes a critical piece for future success. These new workflows will prove beneficial as enterprise safeguard against new security threats that emerge with IoT. That is why it is best to consider security enablement now and integrate it into future solutions to permit continued development; having to worry about security later will only slow down enterprise mobility progression.

 

Lensless Image Sensing from Rambus - Putting the Eye in IoT

March 18, 2014, 2:18 p.m.
Aapo Markkanen, Principal Analyst

Going/deciphering through my notes from this year’s Mobile World Congress, I have as of late become growingly keen on lensless cameras. My early sightings of the concept have come mostly from Alcatel-Lucent’s Bell Labs, which publicized some fruits of its research on the topic around mid-2013. At MWC, it was one of the key technologies for Rambus, which in general tends to be one of the show’s best sources for insight on the more forward-looking, pre-emergent tech areas – such as, for example, IoT security, which is something that my colleagues at our Cybersecurity practice have explored recently.

The point about lensless cameras – or lensless image sensing – is that images aren’t captured directly, but created subsequently by computing. In Rambus’s case, a critical link in this is a diffraction grating, which is done by using a spiral-shaped optical pattern. This pattern gives the captured light the shape that is needed to process it into an individual image. The main advantages of the lensless approach are the extremely miniature form factors that it allows, and potentially dramatic decrease in costs. Lenses require a relatively lot of space and are famously expensive to manufacture, so extensive computerization can shake up the market on both fronts.

Something to bear in mind is the fact that lensless sensing isn’t really meant to replace lenses when it comes to actual photographing, as it would seem unlikely that entirely computed images can ever match lensed ones in terms of resolution. However, the concept’s real potential is namely in detection – of physical changes and motion. And that’s where it also touches strongly on the IoT. Tiny, cheaply produced cameras could allow countless types of physical objects to “see” their dynamic environments, as well as to notify and act on changes in them. Security and monitoring are the most obvious use cases that come to mind, but there are also many, many others, ranging from gesture recognition in wearable UIs to contextual awareness in connected vehicles.

Importantly, lenslessly created images have also a far smaller data footprint than the traditionally captured ones, which is an advantage when it comes to both transferring them wirelessly and analyzing them further. This aspect ties up closely with one major theme that we at ABI Research are these days paying much attention to in our Internet of Everything research: distributed intelligence in IoT architectures. This research theme concerns where analytics and automated actions will ultimately take place: in the cloud, in endpoint devices, or in the “foggy” edge (routers, switches) between the two. (This is something that we have covered e.g. in an earlier blog as well as our free MWC whitepaper.) Most likely, it will largely depend on the parameters of each use case (“why, where and when is the data needed”), which in turn will result in rather diverse architectures. Lensless sensing could address pain points in all parts of the IoT continuum, by making both low-power, low-latency endpoint analytics and remote cloud analytics more efficient and advanced. 

Bouygues and SFR – Rule of 3 and 4

March 7, 2014, 5:52 p.m.
Joe Hoffman, Practice Director

The latest rumor in telecom M&A arena has French conglomerate Bouygues in a hot bid for Vivendi’s SFR.   A tie-up like this will result in the largest mobile Telecom in France.  How does this concentration of market power measure up, and what will the regulator say? 

Let’s look at market share before (blue) and after (red) any such acquisition.   The resulting telecom giant represents nearly 50% subscriber market share – enough to alarm the anti-trust regulators. The resulting duopoly with Orange would control nearly 90% of French mobile telecom subscribers - not a good sign. 

Now look at the Herfindahl-Hirschman Index as measure of market power concentration.  Though this is used by the U.S. Department of Justice, it is still reasonable to help understand where to French regulators might rule on any such proposal.  Looking at the subscriber base and the resulting concentration, we see the  HHI increasing from 2950 to a staggering 4004.  This change in market power concentration goes beyond the ill-fated AT&T acquisition of T-Mobile US. 

 

This is yet another example of the economic pressure observed by the Rule of Three and Four that may not gain regulatory approval.  Proponents of an acquisition of SFR by Bouygues should prepare for serious headwinds. 

 

Apple’s CarPlay is born, but what about Google, the OAA and Samsung?

March 4, 2014, 10:25 a.m.
Dominique Bonte, Vice President and Practice Director

Media attention for the launch of Apple’s in-car smartphone integration standard CarPlay on Volvo, Ferrari, and Mercedes vehicles at the Geneva auto show is huge.  Announced as iOS in the Car in 2013, it emerged under the CarPlay name allowing calling, messaging, navigating, and listening to music on iPhones controlled via voice (Siri) or the car’s head unit touch screen. No word on third party automotive applications yet, except for audio apps such as Spotify and iHeartRadio. Nonetheless Apple enjoys huge support from the automotive industry (BMW, Ford, GM, Honda, Hyundai, JLR, Kia, Mitsubishi, Nissan, PSA, Subaru, Suzuki and Toyota next to the ones mentioned above).  

Despite Apple getting in the limelight with CarPlay, more relevant is what the Open Automotive Alliance will do. The OAA was announced at CES 2014 to develop an Android smartphone vehicle integration standard as well as facilitating the adoption of Android as an embedded automotive operating system.

At the same time the CCC’s MirrorLink made a big splash at MWC 2014 with MirrorLink 1.1 Developer Fast Track application certification in place, the first apps such as Glympse, Parkopedia , and Coyote having been made available and Honda, Toyota and VW showing implementations . PSA also announced MirrorLink support on the new 108 and C1. While support from the car industry is overwhelming, handset support is still limited to mainly Android phones from vendors such as Sony and recently HTC.

And what will Samsung do? Adopt whatever the OAA comes up with or – in their typical style – add some differentiating features on top? Samsung also supports MirrorLink on phones such as the Galaxy S3, so that might be another route.

Are we seeing a real in-vehicle smartphone integration war being unleashed? And why do we need that many standards? What the connected car industry needs most is less fragmentation, not more. Having a separate standard for each handset brand is missing the point entirely. Third party developers are looking for a common platform such as MirrorLink spanning the entire connected car industry. For the car OEMs it’s about having little choice other than supporting all possible standards, clearly showing where the power has shifted to. Once more, all eyes are on Google (and the OAA) to unlock the full potential of the connected car and automotive application ecosystem.

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