ABI Research forecasts that network slicing stands to create approximately US$66 billion in value coming from the ever-increasing digital requirements of enterprise verticals, but in order to materialize this opportunity, CSPs and thetelco supply chain will telco supply chain will need to take enterprise requirements more seriously and promote a transparent and vendor-agnostic approach for network slicing platforms.
The commercial potential of network slicing remains significant, but the level of standard maturity for slice creation and life cycle management is incomplete. This assertion will be echoed by many Tier One CSPs who contend that with the existing disjoint industry approach, an End-to-End (E2E) network slice may never become a reality. Network slicing revenue will eventually be on an upward trajectory, but ABI Research does not expect 2020 to be a year of any type of commercial deployment.
A trend that is picking up pace is for Mobile Service Providers (MSPs) to embrace public clouds for growth opportunities outside of the consumer market. The most interesting scenario for this type of collaboration will be for CSPs to partner with public cloud providers to seek operational efficiencies for non-network workloads. For example, AT&T has partnered with Microsoft, in order to bring Azure workloads to AT&T’s edge computing locations. This is the first case when a CSP can offer a webscale something unique. These exclusive partnerships could restrict the partnering potential of CSPs, but ABI Research expects several of these partnerships to be announced during 2020, and even making webscale giants vital for the success of enterprise 5G applications.
The role that public clouds will play in how CSPs position themselves in the future remains to be seen. However, CSPs should consider staking their success on the ability to make commitments today that may not pay off until years into the future. In other words, their strategy should begin with a high tolerance for risk and what they do not know over cloud and associated economic models, rather than what they do know. Successful strategies must be built on a degree of unpredictability, not in spite of it.
With the highly anticipated 3rd Generation Public Partnership (3GPP) Release 16 on the horizon (estimated June 2020), Mobile Network Operators (MNOs) need to make impactful steps toward the massive network automation overhaul that 5G requires. The ideal 5G network should have the capabilities in supporting sizable bandwidth, handling more devices and increased “intelligence.” Having Virtualized Radio Access Network (VRAN) initiatives in 2020 can facilitate an MNO’s evolution of its existing mainframe architectures to webscale networks; thereby increasing the “intelligence” prerequisite that 5G necessitates.
Having VRAN architectures disaggregates the hardware and software components (known as “function split”) of the base stations by transferring the functions of the Baseband Unit (BBU) to virtual machines (or Virtual Baseband Units (vBBUs)). MNOs can, therefore, manage their network resources virtually—based on real-time scenarios and data usage. A virtualized network allows MNOs to depart from single vendor reliance as well. This would enable MNOs to lower Capital Expenditure (CAPEX) (through using commercial, off-the-shelf servers, rather than relying on a lone vendor providing proprietary equipment) and Operational Expenditure (OPEX) (less downtime, less maintenance, and increased energy efficiencies). Having the flexibility with multiple equipment vendors would allow MNOs to capitalize on the innovation velocities of multiple vendors as well.
Rakuten is a notable player that is bullish on the possibilities of VRAN architectures. Along with its greenfield virtual network, Rakuten Mobile (in collaboration with Altiostar) is also one of the largest VRAN vendors in the world.
The emphasis shift from hardware to software also requires a more mature, developed Open RAN (ORAN) ecosystem that ensures cloud-scale economics (universal hardware compatibility; modular software designs for scalability) to the Radio Access Network (RAN). The O-Ran Alliance (with members that include AT&T, Deutsche Telekom, Intel, Verizon, and SK Telecom) was created to 1) address software interface standardization needs of vendor-independent network solutions, and 2) establish coherent supply chain and procurement models across the industry.
The new ORAN architecture, which is software-defined, unbundled, programmable, and flexible, can meet the requirements for Enhanced Mobile Broadband (eMBB) and ultra-low latency. It supports 5G network slicing, enabling the creation of multiple virtual networks from a single shared infrastructure to support specific use cases for dynamic and large-scale networks, such as a highly scalable wireless surveillance system based on the edge network
If Rakuten is successful in making the vRAN model work, it would embolden CSPs to double down on their own Network Functions Virtualization (NFV)/Software-Defined Networking (SDN) initiatives, especially as it relates to vRAN. RAN is one of the costliest domains in the construction of a network, and it is a key area that CSPs will be keen to virtualize to reap cost savings.
Cloud-native technologies (i.e., containers and microservices) are steadily encroaching on the telco ecosystem and promote scalability, resilience across hybrid (virtual and physical) architectures, and ultra-rapid deployment and innovation cycles. This is now becoming a critical priority for Communication System Providers (CSPs) who wish to compete against webscales for Business-to-Business (B2B) and enterprise 5G.
At present, there is no “one-size-fits-all” approach for cloud-native tools. However, ABI Research expects to see some common denominators appearing in 2020 across all market activities; specifically, the need to industrialize existing domain-specific and narrow deployments, scale across multiple geographies, and bring to market easy to consume products. These are not trivial and remain some of the biggest hurdles for the industry to pursue new growth with more manageable and automated networks. ABI Research expects the industry at large to join forces in 2020 to establish standards for cloud-native tools and methodologies in a bid to render them ready for telco networks. But caution must be taken that such standards do not retard speed and efficiency by trying to adapt these cloud-native solutions into a rigid telco framework that most vendors and CSPs are accustomed to, but to start with a fresh approach.
Always-on connected Personal Computers (PCs) have been a big challenge for the industry so far. Thanks to the emergence of 5G, 2020 will see the portable computing and mobile value chains converging to bring always-on broadband experiences on the move to new device types beyond smartphones. Dozens of always-on 5G device models, notebooks, and ultrabooks will hit the market by 2020 and sales of these devices will exceed 10 million by 2021. This market will be heavily contested between traditional notebook Original Equipment Manufacturers (OEMs) like Dell, HP, and Lenovo, and mobile phone OEMs like Apple, Samsung, Huawei, and LG. Time to market, an optimized balance between performance and device battery life through highly integrated designs centered around 5G connectivity, and the ability to distribute these devices across both consumer and enterprise channels will be the key factors for large-scale deployments of these devices. Smartphone sales are dead! Long live 5G smartphones sales!
To paraphrase Mark Twain, the reports of the smartphone’s death have been greatly exaggerated if the market into 2020 is anything to go by. Despite an initial lukewarm reception to the availability, pricing, and use cases for 5G smartphones, the market is set to expand exponentially in 2020. It will be led by a hatful of new models set to arrive from all major vendors (including those from 5G laggard Apple), many of which will also be driven down the price tiers. Indeed, in comparison with the growth of 4G at launch, 5G will smash its predecessor on nearly every metric. Excluding the obvious gains in an increase in data throughput and improved latency, 5G wins hands-down on the number of mobile devices, subscribers, and networks available at launch.
The charge to 5G is currently being led by the key markets of the United States and South Korea, but it will be the introduction of China’s market in 2020 that will predominate, boosting demand further for smartphones. Japan and parts of Western Europe will not be far behind, making significant gains throughout the year.
While 5G network coverage and device affordability are earmarked as the key drivers that will accelerate smartphone migration in 2020, the technology is also set to influence user behavior. When coupled with expected innovation and new device form factors that 5G will surely bring, the market will be stimulated further from its current slumber. Indeed, according to ABI Research, with little over 12 million 5G smartphone sales expected by the end of 2019, the market is set to grow globally by more than 1,200% to reach more than 170 million units worldwide in 2020, and that is no exaggeration.
With 5G rollouts well underway, mobile device manufacturers are stepping up their efforts to provide consumers with the devices to support the new communications technology, which offers increased data throughput, enhanced signal reliability, and better coverage. As consumers increasingly aim to have the latest features and technologies in their smartphones, devices with access to 5G will become increasingly popular, dominating the market, which also currently consists of mobile broadband devices, and will also include of tablets, notebooks, and smartwatches. 5G will help shape the smartphone market in 2020, with most, if not all, smartphone manufacturers expected to release more and more devices across varying price tiers.
These new devices will also be supported by new 5G components, with suppliers expected to continue their efforts to provide this technology. A number of suppliers have developed multiple different 5G chipsets, modems, and platforms for smartphones. The components that these suppliers are expected to be working on will all be supported by smaller and cheaper devices, helping to increase the 5G smartphone market through 2020.
While wearables benefit from cellular connectivity, giving them greater freedom from being tethered to smartphones and allowing wearers to use them when on the go, 5G wearables are not expected to be seen in 2020. Component manufacturers have yet to announce any 5G chipsets for wearables, and are not expected to do so in 2020, as the market potential is small, with few device shipments compared to other mobile devices. The requirement for the technology is low, as 4G is capable enough to support them, and there is the added complexity of fitting the required 5G components in a small form factor.
5G connections will hit a record number of subscribers in 2020, just 2 years after the first launch of 5G commercial services. MSPs have every hope that 5G will help them reduce the cost per Gigabyte (GB) of bandwidth and improve the Average Revenue per User (ARPU) compared to existing access technologies. However, the lack of business model innovation means MSPs will continue to differentiate their data plans on higher bandwidth offerings and staged consumers’ upgrades toward unlimited data consumption. This strategy could probably prove efficient to prevent the ongoing decline of the mobile ARPU in the short term, but is unlikely to provide any significant boost to it in the longer term. Flat to declining ARPUs, despite upgrading subscribers to 5G, will lead the mobile industry to be more pragmatic about 5G opportunities in the consumer market. In 2020, there will be a common realization that eMBB use cases will not justify 5G Return on Investments (ROIs) on their own. At that point, the industry will turn itself to investigating new commercial opportunities provided by the enterprise market as the ultimate cash cow for securing 5G ROI.
As things stand now, the majority of 5G networks, from the core to the radio elements, are not futureproof. They are based on proprietary hardware boxes specifically designed to support eMBB commercial services. These networks are far from being optimized for the enterprise applications. Any upgrade of existing 5G networks to address new industry verticals will translate into equipment stacking and higher CAPEX and OPEX. In 2020, MSPs will start to require agile, flexible, and configurable equipment so they can easily and timely address the enterprise market. This will translate into the use of open and programmable compute resources in both the core and the radio networks, instead of using proprietary Central Processing Units (CPUs) and Application-Specific Integrated Circuits (ASICs). This trend will be highly beneficial to companies like Intel, NVIDIA, Xilinx, and Qualcomm, to certain extent. For example, Early 5G base stations powered by open processing architectures supplied by these players will start to hit the marketplace by 2020, with large-scale deployments expected for 2021.
The standardization of URLLC (guaranteeing a latency of below 10 Milliseconds (ms), with a reliability of 99.999%) enables connecting particularly mission-critical applications, such as Autonomously Guided Vehicles (AGVs), collaborative robots, or fitting every single production machine with mobile control panels, while introducing mMTC capabilities (allowing the connection of up to 1 million devices per square kilometer), and enables setting up particularly dense massive wireless sensor networks, which are of key importance when it comes to factory and process automation and a key part in the context of the fourth industrial revolution (Industry 4.0). Furthermore, the enhanced positioning accuracies will enable factory owners to create completely flexible production plants.
While deployment of 5G connectivity for the consumer market started in 2019, 2020 will be important in determining the performance of 5G when it comes to enterprise verticals. With current 5G deployments resting on eMBB capabilities, the most important release for enterprise verticals, such as industrial manufacturing and automotive & smart transportation will be Release 16, which will be frozen in the first half of 2020, defining key aspects like Time Sensitive Networking (TSN) and reliable networking capabilities and enhanced positioning capabilities (with accuracies below 10 meters).
In addition to the technical features 5G Release 16 will offer, more and more countries are developing flexible spectrum models that will allow enterprise customers to set up and operate their own private 5G network. Most importantly in this context, the Citizen Broadband Radio Service (CBRS), which has been opened for enterprise use in September 2019 will be given to even more businesses, while Germany will start to award local 5G spectrum to enterprises at a particularly affordable rate. With 5G becoming more relevant to enterprise verticals (with the freeze of Release 16), a number of private 5G network deployments will kick off during 2020 and will further increase in the coming year and beyond.
All of that, however, rests upon the timely freeze of Release 16, with large players like Bosch, Mercedes, or Siemens eagerly waiting to bring 5G to the factory floor. Patience is not endless, so they all have their contingency plans in place, should there be any major delays.
5G is off to a bold start. South Korea reported 3.5 million 5G subscriptions as of the end of October 2019, but the reality is that China is likely to become the 5G apex market to track and monitor. As of early November, the total number of 5G subscriptions in China stood at 7 million. By the end of the year, 5G subscriptions should eclipse 10 million. By the end of 2020, total 5G subscriptions are likely to surpass 115 million.
That growth is being stimulated by robust 5G competition. China Mobile has announced that it is confident that more than 10 brands will release more than 100 5G smartphone models over the coming months. Interestingly, China Mobile expects to see 5G embedded not just into smartphones, but also into industry modules (estimated at 15 million), as well as “household intelligent hubs” (estimated at 50 million). Given the concentration of market demand and 5G-related communications equipment product production in China, we are likely to see an accelerating proportion of original intellection property and novel business ideas originating in the Chinese market. Having a 500 million to 600 million 5G subscriber market (by 2025) will give Chinese brands significant market leverage. The creative destruction processes generated by the 5G innovation cycle would probably amaze Joseph Schumpeter.
Widespread commercial 5G deployments first occurred in 2019, while several networks, smartphones, and Fixed Wireless Terminals (FWTs) were launched. These initial deployments have been vital to identifying the role of 5G in the consumer space and it seems that early adopters are really taking advantage of higher speeds to use new applications, including cloud gaming and Augmented Reality (AR)/Virtual Reality (VR). However, these demanding applications, coupled with the current sparse deployment of 5G (compared to the more densely deployed and mature 4G networks), have already caused these networks to congest. Mobile operators in these markets will need to densify their networks at a very high cost, without clear new revenue opportunities, because 5G is typically sold at the same price as 4G. In the most advanced 5G market, South Korea, 5G has managed to stop the declining ARPU trend, but it is now clear that it cannot generate new consumer revenue.
Therefore, ABI Research expects technologies that offer a compromise will be the most valuable asset for 5G operators in 2020. The most prominent of these will be Dynamic Spectrum Sharing (DSS), which allows 4G and 5G to run on the same frequency band, thus limiting the need for new cell sites and lowering costs considerably.
5G edge and private networks’ proofs of concept will be introduced in 2020, but commercial implementations are unlikely to gain mainstream before 2023 at the earliest. Private networks based on mission-critical communications are already deployed in a number of industries, including manufacturing, logistics and supply chain, defense, oil & gas, rail services, public safety, with Integrated Digital Enhanced Network (iDEN), TETRA, P25, and Wi-Fi the main connectivity technologies used. In this sense, 5G will be introduced as a challenger to existing private and edge networks with openness, better performance, stability, security, and implementation simplicity the key differentiators. However, this market will be heavily contested between the legacy enterprise equipment suppliers, such as Siemens, Bosh, ABB, and HPE, AECOM and telco players, including Ericsson, Huawei, Nokia, and ZTE. While telco players are gearing up to introduce their equipment for this market, the traditional enterprise infra suppliers are considering investing in the 5G spectrum and will continue to forge partnerships with MSPs and 5G technology innovators throughout 2020 in order to add 5G to their collection of enterprise technologies.
However, it is not clear yet what role MSPs and their traditional technology suppliers will play in the 5G private networks space and what business models they will consider for servicing this market.
The explosion in Initial Commercial Deployments (ICDs) in the United States, using CBRS spectrum, indicates a massive potential in enterprise networking for private cellular networks. There are now private LTE deployments in shopping malls, parking lots, airports, and solar farms, all of which are deployed by vendors and third parties, with no actual deployments by U.S. carriers. ABI Research expects these types of deployments to explode during 2020, making private cellular a major alternative for venue owners, enterprises, factories, and ports.
This will create a new value chain, not necessarily driven by the usual Tier One heavyweights (Ericsson, Huawei, and Nokia). These companies will naturally be present in this new value chain, but they will likely prefer to address the high end of this market segment, rather than Small and Medium-Sized Enterprises (SMEs) or smaller contracts. Nevertheless, the new private cellular supply chain will create new types of innovation and opportunities for many new companies.
Rakuten initiated a storm in the telco domain and in 5G discussions when it claimed that its 4G network, which will consist of ORAN, can save up to 50% compared to traditional mobile networks. However, these cost savings are very specific to Rakuten and the Japanese market, where fiber connectivity and existing sites are not a challenge, and thus, a cost driver. In almost all other markets, an ORAN strategy does not, in fact, drive cost savings that aggressively and, in some cases, could cost even more than a traditional RAN. This is exactly what mobile operators will conclude in 2020.
Vodafone has launched a huge tender for many of its European 5G radio networks, which will include ORAN, but it remains to be seen whether ORAN will be chosen when Ericsson, Huawei, and Nokia may provide more competitive equipment in both technology and cost. ORAN will surely become a vital component of 5G networks, but will certainly not be the main actor or command cost savings in the order of 50%.
Existing Artificial Intelligence (AI) applications and networks are currently serviced by different processing architectures, either that be Field Programmable Gate Array (FPGA), Graphical Processing Units (GPUs), CPUs, Digital Signal Processors (DSPs), or hardware accelerators, each used to its strength depending on the use case addressed. However, the next generation and AI and Machine Learning (ML) frameworks will be multimodal by their nature and may require heterogeneous computing resources for their operations. The leading players, including Intel, NVIDIA, Xilinx, and Qualcomm will introduce new chipset types topped by hardware accelerators to address the new use cases. Vendors of these chips will move away from offering proprietary software stacks and will start to adopt open Software Development Kits (SDKs) and Application Programming Interface (API) approaches to their tools in order to simplify the technology complexity for their developers and help them focus on building efficient algorithms for the new AI and ML applications.
The year 2019 saw the launch of new custom AI chipsets by both major vendors and new startups alike. From Cerebras Systems’ world’s largest chipset to Alibaba’s custom cloud AI inference chipset, the AI chipset industry has been hugely impacted by the desire to reduce energy consumption, achieve higher performance, and, in the case of China, minimize the influence of Western suppliers in their supply chain. The year 2020 will be another exciting year for AI chipsets. Several stealth startups are likely to launch programmable chipsets for data centers, while the emergence of new AI applications in edge devices will give rise to more Application Specific Integrated Circuits (ASICs) dedicated for edge AI inference workloads.
Despite claims from Google in achieving quantum supremacy, the tech industry is still far away from the democratization of quantum computing technology. Existing vendors, such as IBM and D-Wave, will continue to enhance its existing quantum computing systems, but the developer community remains small and the benefits brought by these systems will still be limited to selected industries, such as military, national laboratories, and aerospace agencies. Like other nascent processing technologies, such as photonic and neuromorphic chipset, quantum computing systems in their current form still require very stringent operating environment, a lot of maintenance, and custom adjustment, and are definitely not ready for large-scale commercial deployments.
The AR market has been a mixed bag in terms of launches, improvements, and adoption. The year 2020 will bring more of the same, at a larger scale. Prominent enterprise players like RealWear, Vuzix, and Microsoft will continue to lead the pack. Some new consumer players will enter the market, with Apple being the most impactful question mark, but no matter what, the consumer space will not see significant adoption in 2020; far more maturation in both hardware and software is required.
At the same time, consumer AR applications will significantly grow in 2020, mostly on mobile, but tapping into small consumer glasses adoption where possible. More businesses in retail, media and entertainment, tourism, and hospitality will experiment with AR either for marketing purposes or actual usage (like virtual try on, in store navigation, and customer service). The number of active AR users will continue to grow as a result on both the enterprise and consumer side, and more users will be curious about using AR apps.
AR cloud and 5G are already set to be 2020 buzzwords in AR, again with enterprise driving adoption and use cases, but with consumers looking to tap into that growth later on when appropriate. Growth in machine vision, AI/ML, Three-Dimensional (3D) spatial mapping, and cloud-enabled AR platforms and applications will all drive capability further, but questions around security, Intellectual Property (IP) protection, user experience, and, ultimately, value still need to be answered. With a realistic outlook on 5G, significant adoption will not occur in 2020, but instead will start in 2021 or later as network infrastructure rolls out; use cases also need to expand beyond current needs to really push networks past 4G or Wi-Fi capabilities; other than some very specific applications that require ultra-low network-side latency (real-time VR edge streaming), ultra-high bandwidth (8K+), or high concurrent user support (stadium experiences); the true necessity of 5G for the majority of users is not there yet.
The enterprise side of the VR market remains healthy and will continue to grow. It is the consumer side, however, that has hit the most roadblocks, and 2020 will, at a minimum, make the fork in the road a bit clearer (if not determine which route the consumer market drives down). Google’s decision to end Daydream and open source Cardboard effectively put mobile VR into a dormant state; while some activity will continue in the commercial space, the consumer mobile VR market is dead in the water. This places the emphasis on selling dedicated VR hardware to consumers, which puts further pressures on the industry to pull in new users; it is much easier when the Head-Mounted Device (HMD) costs US$100 or less and works with a device that consumers already have in their pockets.
There has been some positive news, such as strong demand for Oculus Quest and VR exclusives generating as much industry buzz as any general release AAA title. While one title alone will not dramatically shift the market’s trajectory, it will create some much-needed exposure. As it currently stands, ABI Research expects better visibility into the future, but announcements to date do not suggest a dramatically improved situation for consumer VR in 2020, especially if Sony does not announce and release an update to PSVR with the upcoming PS5 console.
Enterprise and commercial segments, however, will continue to gain momentum, particularly in the healthcare, Architecture, Engineering, and Construction (AEC), and education markets, and training across all verticals will remain a key driver for this immersive technology. Location-based VR is expected to remain healthy as well. More emphasis on mixed-reality solutions and applications should come to light in 2020 as well; companies like Varjo will continue to demonstrate how VR devices can serve a mixed reality role. Advancements on the hardware front are also coming to the commercial and enterprise markets first, which are enabling improved user experiences. High costs prevent these features and technologies from hitting the consumer market, but it does foreshadow things to come in future years, which again suggests VR’s consumer future is brighter further out than 2020.
QR codes are prevalent in the Chinese ticketing arena and have become very widely used for transport applications. In July 2017, the WeChat program “Ride Code” was launched, allowing subway and bus riders to pay for transit fares with QR codes directly upon boarding in various Chinese cities.
Ride Code is now being seen as the first step toward establishing a smart transportation ecosystem. Currently, while QR codes are mainly located in the Asia-Pacific region, if it finds traction in other regions, there may be an impact on the traditional closed-loop ticketing market. Typically, it was believed that QR codes would not provide adequate read speed for mass transit applications; however, developments in readers have opened this form factor to the market and found considerable traction. As a result, the traditional closed-loop ticketing market will face severe opposition to find grounding in the region, especially if other countries adopt the QR code. Indeed, this is already happening as, earlier this year, Taiwan implemented a mobile ticketing solution that enables travelers to use payment cards to purchase tickets via an app and to use a QR code on their mobile devices. India may also consider using QR codes as part of its transportation network within the next few years, placing pressure on traditional smart card vendors to offer a compelling alternative to the QR code or risk losing out on possible new revenue streams.
The Information Technology (IT) versus Operational Technology (OT) clash refers to the challenges originating from the technological misalignment of implementing corporate-focused, digital cybersecurity practices from IT toward industrial-focused OT. This will be one of the key cybersecurity issues in the 2020 era, transcending multiple verticals, including industrial and manufacturing, critical infrastructure, energy, water, and utilities, all the way to centrifuges used in nuclear power facilities. The advent of Internet Protocol (IP) has enabled extensive connectivity to external sources, supervisory systems like Supervisory Control and Data Acquisition (SCADA), Industrial Control Systems (ICS) device monitoring like Remote Terminal Units (RTUs) and Programmable Logic Controllers (PLCs) or asset management platforms, forcing a digital industrial transformation. This evolution, however, also coincided with a sharp increase in malicious IP-borne threats to ICS, a traditionally closed-loop environment with inherently insecure systems based on legacy communication and network protocols like MODBUS and DNP3. As a result, cybersecurity and industrial vendors have been slowly trying to introduce a new array of IT cybersecurity technologies to ICS. However, migrating digital security practices from IT to OT simply does not work and, as a result, this will force industrial players to re-evaluate their list of priorities and develop custom-tailored ICS solutions.
Further, implementers will need to be vigilant, familiarize themselves with new technological concepts, and adapt their systems to meet the increasing cybersecurity demands in an increasingly dangerous industrial market landscape. These include concepts like next-generation smart gateways with dynamically filtering options and edge-to-cloud integration, pervasive yet non-intrusive network monitoring, cryptographic protocols, and proper encryption of key life cycle management, extensive disaster recovery protocols, moving past standard malware detection, and embracing new ML technologies with data traffic, Deep Learning (DL), anomaly detection, and deep packet inspection, and passive and active ICS node surveillance under acceptable thresholds of operational latency, among many other technologies. Companies like Dragos, Forescout, Honeywell, Schneider Electric, Siemens, Sentryo, Sierra Wireless, and Xage Security are some of the leading innovators providing solutions for some of the most perplexing challenges facing ICS cybersecurity.
Separating the apparent value of a particular technology from its veiled dangers is certainly not an easy task, but how about when the dangers are actually as obvious as its merits? Face recognition fits this obscure profile of a technology where every positive attribute it manages to score in utility and security across multiple use case scenarios also comes with a hefty toll in privacy and, in most cases, controversy over civil liberties. A few past noteworthy trends on that note include the modernization and aggressive mobilization of all law enforcement branches to invest heavily toward indiscriminate usage of face recognition in Asia-Pacific (and particularly, China), the outright ban of face recognition in California and introduction of biometric-specific legislation in multiple U.S. states, the privacy concerns that forced law enforcement to disclose covert surveillance over public events in the United Kingdom, and the introduction of strict biometric surveillance regulations in the European Union (E.U.) at the same time that counter-terrorism and stricter border control are among the top priorities.
These regional trends will shape this biometric landscape moving forward and are not limited to simply governmental and political influences, but also reflect enterprise ventures as well. On the one hand, there are Asia-Pacific AI unicorns like Megvii, which fervently pushes face recognition surveillance in China, and on the other hand, established companies like Microsoft that delete their own biometric databases on the grounds of “broad societal ramifications and potential for abuse” for the technology. This multi-faceted cluster of mixed reactions across the globe is not expected to subside in the post-2020 era. Instead, this love-hate relationship will escalate, pushing the boundaries of law enforcement surveillance, civil liberties, public safety, and security protocols. The once inaccurate biometric modality is currently greatly benefiting from the exponential increase in ML and AI technologies boosting its versatility across the board. While the roadmap ahead is quite turbulent, face recognition and, particularly, biometric surveillance will proliferate, attempting to balance both privacy and data protection amid a regulatory maelstrom and public safety concerns.
Despite the continued increase in the use of mobile payment platforms, the payment card will remain as relevant as ever in 2020.
The use of popular mobile payment platforms, including Apple, Samsung, and Google Pay, as well as popular QR code platforms, most notably WeChat and Alipay, continues to increase and the vendors behind the platforms are looking to aggressively expand these platforms across new countries, as well as looking to access new markets, such as ticketing, in a bid to create further brand loyalty, customer stickiness, and, ultimately, retention.
Despite this, the payment card market continues to grow, as banks and financial institutions place further emphasis on the payment card, using it as a physical form factor in order to differentiate through innovative card portfolios and related services, including contactless, metal, sustainable card bodies, biometric, Dynamic Card Verification Value (DCVV), and instant issuance.
In 2020, mobile payment platforms will continue to be viewed as a companion to the traditional payment card, as banks and financial institutions place personalization and tailoring at the heart of their respective payment card strategies.
The Subscriber Identity Module (SIM) card market remains one of challenge and 2020 will prove no different. Over the last few years, declines in removable SIM card issuance has be driven by a set of regional factors, including a relaxation of roaming charges in China, which previously drove multiple SIM card ownership per citizen, continued Identification (ID) registration in Indonesia and India, which was impacted by a combination of MNO consolidation and an end to significant promotional 4G activities.
These challenges will continue, but the rise in smartphone costs will add another negative dimension to the SIM cards market in 2020. With flagship smartphone devices typically retailing in excess of US$1,000, MNOs are already reacting, extending contract lengths from 18 to 24 months toward 36 to 48 months, as well as consumers, who will look to spread the cost of higher-value handsets over a longer time span. Both will have a direct impact on SIM replacement rates, subsequently resulting in a significant decline in SIM card demand.
Embedded SIM (eSIM) handsets remain in a relatively nascent phase. Apple and Google are currently supporting and Samsung is expected to launch its first eSIM handset in 2020. However, the continued focus on hybrid devices, consisting of a traditional removeable SIM slot, alongside eSIM and a notable lack of MNO eSIM readiness, means that the eSIM will not impact the traditional SIM cards market in 2020. The short-term 2020 threat is presented by increasing handset prices, directly impacting SIM replacement rates, with eSIM forming a second wave of market disruption.
The zero-trust security model has been much talked about in the past decade, and has had enough time to mature, not just as a concept, but as a commercial offering. Many cybersecurity vendors are pivoting their platforms to focus on zero-trust, abandoning the “trust but verify” model. Tech and telcos are also embracing the trend, with both Microsoft and Verizon building on it. And while the principles are obvious in an increasingly de-perimitized world, actual implementation is still a costly and complex affair for many (and, in particular, for Small and Medium-Sized Businesses (SMBs)).
The prerequisites are onerous and include: having the APIs to effectively be able to integrate all third-party products into the security architecture (difficult with an expanding Internet of Things (IoT) ecosystem and hybrid cloud services); being able to see, discover, and then manage all devices, people, applications, and services connecting to a (and often many) network(s); and then effectively expanding Identity and Access Management (IAM) to all of these assets in order to implement appropriate policies, with least privileged access the default baseline (meaning that without configuration, no one has access to anything). Once implemented, it requires continuous micro-management, which can be a challenge in an environment where development and sales strategies are hurtling toward go-to-market in days, rather than weeks. And this is without taking into account ephemeral development cycles, with on-demand spin-ups (leveraging containers) that can close hours later. For zero-trust to work effectively, security automation and analytics will need to play a big part to comprehensively cover enterprise networks that are both growing and in continuous flux. As such, zero-trust probably needs another few years before the technology becomes both more affordable and simpler to use for mass market adoption.
Despite the increase of mobile identities, the physical ID credentials market continues to grow. In 2018, the 600 million issuance barrier was surpassed, driven by strong distribution in the national ID and passport sectors, and issuance is forecast to exceed the 700 million barrier as early as 2021.
Physical and mobile form factors have very different use cases, features, and functionalities. Physical credentials are always available and require no connection to operate, while maintaining an historically-proven root of trust in the population. The trained eye can conduct checks with physical security measures built in to the body of the document and, with biometrics, an additional layer of authentication can reinforce this. Mobile credentials have their own User Services Platforms (USPs). Near universal network coverage permits an almost global communication between citizens and governments, and typically high smartphone penetration in most countries provides a smorgasbord of feature-rich devices on which to capitalize. Integrated biometrics authentication capabilities provide additional security to access identities stored within isolated hardware solutions, such as Secure Elements (SEs) and interfaces with varying connectivity solutions, such as Bluetooth, Near Field Communication (NFC), and Wi-Fi. In 2020, the continued increase of mobile identity issuance will not be the beginning of the end of the physical document, with the overarching trend in binding identities to a physical document and then digitizing that document to a mobile counterpart in order to extend functionality with governments looking to expand reach and communication lines with citizens, rather than using technology to dematerialize an already proven and trusted form factor.
ABI Research forecasts total e-commerce revenue of US$3.52 trillion in 2020, growing Year-over-Year (YoY) at nearly 19%. This growth depends on ever faster and more convenient modes to reach the final mile and yard in suburban and urban markets, as well as share in rural areas. This includes the increase of one-day delivery and seven-days-a-week delivery in 2020 to reduce “click-to-door” time and combat the Amazon effect. There is increasing convergence of online and in-store businesses, with brick and mortar positioned as hubs closer to the customer, as well as e-commerce sites directing package delivery to retail outlets. Additive investment will grow in Buy Online Pay in Store (BOPIS) options.
China giants Alibaba and JD.com now have greater focus on growth through lower-tier cities, chasing fast growing, third-place Pinduoduo’ s rural playbook to reach the next 600 million people. Singles Day in China for 2020 will surpass not only all of the U.S. retail holidays (Thanksgiving, Black Friday, and Cyber Monday), but 2019’s record-setting US$38.4 billion for Alibaba alone, at a 26% increase YoY.
Retailers need to address their increasing costs and consumer expectations through new business models and optimized transportation and logistics methods. Amazon already felt the financial pressure in 2019, with North American margin compression, as it grew investments in its next-day Prime delivery, expected to impact Walmart as well. Other retailers have been pushed into offering expanded shipping options and reverse logistics in order to compete.
Despite numerous headlines declaring the arrival of driverless, self-driving, or robot vehicles, very little if any commercial usage is underway beyond closed-course operations in the United States. Alphabet’s Waymo has been in testing mode since 2016. Its latest vehicles are still manually operated by trained drivers. Heavy-duty leader Daimler Trucks’ (DTNA) 2020 Cascadia with Detroit Connect 5.0 will offer Society of Automotive Engineers (SAE) Level 2 partial automation features, initially with automated braking, steering, and forward lateral control. DTNA just delivered two eCascadias for customer testing. In partnership with Gatik AI, Walmart has been testing “self-driving” Ford Transit vans that are planned for middle-mile deliveries. The vans will also be operated by drivers in the pilot.
Despite the successful primarily manned testing and early revenue operations, there are no known regulatory approvals or fully autonomous methods to address the first and last mile for heavy-duty big rigs through challenging urban and suburban locations. Additional cultural acceptance is another factor. Successful revenue-generating routes will remain highway-only for the foreseeable future, with ABI Research not forecasting a material level of SAE Level 4 shipments prior to 2023 in North America.The journey from SAE Level 2, early commercial OEM deployment this year to ubiquitous highly automated Level 4 and fully automated Level 5 is still years away, which does not grab attention or Internet clicks. Many other opportunities, including closed courses (e.g., airports, ports, mines, oil and gas operations, universities, corporate campuses), are early movers, with opportunity growing for altering the role of “drivers” in vehicles equipped with significant AI.
The established industrial robotic vendors have posted dismal financial results throughout 2019. FANUC, in particular, has lost out, with its revenue from March to September in 2019 26.4% lower than for the same period in 2018. Similar troubles have been faced by the ABB, Kuka, and Yaskawa, in what is, no doubt, the result of an abrupt slowdown in demand from China, the world’s most important robotic market. This decline in fortunes is heavily linked to wider challengers in the global manufacturing environment and, in particular, challenges for automotive manufacturers, which have historically been the chief customers of robotic arm vendors. While there will be some cyclical rebound in 2020, competition from up-and-coming Chinese robotic vendors will further limit the growth projections of the larger robot OEMs.
But the macroeconomic environment is not the only reason for legacy industrial robotic vendors to watch out. Despite developing alternative robotic systems like mobile robots and Collaborative Robots (cobots), these vendors have not achieved success outside the purview of traditional articulated arms, Selective Compliance Assembly Robot Arm (SCARA), parallel, and linear robots. They have largely missed the chance to gain leadership in nascent robotic fields and are, thus, going to be playing a less central role for the industry from now on, and smaller industrial vendors and third-party technology providers could even be consolidated as this mature market begins to run out of growth opportunity.
The cobot opportunity, led by U.S. manufacturer Teradyne and its acquisition of Universal Robots, is important for developing a more flexible form of automation, but is far eclipsed by the potential for mobile robotics. E-commerce giants like Amazon have led the charge with hundreds of thousands of guided vehicles deployed across the supply chain. In 2020, flexible robotic mobility will scale up and move further out of the warehouse. There will be more than 10,000 robots deployed to clean retail stores, malls, and real estate. The number of ground robots deployed for delivery across controlled environments like campuses will increase to the thousands, and improvements in navigation will see mobile robots deployed in some capacity across most sectors of the global economy.
At the end of 2018, Airbus had a commercial aircraft backlog of 7,577 aircraft, while Boeing’s was 5,873. This means that if neither company got a single new order, their assembly lines would continue to run for at least 7 to 10 years. Obviously, this is not the case; there is increasing demand for travel, increasing demand for greater personalization and customization, and a greater awareness of best practices around consumption, distribution, and use. The aviation industry presents a compelling case for the kinds of systemic inefficiencies technology seeks to address, but it is far from the only one. ABI Research sees similar challenges everywhere from automotive (high volume, high value, high-complexity manufacturing) to electronics (high mix, high variability), durable goods, heavy equipment/machinery, and even healthcare. It is in these areas where the virtualization of business processes makes a big difference. In automotive, for example, Vietnamese car company VinFast created and delivered two new production vehicles and a scooter from scratch in less than 21 months (the land where the manufacturing facility now stands was not even developed). VinFast achieved this by doing everything digitally: plant layout and design, vehicle simulation and testing, and virtual commissioning. In dental, Align, the company that makes the Invisalign retainer (and is the largest 3D printing user based on photopolymer consumption), employs a 100% digital workflow to produce more than 500,000 unique products per day and 65 inventory turns per year (versus the 12 to 15 turns/year industry average).
More than 80% of bearings in the world do not reach their designed life, and 50% of all bearing failure happen because of poor lubrication. Companies like SKF want to sell rotations and motion, rather than actual bearings. To do this, SKF is starting by connecting and measuring equipment, then managing what they measure. Konecranes is starting similarly; first, it is starting with a predictive maintenance application to minimize time issues and make sure its customers stay up and running. Eventually, Konecranes will be selling weightlifting rather than cranes; for example, by charging based on the amount of weight moved over a certain distance, as you might expect in industries, such as freight transport (think of a crane as a vertical moving machine). Most companies start with simple applications like asset tracking before moving on to more advanced condition-based monitoring, maintenance, and business model transformation.
The year 2020 will continue to witness articles, blogs, and press releases highlighting that data is the new oil and manufacturers should be investing in Industry 4.0 technologies (digital twins, predictive maintenance via IoT sensors, optical scanners, AR, analytics, ML, etc.). There will also be articles with quotes from exasperated manufacturers where a technology or technologies did not live up to the hype and the factory’s operations are no better off; once again, technology suppliers will be accused of promising the world and falling way short.
Often, staff at manufacturing plants still collect data on paper, which are manually input and stored either in Excel or siloed applications. These types of environments should provide rich pickings for technology suppliers. However, Industry 4.0 investments will come to nothing if solutions are fed incomplete or inaccurate data.
Suppliers need to work with manufacturers to instill a data culture, deciding what data are relevant, the best ways to collect them, and, most important of all, how to organize them before considering anything else.
ABI Research has conducted research on location intelligence revenue and forecasts the ride hailing and online food delivery market to be a significant driver for Transport & Logistics (T&L) spending on location intelligence over the next 5 years. ABI Research defines location intelligence revenue as consisting of revenue from downloads of digital mapping content and in-house software and subscriptions from hosted digital map content and APIs on the digital map provider or third-party’s cloud platform. The study was conducted on the Australian, Chinese, Japanese, and Korean markets and found that, by 2020, location intelligence revenue for ride hailing and online food delivery services will grow to US$213 million, US$391 million, US$94 million, and US$37.4 million, respectively. This represents a YoY growth of 12%, 11%,17%, and 15% for each respective market from 2019. By 2020, ABI Research forecast that the total location intelligence spending on ride hailing and online food delivery services combined will make up 54% of the total T&L spending on location intelligence for these markets combined.
The main driving forces behind location intelligence spending for ride hailing and online food delivery services are financial and technological. On the financial side, there is a need to increase the operational efficiency of vehicles transporting passengers, as well as food delivery personnel. This is due to the high operating costs that come with each driver and food delivery personnel. The dynamics of the business model lies more in reducing costs in order to increase profits, and this has to be done through ensuring that each vehicle is maximizing its route and, thus, profitability per unit of time. This will require location intelligence capabilities, such as route optimization, real-time road data, and granular map information, which includes accurate drop-off and pick-up points. In Singapore and Yangon, users might have to walk up to between 260 and 300 feet to get to their ride. In a country likes China, where DiDi registers more than 20 million rides per day, this amounts to a total of more than 760,000 hours wasted daily waiting to pick up passengers, rather than driving to the next point. The second driver would be technology. This refers to the use of AI algorithms to optimize routes based on real-world data. For instance, Raxel Telematics has been developing predictive models for fleets based on parameters like a list of destinations for each road, driver profile, and type of vehicle that would be able to predict the driver’s time of arrival for certain use cases. Much of the ride hailing and food delivery business also depends on Global Positioning System (GPS) technology, which is seeing some major upgrades to its level of precision. For instance, the Australian government has funded US$12 million to develop Precise Point Positioning (PPP) through a Satellite-Based Augmentation System (SBAS), a Global Navigation Satellite System (GNSS) augmentation. Many of these technological trends regarding an increase in precision technology and the use of AI for route optimization and prediction, coupled with the financial pressure to reduce operation costs, will drive location intelligence spending for ride hailing and online food delivery services in the immediate short term.
The concept of Continuous Intelligence (CI) will be consolidating in the IoT analytics market, enabling more advanced analytics in near-real time. Since the emergence and expansion of streaming analytics and streaming technologies, the ability to continuously analyze and extract value from the IoT data is growing. The CI application will be possible because the cloud vendors and vendors are offering E2E platforms, expanding their capabilities through digital twinning, big data technologies, and ML algorithms. Hence, in 2020, ABI Research predicts greater adoption of CI technologies, which will elevate IoT data analytics beyond traditional operational level (maintenance and control), but we will also observe a greater impact on strategic planning and organizational change.
mMTC begun under 4G, with LTE-M and Narrowband-IoT (NB-IoT) being “forward-compatible” with the forthcoming 5G New Radio (NR) standard. Chipset vendors saw a greenfield opportunity to go from zero to hero with massive IoT, with some being established from scratch for the sake of developing a single NB-IoT baseband chip. This resulting race saw 17 baseband vendors emerge, but only four different ones currently supply most of the hundreds of LTE-M and NB-IoT products now available. HiSilicon, MediaTek, Qualcomm, and RDA
(UNISOC) dominate. And this situation will only compound as we move toward Release 16 and the full coexistence of LTE-M and NB-IoT with 5G NR, i.e., the “official” start of the mMTC market. Though the LTE-M and NB-IoT business is still small, supplier partnerships are already in place and it will be difficult for more chipset vendors to secure a foothold. Module and device OEM integration experience is vital to understanding real-world implementation, and for successful chipset product iteration. Greater integration, greater power efficiency, smaller size, and even lower cost are already propelling the LTE-M and NB-IoT chipset market into its third generation of products. But the vast number of likely Consumer IoT (C-IoT) connected endpoints will not mean there is room for all. Nothing succeeds like success and only those with strong early adoption, regardless of slow initial sales, will be there to enjoy the boom years to come.
Uber and Airbnb could be considered the Sharing Economy 1.0. But China is showing the world what the next phase of the sharing economy will look like. It started with bike sharing, with shared bike access increasing in China by over 600% in 2017. The year 2018 saw some rationalization of bike sharing growth, with over half the dockless bike sharing companies in China going bust. But 2018 then saw the launch of shared ebikes, mopeds, and scooters. Late in 2018, another new sharing application hit the market and has been a major driver of cellular connections in China today—shared powerbanks. Powerbanks are portable battery packs for smartphones and they are used most by urbanites at restaurants, bus stations, and airports. Other sharing applications in China include portable sleep stations and massage chairs in airports, umbrellas, parking spots, and even shared kitchens.
Why is the sharing economy taking off in China and will it continue to see growth in 2020? Three important technologies have enabled this next phase of the sharing economy. The first, which was a key enabler of shared taxi services is the prevalence of the smartphone for initiating, executing, and monetizing transactions. The second is cheap connectivity. Cellular connectivity to the smartphone has enabled bike sharing, but now even cheaper cellular connectivity is available for connecting things using LPWA technologies. NB-IoT is the technology driving much of the newer sharing economy applications in China. Not only are LPWA connectivity fees inexpensive, but the hardware enabling connectivity continues to decrease in cost. The third is payment apps and Chinese citizens are prolific users of payment apps, the two most popular being WeChat and Alipay.
There are reasons to believe that the newer applications in the more “connected” version of the sharing economy will continue to grow across the world, albeit at a more measured pace than seen in China. LPWA cellular networks are expanding worldwide, replacing 2G, and existing network infrastructure supports LPWA network deployments, in addition to offering more coverage with fewer cell sites. In developed regions, expanding micro-mobility options will continue. In developing regions without sufficient access to resources, rental services will have even more value for things like powerbanks, various forms of transportation, tractors, tools, and even portable lighting systems. But another reason that the next phase of the sharing economy will likely flourish is government sponsorship. There are societal and economic benefits to enabling accessibility for a broader cross section of the population to valuable services available through sharing applications.
For many years, there have been predictions that the IoT platform supplier market will begin to consolidate. There are more than 100 companies that offer device-to-cloud IoT platform services and for every one that is acquired, there are always new ones that come to market. Some reasons for predicting the demise of this market is cloud suppliers launching their IoT platform services—think Azure IoT Hub and AWS IoT Hub. But, interestingly, these heavyweights have probably brought more IoT platform suppliers out of their garages and into partner programs because the cloud suppliers are an important channel for enterprise IoT adoption. There are multiple reasons that the IoT platform supplier market will stay vibrant in 2020. On the demand side, the first is IoT connections and application diversity and breadth continuing to grow. IoT platform services offer the means for managing a growing fleet of connected devices. Second, IoT platform suppliers are effectively software suppliers. They do not have high CAPEX investments greatly supported by cloud Infrastructure-as-a-Service (IaaS), so they do not need a large customer base from which to build their business. For customers, their services offer great value for reasonable costs. On the supply side, 50% of IoT platform services connections are from vendors who offer platform services to support other parts of their business. This includes telco suppliers who use platform services as a lead generator for other IoT services and for strengthening relationships with mobile operators. For cloud providers, platform services are for adopting storage and compute services for IoT data. For chipset and gateway suppliers, it is for selling hardware and for commoditizing mitigation. Another supply side driver is that platform services continue to evolve, adding low-code/no-code application development, finer grained data management services, and more security services features within platform device management services. The bottom line is that IoT platform services address the challenges of bridging the IT and OT domains in a cost-effective way to accelerate IoT application development and deployments.
In 2019, Sigfox sought to promote itself as “Zero G,” riffing off of the cellular radio “generations” and the attention that each new one receives. Some of Sigfox’s highest profile uses have been as an emergency communication channel in the event of primary communications technologies being offline or jammed. Sigfox would like that to become its main use, thereby piggybacking on the success of cellular IoT and, in an ideal world, even becoming part of the 5G standard. Cellular carriers do value unlicensed proprietary Low-Power Wide-Area (LPWA): major players, from Orange and KPN in Europe to Asia Pacific Telecom and SoftBank in the Far East, have deployed LoRaWAN, for example. While the Omantel subsidiary Momkin is Oman’s Sigfox provider. But the choice to combine licensed and unlicensed technologies in a single connected device is one for each respective IoT device OEM, or its enterprise customer, to make. The two cannot be reconciled at the standards level, for the premium that cellular commands stems from the cost of its license, and the control that its owners have over their blocks of spectrum, providing a secure, managed, quality of service-based guarantee to IoT customers. The cellular industry’s merger with proprietary LPWA, at the carrier level or at the standards level, would be akin to Microsoft building Windows 10 with open-source code. Having customers know that the free-to-use Industrial, Scientific, Medical (ISM) band is the best way to underpin, and ergo guarantee, cellular itself would be to rob cellular of its integrity and value.
The accelerated growth of the edge technology and intelligent device paradigm created one of the largest industry misconceptions: edge technology will cannibalize cloud technology. The fact is that edge intelligence is a growing market with a large volume of investment and opportunities for vendors to garner newly emerged market share. In last few months of 2019, AWS, Microsoft, Google, Ericsson, and Nokia announced large investments in their own flagship edge data services, indicating their penetration in the edge computing market of the IoT. However, cloud computing is not going anywhere. In fact, ABI Research would predict that, in the future (maybe not 2020), we will see a rapid development of edge-cloud-fog continuum, where technology will complement each other, rather than cross-cannibalize.
Already in 2019, smart cities have developed deeper insights into high-priority challenges and approaches to address those. Many have started to develop a narrative centered around five holistic focus areas: digital twins and urban modeling, resilience, circularity, electric micro-mobility and micro-transit, and smart urban spaces. In 2020, these concepts will be further galvanized and integrated into a comprehensive urban agenda and strategy, very much defining the character of smart cities of the future. But they also help address short-term challenges. The adoption of micro-mobility in the form of electric bike, scooter, and motorcycle sharing significantly reduces both air pollution and traffic congestion, arguably the two biggest issues cities are grappling with today. This represents a short-term solution awaiting widespread adoption of electric driverless vehicle sharing by 2030. It does, however, prompt city governments to reorganize public space to accommodate these new smart mobility modes. The wider safety and sustainability questions are starting to be approached in a more structural and fundamental way, respectively focused on resilience (readiness/responsiveness) and an approach based on circular economy concepts (resource self-sufficiency and recycling maximization). Finally, the digital twin and wider urban modeling concepts will provide a fertile environment for the mass adoption of basic IoT connectivity technologies, informing and enhancing static 3D models to become real-time replicas of the cities’ physical assets, in turn, enabling further efficiency and resource utilization improvements, scenario analysis, generative design, and preventive and real-time maintenance.
Translating these high-level paradigms into practical technology implementations will continue to elude all but the most advanced cities, such as Singapore and Dubai. Issues include technology life cycle uncertainty—if or when to adopt new technologies like 5G, LPWA, AI, blockchain, and driverless mobility—anticipating upgrade cycles, repurposing systems across multiple verticals and use cases, and learning how to efficiently implement open IoT platforms. At the same time, the wider ecosystem dynamics toward which smart cities and the overall government technology sector are gravitating are increasingly defined by technology marketplaces (Geotab), open data sharing platforms (Transport for London, HERE’s Open Location Platform), vendor accelerator programs (Qualcomm), public-private partnerships (SharedStreets), sharing economy leverage, and a long tail of smart city technology startups and system integrators. This represents a major challenge for cities in terms of aligning internal organizational structures to enable efficient participation in this new market constellation.
Furthermore, against a background of a continuing challenging economic climate, cities will put more emphasis on ROI or, at the very least, will want to optimize where their investments are going. This will require vendors to provide detailed information on what their solutions can achieve in terms of cost savings and tangible benefits for citizens and enterprises alike through both general awareness building and quantitative tools. More concretely, vendors will have to tailor their business models toward CAPEX-free “as-a-Service” offers, while at the same time providing financing support, either directly through their own financing or Venture Capital (VC) divisions or indirectly, helping discover new funding mechanisms and opportunities.
Rather than contracting to bring a level of standardization and calm to the smart home market, the divisive array of connectivity protocols within smart home offerings will only increase in 2020.
Ongoing smart home provider support for ZigBee, Z-Wave, proprietary, and Wi-Fi will extend to increasingly integrate Thread and Bluetooth across a range of competing smart home devices and applications. This will develop, despite protocol complexity and lack of interoperability long hampering consumer engagement, as well as limited OEM investment, to deliver connectivity within a wide selection of offerings.
Instead, existing and emerging smart home service providers will look to leverage their connectivity selection to differentiate their own smart home offerings and protect their installed base. With Google Nest, and potentially Apple, set to push the still emerging Thread protocol into a range of new smart home devices in 2020, rather than standardizing, a new generation of single vendor controlled, smart home systems will further segment and limit smart home potential.
Over the past few years, Amazon and Google—and, more recently, regional players in key markets like China—have amassed significant smart home customer bases. But, despite their seemingly unassailable positions in the smart home market, these consumer technology players have yet to secure these homes from potential competition from other industries, and 2020 could be the starting point for renewed competition.
With the appeal of voice control combined with low-priced devices underwritten by the long-term value of a large smart home installed base, consumer tech companies leapfrogged communications companies’ smart home efforts. In 2020, the value of a new generation of home connectivity offerings, primarily LPWA and the first 5G services, could be leveraged to wrestle smart home control back from consumer technology players. The direct connectivity and service provider management of smart home device connectivity, under the control of communications players willing to target smart home services and with a strong consumer focus and an eye toward long-term value, will give service providers a meaningful differentiator from existing offerings. The smart home market remains in play and, in 2020, communications players have the potential to re-write their role in the market.
Driving is a multi-agent problem, with many of today’s accidents and inefficiencies due to poor communication and coordination between the various road users. The year 2020 will see the advent of more cooperative forms of mobility, with connected cars on the road starting to share data messages about road and traffic conditions to allow other connected vehicles to anticipate hazards and improve traffic flow.
The first phase will take the form of low-bandwidth, high-latency communication via the Long-Term Evolution (LTE) network between connected cars and data ingestion platforms to enable applications like ice and oil hazard warnings and lane-level traffic assistance. The year 2020 will see millions of connected cars deployed that both contribute data to these ingestion platforms and take advantage of the services that they enable.
The year 2020 will also see the first large-scale deployment of 802.11p V2X technology on the Volkswagen Golf in Europe, a model that typically ships in volumes of 450,000+ every year. This will enable low-bandwidth and low-latency broadcast communications between a growing number of connected cars to enable safety-critical collision avoidance.
In 2020, an increase in different micro-mobility transportation methods will be seen, even though the bike share market crashed in 2018. The crash from China’s large market players, Mobike, Obike, and Ofo, encouraged European- and American-based service providers to ratify their market models so that they were not distributing at an aggressive rate.
The fallout of the Chinese vendors has also seen an increased number of other forms of transport being used for a service. Micro-mobility methods of transportations, such as e-bikes and scooters, are now being marketed in the European and North American markets especially, and are proving quite successful as providers plan to increase their fleet sizes.
In 2020, we will see the improved micro-mobility market with increasingly different modes of transportation being introduced to the market, though the shared bike will still lead.
At one point, 2020 seemed a distant target, a long-term horizon over which the technology trends that have dominated the automotive scene for the last 10 years—electrification, connectivity, autonomous driving—would all have harmonized to deliver safer, more efficient transportation for all. Indeed, there was good reason for optimism. Complementary Metal-Oxide-Semiconductor (CMOS) image cameras made Advanced Driver-Assistance Systems (ADAS) affordable, DL approaches and powerful computing made Autonomous Vehicle (AV) software development seem feasible, Tesla showed that connectivity meant more for automotive than eCall and traffic services, and Uber gave hope of a transportation future free from widespread car ownership.
In spite of this, the world goes into 2020 with road accident casualties increasing, OEM spending on autonomous technologies contracting, connectivity enabling the same legacy infotainment applications, and ride hailing operations facing serious questions over profitability. The CASE overall vision remains compelling, and most OEMs are staying the course, targeting 2025 or 2030 for the transition to connected, autonomous, and electrified mobility. How can the industry avoid missing the mark again? The focus must shift from the broad strokes vision, compelling as it may be, to the pain points that hold back implementation: how can the safety of an autonomous system be demonstrated to regulators, how can smart-charging approaches enable Electric Vehicle (EV) deployment without overwhelming the last mile of power distribution, and how can the Intelligent Vehicle Network (IVN) be sustainably redesigned to maximize the value of connected and software-defined cars?
The launch of Disney+ in late 2019 (coupled with new services in 2020) portends a significant shift coming to the video market. Viewers are already migrating to Over-the-Top (OTT), splitting time between smartphones and Connected TV (CTV), so this change does not speak to consumer behavior, but rather points to a change in services and sourcing of content. The arrival of Virtual Multichannel Video Programming Distributor (vMVPD) services like DirecTV Now (now AT&T TV Now), Sony’s PlayStation Now, YouTube TV, and more suggested a future where the transition from traditional pay TV services would be more about content distribution, rather than changes to content packaging and services; Direct to Consumer (DTC) is changing this paradigm.
Since the initial growth period, the growing penchant among content owners to DTC is creating a more challenging market for vMVPDs. As a result, subscriber bases in some of the services have slowed, if not declined. Disney stands at the forefront of this new future, leveraging its acquisitions and deep catalog of content to create a formidable contender to market leader Netflix. The arrival of more DTC services in 2020 will further fragment the content landscape, making it an increasingly crowded space as more services vie for consumers’ content budgets. What does this mean for the market?
Prices will continue to climb, as services focus more on original programming and increase spending to secure content rights from a diminishing pool. These market conditions will make it increasingly challenging to launch a new service without preexisting content; Apple TV+ is a prime example here, which resulted in a low price (US$5/month) and bundling with new hardware purchases to spur subscriber growth. For MNOs, this makes partnering with existing services a more viable strategy over creating new services from the ground up. For pay TV operators, the market continues to be a challenging environment, but the shift to DTC does creates an opportunity for these MVPDs to serve as an aggregation point for fragmented OTT services. Search and recommendation, analytics, and cross-platform attribution will become increasingly valuable tools, and technologies as content services seek to keep viewers engaged and committed to their platforms.
Finally, there is interactivity—something that could become more important as new services like cloud gaming increasingly find their way to network operators and content platforms. All of these create points of differentiation and opportunities within in the network, including lower latency, edge computing, and synchronization of inputs and content streams.
As anticipated, initial deployments of 5G networks started with the launch of 5G Fixed Wireless Access (FWA) services. Verizon 5G Home service was first launched in October 2018. A few operators in other markets followed Verizon’s move in 2019, including EE, Three UK, Vodafone in the United Kingdom, Telia in Finland, Optus Australia, and Rain in South Africa.
For capacity provided by 5G, 5G FWA garners high interest from operators to replace last-mile fiber connectivity for residential broadband services. This allows greater service coverage and improved network delivery for customers served. While there are still barriers to adoption, similar to traditional 5G (infrastructure is expensive and time consuming to scale), many other operators and equipment vendors have already been trialing 5G FWA deployment across different regions. Qualcomm’s recent announcement of 5G FWA partnerships, with more than 30 OEMs and ongoing spectrum acquisitions by operators indicate that the ecosystem is getting ready to speed up rate of deployment. ABI Research expects to see accelerated growth in the 5G FWA market starting in 2020, as more 5G FWA Consumer Premises Equipment (CPE) is expected to hit the market, together with 5G FWA rollouts in 2020.
Announcements of 8K Television (TV) sets by major vendors earlier in 2019 attracted much attention and raised many of questions within the industry. CES 2020 will undoubtedly showcase a slew of new 8K sets and a decrease in average price from last year, but questions still remain. Will the 2020 Tokyo Olympics kick off 8K TV set sales, what other content sources will move to 8K support, and when will 8K TVs become the mainstream?
The Tokyo Olympics is one of the forefront upcoming content sources for 8K, with plans to cover the entire event with 8K capture and streaming. However, 8K broadcast is likely to be limited only to Japan in 2020. Other than 8K broadcast by HNK, there is not much content available yet. Without the content to take advantage of the higher resolution, adoption, of course, will be limited. The price of 8K TV sets are relatively high for average consumers (ranging from US$2,200 to US$60,000 today), while price points of 4K TV sets have become affordable to most consumers across different markets. In addition, there is still room for the 4K market to grow, because 4K TV set penetration accounts for only one-third of worldwide TV households at present. The transition from High Definition (HD) to Ultra-HD (4K) will continue in 2020 with very limited 8K shipments, less than 1 million worldwide.
The year 2019 was a significant one for Wi-Fi 6. The technology was deployed in a number of high-profile and high-volume smartphones, including the Samsung Galaxy S10, Note10, iPhone 11, and iPhone 11 Pro series of devices. This was compounded by numerous access point and networking product announcements over the course of the year, alongside some traction in notebook PCs. In September 2019, the Wi-Fi Alliance launched its Wi-Fi 6 certification program with certified chipsets now readily available from Broadcom, Cypress, Intel, Marvell, and Qualcomm, removing a further barrier to adoption. This early client adoption from companies like Samsung and Apple will help incentivize others to adopt the technology, while the companies like MediaTek have also recently unveiled their 5G Systems-on-Chips (SoCs) with integrated Wi-Fi 6 support, adding to Broadcom and Qualcomm’s mobile Wi-Fi offerings. In the computing space, Intel’s promotion of Wi-Fi 6 as a fundamental technology in premium laptop solutions through its Project Athena program will also help boost adoption over the next 12 months. Alongside this, the next generation of flagship tablets is likely to follow the lead of smartphones, while in higher-end connected home devices, Wi-Fi 6 technology may be used as a differentiator by leading OEMs. By the end of 2020, ABI Research expects Wi-Fi 6 chipset shipments to more than triple versus 2019 shipments, growing to nearly 383 million units, as the technology is increasingly adopted across numerous device categories, including smartphones, tablets, PCs, networking products, and some premium tier home entertainment devices.
To date, much of the marketing around Wi-Fi 6 has emphasized higher speeds and throughput versus Wi-Fi 5, and the initial client adoption has been centered around high-performance mobile and computing devices. However, there is a much wider range of device types that can be connected via Wi-Fi technology, ranging from connected light bulbs and thermostats to low=power wearables and industrial condition monitoring sensors, among many others. Today, these devices are being served predominantly by 802.11n Wi-Fi chipsets, and a number of vendors are continuing to innovate in this space to provide lower-cost chipsets with minimal power consumption to serve these markets more effectively. However, new enhancements in Wi-Fi 6, such as TWT and Orthogonal Frequency-Division Multiple Access (OFDMA) that improve power consumption and airtime usage, as well as improved coexistence, simpler client designs, and extended range, can enable low-cost Wi-Fi 6 chipsets that can better serve the needs of a wide variety of IoT applications than ever before. IP providers, such as CEVA, are already promoting low-power features of Wi-Fi 6 through its RivieraWaves RW-AX Low Power platform, a 20-Megahertz (MHz) solution for small, low-power IoT devices, medical equipment, and wearables as a replacement to 802.11n. In October 2019, AIC Semiconductor licensed CEVA’s 1x1 802.11ax Wi-Fi 6 IP for low-power IoT connectivity applications. However, in order for this market to scale, many more Wi-Fi solution providers need to develop more IoT-centric Wi-Fi 6 IoT chipsets to help increase the viability of Wi-Fi 6 for IoT applications. In addition, more education and awareness around Wi-Fi 6 for IoT applications also need to be developed. While there are likely to be some wearables and smart home products supporting the technology in 2020, ABI Research believes that 2021 will see the first real ramp up of Wi-Fi 6 for IoT applications, as more and more chipset providers begin to provide low-power IoT-centric Wi-Fi 6 SoCs over the course of the next 12 months. As these Wi-Fi 6 IoT chipsets fall in price, and the cost and availability become comparable to 802.11n, the enormous benefits that these solutions can provide versus existing technologies will help scale up Wi-Fi 6 adoption across a number of IoT verticals over the next few years.