China

Alibaba will let you find restaurants and order food with voice in a car

Posted by | alibaba, alibaba group, alipay, Android, Asia, automotive, AutoNavi, Baidu, Beijing, China, Emerging-Technologies, in-car apps, online marketplaces, operating system, operating systems, order food, shanghai, taobao, Tencent, Transportation | No Comments

Competition in the Chinese internet has for years been about who controls your mobile apps. These days, giants are increasingly turning to offline scenarios, including what’s going on behind the dashboard in your car.

On Tuesday, Alibaba announced at the annual Shanghai Auto Show that it’s developing apps for connected cars that will let drivers find restaurants, queue up and make reservations at restaurants, order food and eventually complete a plethora of other tasks using voice, motion or touch control. Third-party developers are invited to make their in-car apps, which will run on Alibaba’s operating system AliOS.

Rather than working as standalone apps, these in-car services come in the form of “mini apps,” which are smaller than regular ones in exchange for faster access and smaller file sizes, in Alibaba’s all-in-one digital wallet Alipay . Alibaba has other so-called “super apps” in its ecosystem, such as marketplace Taobao and navigation service AutoNavi, but the payments solution clearly makes more economic sense if Alibaba wants people to spend more while sitting in a four-wheeler.

There’s no timeline for when Alibaba will officially roll out in-car mini apps, but it’s already planning for a launch, a company spokesperson told TechCrunch.

Making lite apps has been a popular strategy for China’s internet giants operating super apps that host outside apps, or “mini-apps”; that way users rarely need to leave their ecosystems. These lite apps are known to be easier and cheaper to build than a native app, although developers have to make concessions, like giving their hosts a certain level of access to user data and obeying rules as they would with Apple’s App Store. For in-car services, Alibaba says there will be “specific review criteria for safety and control” tailored to the auto industry.

alios cars alibaba

Photo source: Alibaba

Alibaba’s move is indicative of a heightened competition to control the operating system in next-gen connected cars. For those who wonder whether the e-commerce behemoth will make its own cars given it has aggressively infiltrated the physical space, like opening its own supermarket chain Hema, the company’s solution to vehicles appears to be on the software front, at least for now.

In 2017, Alibaba rebranded its operating system with a deep focus to put AliOS into car partners. To achieve this goal, Alibaba also set up a joint venture called Banma Network with state-owned automaker SAIC Motor and Dongfeng Peugeot Citroen, which is the French car company’s China venture, that would hawk and integrate AliOS-powered solutions with car clients. As of last August, 700,000 AliOS-powered SAIC vehicles had been sold.

Alibaba competitors Tencent and Baidu have also driven into the auto field, although through slightly different routes. Baidu began by betting on autonomous driving and built an Android-like developer platform for car manufacturers. While the futuristic plan is far from bearing significant commercial fruit, it has gained a strong foothold in self-driving with the most mileage driven in Beijing, a pivotal hub to test autonomous cars. Tencent’s car initiatives seem more nebulous. Like Baidu, it’s testing self-driving and like Alibaba, it’s partnered with industry veterans to make cars, but it’s unclear where the advantage lies for the social media and gaming giant in the auto space.

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Snap is channeling Asia’s messaging giants with its move into gaming

Posted by | alibaba, Apps, Asia, Australia, Bitmoji, Canada, China, computing, e-commerce, epic games, Evan Spiegel, Facebook, food, France, game developers, Gaming, instagram, Instant Messaging, Japan, josh constine, Kakao, Los Angeles, messaging apps, Messenger, nhn japan, Nintendo, operating systems, player, Snap, Snapchat, Social, social media, social network, Software, Southeast Asia, Startups, Tencent, United Kingdom, United States, WeChat, WhatsApp | No Comments

Snap is taking a leaf out of the Asian messaging app playbook as its social messaging service enters a new era.

The company unveiled a series of new strategies that are aimed at breathing fresh life into the service that has been ruthlessly cloned by Facebook across Instagram, WhatsApp and even its primary social network. The result? Snap has consistently lost users since going public in 2017. It managed to stop the rot with a flat Q4, but resting on its laurels isn’t going to bring back the good times.

Snap has taken a three-pronged approach: extending its stories feature (and ads) into third-party apps and building out its camera play with an AR platform, but it is the launch of social games that is the most intriguing. The other moves are logical, and they fall in line with existing Snap strategies, but games is an entirely new category for the company.

It isn’t hard to see where Snap found inspiration for social games — Asian messaging companies have long twinned games and chat — but the U.S. company is applying its own twist to the genre.

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UK report blasts Huawei for network security incompetence

Posted by | 5g, 5G network security, Asia, China, Ciaran Martin, computer security, cyberattack, cybercrime, ernst & young, Europe, european union, huawei, Mobile, National Cyber Security Centre, national security, Security, telecommunications, UK government, United Kingdom | No Comments

The latest report by a UK oversight body set up to evaluation Chinese networking giant Huawei’s approach to security has dialled up pressure on the company, giving a damning assessment of what it describes as “serious and systematic defects” in its software engineering and cyber security competence.

Although the report falls short of calling for an outright ban on Huawei equipment in domestic networks — an option U.S. president Trump continues dangling across the pond.

The report, prepared for the National Security Advisor of the UK by the Huawei Cyber Security Evaluation Centre (HCSEC) Oversight Board, also identifies new “significant technical issues” which it says lead to new risks for UK telecommunications networks using Huawei kit.

The HCSEC was set up by Huawei in 2010, under what the oversight board couches as “a set of arrangements with the UK government”, to provide information to state agencies on its products and strategies in order that security risks could be evaluated.

And last year, under pressure from UK security agencies concerned about technical deficiencies in its products, Huawei pledged to spend $2BN to try to address long-running concerns about its products in the country.

But the report throws doubt on its ability to address UK concerns — with the board writing that it has “not yet seen anything to give it confidence in Huawei’s capacity to successfully complete the elements of its transformation programme that it has proposed as a means of addressing these underlying defects”.

So it sounds like $2BN isn’t going to be nearly enough to fix Huawei’s security problem in just one European country.

The board also writes that it will require “sustained evidence” of better software engineering and cyber security “quality”, verified by HCSEC and the UK’s National Cyber Security Centre (NCSC), if there’s to be any possibility of it reaching a different assessment of the company’s ability to reboot its security credentials.

While another damning assessment contained in the report is that Huawei has made “no material progress” on issues raised by last year’s report.

All the issues identified by the security evaluation process relate to “basic engineering competence and cyber security hygiene”, which the board notes gives rise to vulnerabilities capable of being exploited by “a range of actors”.

It adds that the NCSC does not believe the defects found are a result of Chinese state interference.

This year’s report is the fifth the oversight board has produced since it was established in 2014, and it comes at a time of acute scrutiny for Huawei, as 5G network rollouts are ramping up globally — pushing governments to address head on suspicions attached to the Chinese giant and consider whether to trust it with critical next-gen infrastructure.

“The Oversight Board advises that it will be difficult to appropriately risk-manage future products in the context of UK deployments, until the underlying defects in Huawei’s software engineering and cyber security processes are remediated,” the report warns in one of several key conclusions that make very uncomfortable reading for Huawei.

“Overall, the Oversight Board can only provide limited assurance that all risks to UK national security from Huawei’s involvement in the UK’s critical networks can be sufficiently mitigated long-term,” it adds in summary.

Reached for its response to the report, a Huawei UK spokesperson sent us a statement in which it describes the $2BN earmarked for security improvements related to UK products as an “initial budget”.

It writes:

The 2019 OB [oversight board] report details some concerns about Huawei’s software engineering capabilities. We understand these concerns and take them very seriously. The issues identified in the OB report provide vital input for the ongoing transformation of our software engineering capabilities. In November last year Huawei’s Board of Directors issued a resolution to carry out a companywide transformation programme aimed at enhancing our software engineering capabilities, with an initial budget of US$2BN.

A high-level plan for the programme has been developed and we will continue to work with UK operators and the NCSC during its implementation to meet the requirements created as cloud, digitization, and software-defined everything become more prevalent. To ensure the ongoing security of global telecom networks, the industry, regulators, and governments need to work together on higher common standards for cyber security assurance and evaluation.

Seeking to find something positive to salvage from the report’s savaging, Huawei suggests it demonstrates the continued effectiveness of the HCSEC as a structure to evaluate and mitigate security risk — flagging a description where the board writes that it’s “arguably the toughest and most rigorous in the world”, and which Huawei claims shows at least there hasn’t been any increase in vulnerability of UK networks since the last report.

Though the report does identify new issues that open up fresh problems — albeit the underlying issues were presumably there last year too, just laying undiscovered.

The board’s withering assessment certainly amps up the pressure on Huawei which has been aggressively battling U.S.-led suspicion of its kit — claiming in a telecoms conference speech last month that “the U.S. security accusation of our 5G has no evidence”, for instance.

At the same time it has been appealing for the industry to work together to come up with collective processes for evaluating the security and trustworthiness of network kit.

And earlier this month it opened another cyber security transparency center — this time at the heart of Europe in Brussels, where the company has been lobbying policymakers to help establish security standards to foster collective trust. Though there’s little doubt that’s a long game.

Meanwhile, critics of Huawei can now point to impatience rising in the U.K., despite comments by the head of the NCSC, Ciaran Martin, last month — who said then that security agencies believe the risk of using Huawei kit can be managed, suggesting the government won’t push for an outright ban.

The report does not literally overturn that view but it does blast out a very loud and alarming warning about the difficulty for UK operators to “appropriately” risk-manage what’s branded defective and vulnerable Huawei kit. Including flagging the risk of future products — which the board suggests will be increasingly complex to manage. All of which could well just push operators to seek alternatives.

On the mitigation front, the board writes that — “in extremis” — the NCSC could order Huawei to carry out specific fixes for equipment currently installed in the UK. Though it also warns that such a step would be difficult, and could for example require hardware replacement which may not mesh with operators “natural” asset management and upgrades cycles, emphasizing it does not offer a sustainable solution to the underlying technical issues.

“Given both the shortfalls in good software engineering and cyber security practice and the currently unknown trajectory of Huawei’s R&D processes through their announced transformation plan, it is highly likely that security risk management of products that are new to the UK or new major releases of software for products currently in the UK will be more difficult,” the board writes in a concluding section discussing the UK national security risk.

“On the basis of the work already carried out by HCSEC, the NCSC considers it highly likely that there would be new software engineering and cyber security issues in products HCSEC has not yet examined.”

It also describes the number and severity of vulnerabilities plus architectural and build issues discovered by a relatively small team in the HCSEC as “a particular concern”.

“If an attacker has knowledge of these vulnerabilities and sufficient access to exploit them, they may be able to affect the operation of the network, in some cases causing it to cease operating correctly,” it warns. “Other impacts could include being able to access user traffic or reconfiguration of the network elements.”

In another section on mitigating risks of using Huawei kit, the board notes that “architectural controls” in place in most UK operators can limit the ability of attackers to exploit any vulnerable network elements not explicitly exposed to the public Internet — adding that such controls, combined with good opsec generally, will “remain critically important in the coming years to manage the residual risks caused by the engineering defects identified”.

In other highlights from the report the board does have some positive things to say, writing that an NCSC technical review of its capabilities showed improvements in 2018, while another independent audit of HCSEC’s ability to operate independently of Huawei HQ once again found “no high or medium priority findings”.

“The audit report identified one low-rated finding, relating to delivery of information and equipment within agreed Service Level Agreements. Ernst & Young concluded that there were no major concerns and the Oversight Board is satisfied that HCSEC is operating in line with the 2010 arrangements between HMG and the company,” it further notes.

Last month the European Commissioner said it was preparing to step in to ensure a “common approach” across the European Union where 5G network security is concerned — warning of the risk of fragmentation across the single market. Though it has so far steered clear of any bans.

Earlier this week it issued a set of recommendations for Member States, combining legislative and policy measures to assess 5G network security risks and help strengthen preventive measures.

Among the operational measures it suggests Member States take is to complete a national risk assessment of 5G network infrastructures by the end of June 2019, and follow that by updating existing security requirements for network providers — including conditions for ensuring the security of public networks.

“These measures should include reinforced obligations on suppliers and operators to ensure the security of the networks,” it recommends. “The national risk assessments and measures should consider various risk factors, such as technical risks and risks linked to the behaviour of suppliers or operators, including those from third countries. National risk assessments will be a central element towards building a coordinated EU risk assessment.”  

At an EU level the Commission said Member States should share information on network security, saying this “coordinated work should support Member States’ actions at national level and provide guidance to the Commission for possible further steps at EU level” — leaving the door open for further action.

While the EU’s executive body has not pushed for a pan-EU ban on any 5G vendors it did restate Member States’ right to exclude companies from their markets for national security reasons if they fail to comply with their own standards and legal framework.

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It’s a draw in latest Qualcomm v Apple patent scores

Posted by | Apple, China, Germany, international trade commission, iPhone, lawsuit, Mobile, Patent Infringement, Patent Law, Qualcomm, san diego, United States | No Comments

It’s Qualcomm 1, Apple 1 in the latest installment of the pair’s bitter patent bust-up — the litigious IP infringement claim saga that also combines a billion-dollar royalties suit filed by Cupertino alleging that the mobile chipmaker’s licensing terms are unfair.

The iPhone maker filed against Qualcomm on the latter front two years ago and the trial is due to kick off next month. But a U.S. federal court judge issued a bracing sharpener earlier this month, in the form of a preliminary ruling — finding Qualcomm owes Apple nearly $1 billion in patent royalty rebate payments. So that courtroom looks like one to watch for sure.

Yesterday’s incremental, two-fold development in the overarching saga relates to patent charges filed by Qualcomm against Apple back in 2017, via complaints to the U.S. International Trade Commission (ITC) in which it sought to block domestic imports of iPhones.

In an initial determination on one of these patent complaints published yesterday, an ITC administrative law judge found Apple violated one of Qualcomm’s patents — and recommended an import ban.

Though Apple could (and likely will) request a review of that non-binding decision.

Related: A different ITC judge found last year that Apple had violated another Qualcomm patent but did not order a ban on imports — on “public interest” grounds.

ITC staff also previously found no infringement of the very same patent, which likely bolsters the case for a review. (The patent in question, U.S. Patent No. 8,063,674, relates to “multiple supply-voltage power-up/down detectors.”)

Then, later yesterday, the ITC issued a final determination on a second Qualcomm v Apple patent complaint — finding no patent violations on the three claims that remained at issue (namely: U.S. Patent No. 9,535,490; U.S. Patent No. 8,698,558; and U.S. Patent No. 8,633,936), terminating its investigation.

Qualcomm said it intends to appeal.

The mixed bag of developments sit in the relatively “minor battle” category of this slow-motion high-tech global legal war (though, of the two, the ITC’s final decision looks more significant), along with the outcome of a jury trial in San Diego earlier this month, which found in Qualcomm’s favor over some of the same patents the ITC cleared Apple of infringing.

Reuters reports the chipmaker has cited the contradictory outcome of the earlier jury trial as grounds to push for a “reconsideration” of the ITC’s decision.

“The Commission’s decision is inconsistent with the recent unanimous jury verdict finding infringement of the same patent after Apple abandoned its invalidity defense at the end of trial,” Qualcomm said in a statement. “We will seek reconsideration by the Commission in view of the jury verdict.”

Albeit, given the extreme complexities of chipset component patent suits, it’s not really surprising a jury might reach a different outcome to an ITC judge.

In the other corner, Apple issued its now customary punchy response statement to the latest developments, swinging in with: “Qualcomm is using these cases to distract from having to answer for the real issues, their monopolistic business practices.”

Safe to say, the litigious saga continues. And iPhones continue being sold in the U.S.

Other notable (but still only partial) wins for Qualcomm include a court decision in China last year ordering a ban on iPhone sales in the market — which Apple filed an appeal to overturn. So no China iPhone ban yet.

And an injunction ordered by a court in Germany forced Apple to briefly pull certain iPhone models from sale in its own stores in January. By February the models were back on its shelves — albeit now with Qualcomm not Intel chips inside.

But it’s not all been going Qualcomm’s way in Germany. Also in January, another court in the country dismissed a separate patent claim as groundless.

A decision is also still pending in the U.S. Federal Trade Commission’s antitrust case against Qualcomm.

In that suit the chipmaker is accused of operating a monopoly and forcing exclusivity from Apple while charging “excessive” licensing fees for standards-essential patents. The trial wrapped up in January and is pending a verdict.

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Tencent Q4 profit disappoints, but cloud and payments gain ground

Posted by | alibaba, alibaba group, alipay, Asia, Baidu, China, cloud computing, e-commerce, Earnings, games publisher, Gaming, iQiyi, online payments, Snap, Tencent, WeChat, weixin | No Comments

China’s Tencent reported disappointing profits in the fourth quarter on the back of surging costs but saw emerging businesses pick up steam as it plots to diversify amid slackening gaming revenues.

Net profit for the quarter slid 32 percent to 14.2 billion yuan ($2.1 billion), behind analysts’ forecast of 18.3 billion yuan. The decrease was due to one-off expenses related to its portfolio companies and investments in non-gaming segments like video content and financial technology.

Excluding non-cash items and M&A deals, Tencent’s net profit from the period rose 13 percent to 19.7 billion yuan ($2.88 billion). The company has to date invested in more than 700 companies, 100 of which are valued over $1 billion each and 60 of which have gone public.

Quarterly revenue edged up 28 percent to 84.9 billion yuan ($12.4 billion) beating expectations.

tencent revenue

The Hong Kong-listed company is best known for its billion-user WeChat messenger but had for years relied heavily on a high-margin gaming business. That was until a months-long freeze on games approvals last year that delayed monetization for new titles, spurring a major reorg in the firm to put more focus on enterprise services, including cloud computing and financial technology.

Tencent has received approvals for eight games since China resumed the licensing process, although its blockbusters PlayerUnknown Battlegrounds and Fortnite have yet to get the green light. The firm also warned of a “sizeable backlog” for license applications in the industry, which means its “scheduled game releases will initially be slower than in some prior years.”

Video games for the quarter contributed 28.5 percent of Tencent’s total revenues, compared to 36.7 percent in the year-earlier period. Despite the domestic fiasco, Tencent remains as the world’s largest games publisher by revenue, according to data compiled by NewZoo. The firm has also gotten more aggressive in taking its titles global.

Social network revenues rose 25 percent on account of growth in live streaming and video subscriptions. The segment made up 22.9 percent of total revenues. Tencent has in recent years spent heavily on making original content and licensing programs as it competes with Baidu’s iQiyi video streaming site. Tencent claimed 89 million subscribers in the latest quarter, compared with iQiyi’s 87.4 million.

Tencent has been relatively slow to monetize WeChat in contrast to its western counterpart Facebook, though it’s under more pressure to step up its game. Tencent’s advertising revenue from the quarter grew 38 percent thanks to expanding advertising inventory on WeChat. Ads accounted for 20 percent of the firm’s quarterly revenues.

All told, WeChat and its local version Weixin reached nearly 1.1 billion monthly active users; 750 million of them checked their friends’ WeChat feeds, and Tencent recently introduced a Snap Story-like feature to lock users in as it vies for eyeball time with challenger TikTok.

The “others” category, composed of financial technology and cloud computing, grew 71.8 percent to generate 28.5 percent of total revenues. WeChat’s e-wallet, which is going neck-and-neck with Alibaba affiliate Alipay, saw daily transaction volume exceed 1 billion last year. During the fourth quarter, merchants who used WeChat Pay monthly grew more than 80 percent year-over-year.

Meanwhile, cloud revenues doubled to 9.1 billion yuan in 2018, thanks to Tencent’s dominance in the gaming sector as its cloud infrastructure now powers over half of the China-based games companies and is following these clients overseas. Tencent meets Alibaba head-on again in the cloud sector. For comparison, Alibaba’s most recent quarterly cloud revenue was 6.6 billion yuan. Just yesterday, the e-commerce leader claimed that its cloud business is larger than the second to eight players in China combined.

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US threatens to reduce intelligence sharing if Germany doesn’t ban Huawei

Posted by | 5g, China, european commission, Germany, Government, huawei, Mobile, mobile network, Security, telecommunications, U.S. government | No Comments

The U.S. government is threatening to reduce the amount of intelligence it shares with Germany if Huawei wins a contract to build the country’s next-generation 5G network.

That’s the takeaway from a letter sent by the U.S. ambassador to Germany, Richard Grenell, to Germany’s economics minister Peter Altmaier, as reported by The Wall Street Journal. Grenell, appointed by President Trump last year, said the U.S. would not be able to continue sharing the same level or amount of classified intelligence over fears of Chinese spying.

It comes just days after Germany’s federal cybersecurity agency announced its 5G security requirements, but did not outright ban Huawei from the contract-bidding process.

It’s the latest move — if not a significant escalation — by the Trump administration to pressure its allies into dropping the Chinese networking gear maker over its links to the Chinese military.

The U.S.’ anti-Huawei cabal has so far seen CanadaAustraliaNew Zealand, Japan and most of Europe drop plans to use Huawei gear, which governments and phone networks have said is both cheap and reliable, but necessary for the anticipated explosion in 5G interest.

But Germany has — like the British — seen little conclusive evidence to show that Beijing is behind the scenes pulling the strings — only that the company could be compelled to spy in the future once use of the technology has been firmly established.

Korbinian Wagner, a spokesperson for the German ministry for economic affairs, confirmed the receipt of the letter but declined to comment on its contents.

The Department of State did not respond to requests for comment.

The U.S. and Germany have worked to try to repair their intelligence sharing relationship following the Edward Snowden disclosures after allegations that the National Security Agency was caught tapping into the phone of German chancellor Angela Merkel. Germany is one of dozens of countries that obtain classified signals intelligence from the U.S. intelligence community, as both a member of NATO and the so-called 14 Eyes alliance of European countries, which rely on the data sharing alliance for counterterrorism efforts. Germany suffered several terrorist attacks in the past two years, most of which inspired by Kurdish extremists and supporters of the so-called Islamic State.

The European Commission is set to rule on a potential bloc-wide ban of Huawei gear in the coming weeks, per reports.

Meanwhile, Germany is expected to launch its 5G spectrum as early as next week, sparking the beginning of the country’s first foray into the next-generation mobile network.

Updated with response from German government,

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The other smartphone business

Posted by | africa, antitrust, Asia, Bolivia, China, data protection, Europe, finland, GDPR, General Data Protection Regulation, geopolitics, google-android, india, Jalasoft, Jolla, Mobile, mobile linux, privacy, Rostelecom, russia, sailfish, Sami Pienimäki, Security, Startups, TC | No Comments

With the smartphone operating system market sewn up by Google’s Android platform, which has a close to 90% share globally, leaving Apple’s iOS a slender (but lucrative) premium top-slice, a little company called Jolla and its Linux-based Sailfish OS is a rare sight indeed: A self-styled ‘independent alternative’ that’s still somehow in business.

The Finnish startup’s b2b licensing sales pitch is intended to appeal to corporates and governments that want to be able to control their own destiny where device software is concerned.

And in a world increasingly riven with geopolitical tensions that pitch is starting to look rather prescient.

Political uncertainties around trade, high tech espionage risks and data privacy are translating into “opportunities” for the independent platform player — and helping to put wind in Jolla’s sails long after the plucky Sailfish team quit their day jobs for startup life.

Building an alternative to Google Android

Jolla was founded back in 2011 by a band of Nokia staffers who left the company determined to carry on development of mobile Linux as the European tech giant abandoned its own experiments in favor of pivoting to Microsoft’s Windows Phone platform. (Fatally, as it would turn out.)

Nokia exited mobile entirely in 2013, selling the division to Microsoft. It only returned to the smartphone market in 2017, via a brand-licensing arrangement, offering made-in-China handsets running — you guessed it — Google’s Android OS.

If the lesson of the Jolla founders’ former employer is ‘resistance to Google is futile’ they weren’t about to swallow that. The Finns had other ideas.

Indeed, Jolla’s indie vision for Sailfish OS is to support a whole shoal of differently branded, regionally flavored and independently minded (non-Google-led) ecosystems all swimming around in parallel. Though getting there means not just surviving but thriving — and doing so in spite of the market being so thoroughly dominated by the U.S. tech giant.

TechCrunch spoke to Jolla ahead of this year’s Mobile World Congress tradeshow where co-founder and CEO, Sami Pienimäki, was taking meetings on the sidelines. He told us his hope is for Jolla to have a partner booth of its own next year — touting, in truly modest Finnish fashion, an MWC calendar “maybe fuller than ever” with meetings with “all sorts of entities and governmental representatives”.

Jolla co-founder, Sami Pienimaki, showing off a Jolla-branded handset in May 2013, back when the company was trying to attack the consumer smartphone space. 
(Photo credit: KIMMO MANTYLA/AFP/Getty Images)

Even a modestly upbeat tone signals major progress here because an alternative smartphone platform licensing business is — to put it equally mildly — an incredibly difficult tech business furrow to plough.

Jolla almost died at the end of 2015 when the company hit a funding crisis. But the plucky Finns kept paddling, jettisoning their early pursuit of consumer hardware (Pienimäki describes attempting to openly compete with Google in the consumer smartphone space as essentially “suicidal” at this point) to narrow their focus to a b2b licensing play.

The early b2b salespitch targeted BRIC markets, with Jolla hitting the road to seek buy in for a platform it said could be moulded to corporate or government needs while still retaining the option of Android app compatibility.

Then in late 2016 signs of a breakthrough: Sailfish gained certification in Russia for government and corporate use.

Its licensing partner in the Russian market was soon touting the ability to go “absolutely Google-free!“.

Buy in from Russia

Since then the platform has gained the backing of Russian telco Rostelecom, which acquired Jolla’s local licensing customer last year (as well as becoming a strategic investor in Jolla itself in March 2018 — “to ensure there is a mutual interest to drive the global Sailfish OS agenda”, as Pienimäki puts it).

Rostelecom is using the brand name ‘Aurora OS‘ for Sailfish in the market which Pienimäki says is “exactly our strategy” — likening it to how Google’s Android has been skinned with different user experiences by major OEMs such as Samsung and Huawei.

“What we offer for our customers is a fully independent, regional licence and a tool chain so that they can develop exactly this kind of solution,” he tells TechCrunch. “We have come to a maturity point together with Rostelecom in the Russia market, and it was natural move plan together, that they will take a local identity and proudly carry forward the Sailfish OS ecosystem development in Russia under their local identity.”

“It’s fully compatible with Sailfish operating system, it’s based on Sailfish OS and it’s our joint interest, of course, to make it fly,” he adds. “So that as we, hopefully, are able to extend this and come out to public with other similar set-ups in different countries those of course — eventually, if they come to such a fruition and maturity — will then likely as well have their own identities but still remain compatible with the global Sailfish OS.”

Jolla says the Russian government plans to switch all circa 8M state officials to the platform by the end of 2021 — under a project expected to cost RUB 160.2 billion (~$2.4BN). (A cut of which will go to Jolla in licensing fees.)

It also says Sailfish-powered smartphones will be “recommended to municipal administrations of various levels,” with the Russian state planning to allocate a further RUB 71.3 billion (~$1.1BN) from the federal budget for that. So there’s scope for deepening the state’s Sailfish uptake.

Russian Post is one early customer for Jolla’s locally licensed Sailfish flavor. Having piloted devices last year, Pienimäki says it’s now moving to a full commercial deployment across the whole organization — which has around 300,000 employees (to give a sense of how many Sailfish powered devices could end up in the hands of state postal workers in Russia).

A rugged Sailfish-powered device piloted by Russian post

Jolla is not yet breaking out end users for Sailfish OS per market but Pienimäki says that overall the company is now “clearly above” 100k (and below 500k) devices globally.

That’s still of course a fantastically tiny number if you compare it to the consumer devices market — top ranked Android smartphone maker Samsung sold around 70M handsets in last year’s holiday quarter, for instance — but Jolla is in the b2b OS licensing business, not the handset making business. So it doesn’t need hundreds of millions of Sailfish devices to ship annually to turn a profit.

Scaling a royalty licensing business to hundreds of thousands of users is sums to “good business”, , says Pienimäki, describing Jolla’s business model for Sailfish as “practically a royalty per device”.

“The success we have had in the Russian market has populated us a lot of interesting new opening elsewhere around the world,” he continues. “This experience and all the technology we have built together with Open Mobile Platform [Jolla’s Sailfish licensing partner in Russia which was acquired by Rostelecom] to enable that case — that enables a number of other cases. The deployment plan that Rostelecom has for this is very big. And this is now really happening and we are happy about it.”

Jolla’s “Russia operation” is now beginning “a mass deployment phase”, he adds, predicting it will “quickly ramp up the volume to very sizeable”. So Sailfish is poised to scale.

Step 3… profit?

While Jolla is still yet to turn a full-year profit Pienimäki says several standalone months of 2018 were profitable, and he’s no longer worried whether the business is sustainable — asserting: “We don’t have any more financial obstacles or threats anymore.”

It’s quite the turnaround of fortunes, given Jolla’s near-death experience a few years ago when it almost ran out of money, after failing to close a $10.6M Series C round, and had to let go of half its staff.

It did manage to claw in a little funding at the end of 2015 to keep going, albeit as much leaner fish. But bagging Russia as an early adopter of its ‘independent’ mobile Linux ecosystem looks to have been the key tipping point for Jolla to be able to deliver on the hard-graft ecosystem-building work it’s been doing all along the way. And Pienimäki now expresses easy confidence that profitability will flow “fairly quickly” from here on in.

“It’s not an easy road. It takes time,” he says of the ecosystem-building company Jolla hard-pivoted to at its point of acute financial distress. “The development of this kind of business — it requires patience and negotiation times, and setting up the ecosystem and ecosystem partners. It really requires patience and takes a lot of time. And now we have come to this point where actually there starts to be an ecosystem which will then extend and start to carry its own identity as well.”

In further signs of Jolla’s growing confidence he says it hired more than ten people last year and moved to new and slightly more spacious offices — a reflection of the business expanding.

“It’s looking very good and nice for us,” Pienimäki continues. “Let’s say we are not taking too much pressure, with our investors and board, that what is the day that we are profitable. It’s not so important anymore… It’s clear that that is soon coming — that very day. But at the same time the most important is that the business case behind is proven and it is under aggressive deployment by our customers.”

The main focus for the moment is on supporting deployments to ramp up in Russia, he says, emphasizing: “That’s where we have to focus.” (Literally he says “not screwing up” — and with so much at stake you can see why nailing the Russia case is Jolla’s top priority.)

While the Russian state has been the entity most keen to embrace an alternative (non-U.S.-led) mobile OS — perhaps unsurprisingly — it’s not the only place in the world where Jolla has irons in the fire.

Another licensing partner, Bolivian IT services company Jalasoft, has co-developed a Sailfish-powered smartphone called Accione.

Jalasoft’s ‘liberty’-touting Accione Sailfish smartphone

It slates the handset on its website as being “designed for Latinos by Latinos”. “The digitalization of the economy is inevitable and, if we do not control the foundation of this digitalization, we have no future,” it adds.

Jalasoft founder and CEO Jorge Lopez says the company’s decision to invest effort in kicking the tyres of Jolla’s alternative mobile ecosystem is about gaining control — or seeking “technological libration” as the website blurb puts it.

“With Sailfish OS we have control of the implementation, while with Android it is the opposite,” Lopez tells TechCrunch. “We are working on developing smart buildings and we need a private OS that is not Android or iOS. This is mainly because our product will allow the end user to control the whole building and doing this with Android or iOS a hackable OS will bring concerns on security.”

Lopez says Jalasoft is using Accione as its development platform — “to gather customer feedback and to further develop our solution” — so the project clearly remains in an early phase, and he says that no more devices are likely to be announced this year.

But Jolla can point to more seeds being sewn with the potential, with work, determination and patience, to sprout into another sizeable crop of Sailfish-powered devices down the line.

Complexity in China

Even more ambitiously Jolla is also targeting China, where investment has been taken in to form a local consortium to develop a Chinese Sailfish ecosystem.

Although Pienimäki cautions there’s still much work to be done to bring Sailfish to market in China.

“We completed a major pilot with our licensing customer, Sailfish China Consortium, in 2017-18,” he says, giving an update on progress to date. “The public in market solution is not there yet. That is something that we are working together with the customer — hopefully we can see it later this year on the market. But these things take time. And let’s say that we’ve been somewhat surprised at how complex this kind of decision-making can be.”

“It wasn’t easy in Russia — it took three years of tight collaboration together with our Russian partners to find a way. But somehow it feels that it’s going to take even more in China. And I’m not necessarily talking about calendar time — but complexity,” he adds.

While there’s no guarantee of success for Jolla in China, the potential win is so big given the size of the market that even if they can only carve out a tiny slice, such as a business or corporate sector, it’s still worth going after. And he points to the existence of a couple of native mobile Linux operating systems he reckons could make “very lucrative partners”.

That said, the get-to-market challenge for Jolla in China is clearly distinctly different vs the rest of the world. This is because Android has developed into an independent (i.e. rather than Google-led) ecosystem in China as a result of state restrictions on the Internet and Internet companies. So the question is what could Sailfish offer that forked Android doesn’t already?

An Oppo Android powered smartphone on show at MWC 2017

Again, Jolla is taking the long view that ultimately there will be appetite — and perhaps also state-led push — for a technology platform bolster against political uncertainty in U.S.-China relations.

“What has happened now, in particular last year, is — because of the open trade war between the nations — many of the technology vendors, and also I would say the Chinese government, has started to gradually tighten their perspective on the fact that ‘hey simply it cannot be a long term strategy to just keep forking Android’. Because in the end of the day it’s somebody else’s asset. So this is something that truly creates us the opportunity,” he suggests.

“Openly competing with the fact that there are very successful Android forks in China, that’s going to be extremely difficult. But — let’s say — tapping into the fact that there are powers in that nation that wish that there would be something else than forking Android, combined with the fact that there is already something homegrown in China which is not forking Android — I think that’s the recipe that can be successful.”

Not all Jolla’s Sailfish bets have paid off, of course. An earlier foray by an Indian licensing partner into the consumer handset market petered out. Albeit, it does reinforce their decision to zero in on government and corporate licensing.

“We got excellent business connections,” says Pienimäki of India, suggesting also that it’s still a ‘watch this space’ for Jolla. The company has a “second move” in train in the market that he’s hopeful to be talking about publicly later this year.

It’s also pitching Sailfish in Africa. And in markets where target customers might not have their own extensive in-house IT capability to plug into Sailfish co-development work Pienimäki says it’s offering a full solution — “a ready made package”, together with partners, including device management, VPN, secure messaging and secure email — which he argues “can be still very lucrative business cases”.

Looking ahead and beyond mobile, Pienimäki suggests the automotive industry could be an interesting target for Sailfish in the future — though not literally plugging the platform into cars; but rather licensing its technologies where appropriate — arguing car makers are also keen to control the tech that’s going into their cars.

“They really want to make sure that they own the cockpit. It’s their property, it’s their brand and they want to own it — and for a reason,” he suggests, pointing to the clutch of major investments from car companies in startups and technologies in recent years.

“This is definitely an interesting area. We are not directly there ourself — and we are not capable to extend ourself there but we are discussing with partners who are in that very business whether they could utilize our technologies there. That would then be more or less like a technology licensing arrangement.”

A trust balancing model

While Jolla looks to be approaching a tipping point as a business, in terms of being able to profit off of licensing an alternative mobile platform, it remains a tiny and some might say inconsequential player on the global mobile stage.

Yet its focus on building and maintaining trusted management and technology architectures also looks timely — again, given how geopolitical spats are intervening to disrupt technology business as usual.

Chinese giant Huawei used an MWC keynote speech last month to reject U.S.-led allegations that its 5G networking technology could be repurposed as a spying tool by the Chinese state. And just this week it opened a cybersecurity transparency center in Brussels, to try to bolster trust in its kit and services — urging industry players to work together on agreeing standards and structures that everyone can trust.

In recent years U.S.-led suspicions attached to Russia have also caused major headaches for security veteran Kaspersky — leading the company to announce its own trust and transparency program and decentralize some of its infrastructure, including by spinning up servers in Europe last year.

Businesses finding ways to maintain and deepen the digital economy in spite of a little — or even a lot — of cross-border mistrust may well prove to be the biggest technology challenge of all moving forward.

Especially as next-gen 5G networks get rolled out — and their touted ‘intelligent connectivity’ reaches out to transform many more types of industries, bringing new risks and regulatory complexity.

The geopolitical problem linked to all this boils down to how to trust increasing complex technologies without any one entity being able to own and control all the pieces. And Jolla’s business looks interesting in light of that because it’s selling the promise of neutral independence to all its customers, wherever they hail from — be it Russia, LatAm, China, Africa or elsewhere — which makes its ability to secure customer trust not just important but vital to its success.

Indeed, you could argue its customers are likely to rank above average on the ‘paranoid’ scale, given their dedicated search for an alternative (non-U.S.-led) mobile OS in the first place.

“It’s one of the number one questions we get,” admits Pienimäki, discussing Jolla’s trust balancing act — aka how it manages and maintains confidence in Sailfish’s independence, even as it takes business backing and code contributions from a state like Russia.

“We tell about our reference case in Russia and people quickly ask ‘hey okay, how can I trust that there is no blackbox inside’,” he continues, adding: “This is exactly the core question and this is exactly the problem we have been able to build a solution for.”

Jolla’s solution sums to one line: “We create a transparent platform and on top of fully transparent platform you can create secure solutions,” as Pienimäki puts it.

“The way it goes is that Jolla with Sailfish OS is always offering the transparent Sailfish operating system core, on source code level, all the time live, available for all the customers. So all the customers constantly, in real-time, have access to our source code. Most of it’s in public open source, and the proprietary parts are also constantly available from our internal infrastructure. For all the customers, at the same time in real-time,” he says, fleshing out how it keeps customers on board with a continually co-developing software platform.

“The contributions we take from these customers are always on source code level only. We don’t take any binary blobs inside our software. We take only source code level contributions which we ourselves authorize, integrate and then we make available for all the customers at the very same moment. So that loopback in a way creates us the transparency.

“So if you want to be suspicion of the contributions of the other guys, so to say, you can always read it on the source code. It’s real-time. Always available for all the customers at the same time. That’s the model we have created.”

“It’s honestly quite a unique model,” he adds. “Nobody is really offering such a co-development model in the operating system business.

“Practically how Android works is that Google, who’s leading the Android development, makes the next release of Android software, then releases it under Android Open Source and then people start to backboard it — so that’s like ‘source, open’ in a way, not ‘open source’.”

Sailfish’s community of users also have real-time access to and visibility of all the contributions — which he dubs “real democracy”.

“People can actually follow it from the code-line all the time,” he argues. “This is really the core of our existence and how we can offer it to Russia and other countries without creating like suspicion elements each side. And that is very important.

“That is the only way we can continue and extend this regional licensing and we can offer it independently from Finland and from our own company.”

With global trade and technology both looking increasingly vulnerable to cross-border mistrust, Jolla’s approach to collaborative transparency may offer something of a model if other businesses and industries find they need to adapt themselves  in order for trade and innovation to keep moving forward in uncertain political times.

Antitrust and privacy uplift

Last but not least there’s regulatory intervention to consider.

A European Commission antitrust decision against Google’s Android platform last year caused headlines around the world when the company was slapped with a $5BN fine.

More importantly for Android rivals Google was also ordered to change its practices — leading to amended licensing terms for the platform in Europe last fall. And Pienimäki says Jolla was a “key contributor” to the Commission case against Android.

European competition commissioner Margrethe Vestager, on April 15, 2015 in Brussels, as the Commission said it would open an antitrust investigation into Google’s Android operating system. (Photo credit: JOHN THYS/AFP/Getty Images)

The new Android licensing terms make it (at least theoretically) possible for new types of less-heavily-Google-flavored Android devices to be developed for Europe. Though there have been complaints the licensing tweaks don’t go far enough to reset Google’s competitive Android advantage.

Asked whether Jolla has seen any positive impacts on its business following the Commission’s antitrust decision, Pienimäki responds positively, recounting how — “one or two weeks after the ruling” — Jolla received an inbound enquiry from a company in France that had felt hamstrung by Google requiring its services to be bundled with Android but was now hoping “to realize a project in a special sector”.

The company, which he isn’t disclosing at this stage, is interested in “using Sailfish and then having selected Android applications running in Sailfish but no connection with the Google services”.

“We’ve been there for five years helping the European Union authorities [to build the case] and explain how difficult it is to create competitive solutions in the smartphone market in general,” he continues. “Be it consumer or be it anything else. That’s definitely important for us and I don’t see this at all limited to the consumer sector. The very same thing has been a problem for corporate clients, for companies who provide specialized mobile device solutions for different kind of corporations and even governments.”

While he couches the Android ruling as a “very important” moment for Jolla’s business last year, he also says he hopes the Commission will intervene further to level the smartphone playing field.

“What I’m after here, and what I would really love to see, is that within the European Union we utilize Linux-based, open platform solution which is made in Europe,” he says. “That’s why we’ve been pushing this [antitrust action]. This is part of that. But in bigger scheme this is very good.”

He is also very happy with Europe’s General Data Protection Regulation (GDPR) — which came into force last May, plugging in a long overdue update to the bloc’s privacy rules with a much beefed up enforcement regime.

GDPR has been good for Jolla’s business, according to Pienimäki, who says interest is flowing its way from customers who now perceive a risk to using Android if customer data flows outside Europe and they cannot guarantee adequate privacy protections are in place.

“Already last spring… we have had plenty of different customer discussions with European companies who are really afraid that ‘hey I cannot offer this solution to my government or to my corporate customer in my country because I cannot guarantee if I use Android that this data doesn’t go outside the European Union’,” he says.

“You can’t indemnify in a way that. And that’s been really good for us as well.”

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Huawei opens a cybersecurity transparency center in the heart of Europe

Posted by | 5g, Asia, Brussels, China, computer security, cybersecurity, EC, Europe, General Data Protection Regulation, huawei, Internet of Things, Mobile, Network Security, Security, telecommunications | No Comments

5G kit maker Huawei opened a Cyber Security Transparency center in Brussels yesterday as the Chinese tech giant continues to try to neutralize suspicion in Western markets that its networking gear could be used for espionage by the Chinese state.

Huawei announced its plan to open a European transparency center last year but giving a speech at an opening ceremony for the center yesterday the company’s rotating CEO, Ken Hu, said: “Looking at the events from the past few months, it’s clear that this facility is now more critical than ever.”

Huawei said the center, which will demonstrate the company’s security solutions in areas including 5G, IoT and cloud, aims to provide a platform to enhance communication and “joint innovation” with all stakeholders, as well as providing a “technical verification and evaluation platform for our
customers”.

“Huawei will work with industry partners to explore and promote the development of security standards and verification mechanisms, to facilitate technological innovation in cyber security across the industry,” it said in a press release.

“To build a trustworthy environment, we need to work together,” Hu also said in his speech. “Both trust and distrust should be based on facts, not feelings, not speculation, and not baseless rumour.

“We believe that facts must be verifiable, and verification must be based on standards. So, to start, we need to work together on unified standards. Based on a common set of standards, technical verification and legal verification can lay the foundation for building trust. This must be a collaborative effort, because no single vendor, government, or telco operator can do it alone.”

The company made a similar plea at Mobile World Congress last week when its rotating chairman, Guo Ping, used a keynote speech to claim its kit is secure and will never contain backdoors. He also pressed the telco industry to work together on creating standards and structures to enable trust.

“Government and the mobile operators should work together to agree what this assurance testing and certification rating for Europe will be,” he urged. “Let experts decide whether networks are safe or not.”

Also speaking at MWC last week the EC’s digital commissioner, Mariya Gabriel, suggested the executive is prepared to take steps to prevent security concerns at the EU Member State level from fragmenting 5G rollouts across the Single Market.

She told delegates at the flagship industry conference that Europe must have “a common approach to this challenge” and “we need to bring it on the table soon”.

Though she did not suggest exactly how the Commission might act.

A spokesman for the Commission confirmed that EC VP Andrus Ansip and Huawei’s Hu met in person yesterday to discuss issues around cybersecurity, 5G and the Digital Single Market — adding that the meeting was held at the request of Hu.

“The Vice-President emphasised that the EU is an open rules based market to all players who fulfil EU rules,” the spokesman told us. “Specific concerns by European citizens should be addressed. We have rules in place which address security issues. We have EU procurement rules in place, and we have the investment screening proposal to protect European interests.”

“The VP also mentioned the need for reciprocity in respective market openness,” he added, further noting: “The College of the European Commission will hold today an orientation debate on China where this issue will come back.”

In a tweet following the meeting Ansip also said: “Agreed that understanding local security concerns, being open and transparent, and cooperating with countries and regulators would be preconditions for increasing trust in the context of 5G security.”

Met with @Huawei rotating CEO Ken Hu to discuss #5G and #cybersecurity.

Agreed that understanding local security concerns, being open and transparent, and cooperating with countries and regulators would be preconditions for increasing trust in the context of 5G security. pic.twitter.com/ltATdnnzvL

— Andrus Ansip (@Ansip_EU) March 4, 2019

Reuters reports Hu saying the pair had discussed the possibility of setting up a cybersecurity standard along the lines of Europe’s updated privacy framework, the General Data Protection Regulation (GDPR).

Although the Commission did not respond when we asked it to confirm that discussion point.

GDPR was multiple years in the making and before European institutions had agreed on a final text that could come into force. So if the Commission is keen to act “soon” — per Gabriel’s comments on 5G security — to fashion supportive guardrails for next-gen network rollouts a full blown regulation seems an unlikely template.

More likely GDPR is being used by Huawei as a byword for creating consensus around rules that work across an ecosystem of many players by providing standards that different businesses can latch on in an effort to keep moving.

Hu referenced GDPR directly in his speech yesterday, lauding it as “a shining example” of Europe’s “strong experience in driving unified standards and regulation” — so the company is clearly well-versed in how to flatter hosts.

“It sets clear standards, defines responsibilities for all parties, and applies equally to all companies operating in Europe,” he went on. “As a result, GDPR has become the golden standard for privacy protection around the world. We believe that European regulators can also lead the way on similar mechanisms for cyber security.”

Hu ended his speech with a further industry-wide plea, saying: “We also commit to working more closely with all stakeholders in Europe to build a system of trust based on objective facts and verification. This is the cornerstone of a secure digital environment for all.”

Huawei’s appetite to do business in Europe is not in doubt, though.

The question is whether Europe’s telcos and governments can be convinced to swallow any doubts they might have about spying risks and commit to working with the Chinese kit giant as they roll out a new generation of critical infrastructure.

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Transportation Weekly: Polestar CEO speaks, Tesla terminology, and a tribute

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Welcome back to Transportation Weekly; I’m your host Kirsten Korosec, senior transportation reporter at TechCrunch . This is the fourth edition of our newsletter, a weekly jaunt into the wonderful world of transportation and how we (and our packages) move.

This week we chat with Polestar CEO Thomas Ingenlath, dig into Lyft’s S-1, take note of an emerging trend in AV development, and check out an experiment with paving. Oh, and how could we forget Tesla.

Never heard of TechCrunch’s Transportation Weekly? Catch up here, here and here. As I’ve written before, consider this a soft launch. Follow me on Twitter @kirstenkorosec to ensure you see it each week. (An email subscription is coming). 


ONM …

There are OEMs in the automotive world. And here, (wait for it) there are ONMs — original news manufacturers. (Cymbal clash!) This is where investigative reporting, enterprise pieces and analysis on transportation lives.

This week, we’re featuring excerpts taken from a one-on-one interview with Polestar CEO Thomas Ingenlath.

On February 27, Volvo’s standalone electric performance brand Polestar introduced its first all-electric vehicle, a five-door fastback called the Polestar 2. The EV, which has a 78 kWh battery pack and can travel 275 miles (estimated EPA guidance) on a single charge, will be manufactured at a new factory in Chengdu, China. Other notable specs: The infotainment system will be powered by Android OS, Polestar is offering subscriptions to the vehicle, and production starts in 2020.

yellow-jacket-polestar

Here is what Ingenlath had to say to me about …

EV charging infrastructure

To be very unpolitical, I think it would be totally stupid if we were to aim to develop electric charging infrastructure on our own or for our brand specifically. If you join the electric market today, of course, you would see partnerships; that’s sensible thing to do. Car companies together are making a big effort in getting out a network of necessary charging stations along the highway. 

That’s what we’re doing; we’re teaming up and have the contracts being designed and soon signed.

On the company’s approach to automation 

The terminology is important for us. We very clearly put that into a different picture, we’re not talking about, and we clearly do not ever want to label it, anautopilot.” The focus of this system is a very safe distance control, which brakes for you and accelerates for you, and of course, the lane keeping. This is not about developing an autopilot system, it is about giving your safety. And that’s where we don’t want to provoke people thinking that they have full rollout autopilot system there. But it is a system that helps you being safe and protected on the road.

I also reached out to Transportation Weekly readers and asked what they wanted to know and then sent some of those questions to Ingenlath.

TW Reader: How did it feel taking one of your personal styling elements – the C shaped rear lamps – from your previous brand over to Polestar?
Ingenlath: It’s an evolutionary process. Polestar naturally builds on its “mothers” DNA and as a new branch develops its own personality. Thor’s hammer, the rear light signature -—with each new model launch (Volvo and Polestar) those elements diverge into a brand specific species.
TW Reader: How much do you still get to do what you love, which is design?
Ingenlath: Being creative is still my main job, now applied on a broader scope — trying to lead a company with a creative and  brand building mindset. Still, I love the Fridays when I meet up with Robin and Max to review the models, sketches and new data. We really enjoy driving the design of both brands to new adventures.

Dig In

Tesla is finally going to offer customers a $35,000 Model 3. How the automaker is able to sell this electric vehicle at the long-awaited $35,000 price point is a big piece of that story — and one that some overlooked. In short, the company is blowing up its sales model and moving to an online only strategy. Tesla stores will close or be converted to “information centers” and retail employees will be laid off.

But this is not what we’re going to talk about today. Tesla has also brought back its so-called “full self-driving” feature, which was removed as an option on its website last year. Now it’s back. Owners can opt for Autopilot, which has automatic steering on highways and traffic-aware cruise control, or FSD.

FSD capability includes several features such as Navigate on Autopilot that is supposed to guide a car from a highway on-ramp to off-ramp, including navigating interchanges and making lane changes. FSD also includes Advanced Summon, Auto Lane Change, and Autopark. Later this year, the system will recognize and respond to traffic lights in more complex urban environments, Tesla says.

All of these features require the driver to be engaged (or ready to take over), yet it’s called “full self-driving.” Now Tesla has two controversially named automation features. (The other is Autopilot). As Andrew Hawkins at The Verge noted in his coverage, “experts are beginning to realize that the way we discuss, and how companies market, autonomy is significant.”

Which begs the obvious question, and one that I asked Musk during a conference call on Thursday. “Isn’t it a problem that you’re calling this full self-driving capability when you’re still going to require the driver to take control or be paying attention?” (I also wanted to ask a followup on his response, but the moderator moved onto the next reporter).

His response:

“We are very clear when you buy the car what is meant by full self driving. It means it’s feature complete, but feature complete requiring supervision.

As we get more — we really need billions of miles, if not maybe 10 billion sort of miles or kilometers on that order collectively from the fleet — then in our opinion probably at that point supervision is not required, but that will still be up to regulators to agree.

So we’re just very clear.  There’s really three steps: there’s being feature complete of full self driving that requires supervision, feature complete but not requiring supervision, and feature complete not requiring supervision and regulators agree.

In other Tesla news, the National Transportation Safety Board is investigating a crash, that at first glance seems to be similar to the fatal crash that killed Tesla owner Joshua Brown.

In cooperation with the Palm Beach sheriff’s office, the NTSB is sending a team of three to conduct a safety investigation of the commercial motor vehicle and Tesla crash in Delray Beach, FL.

— NTSB_Newsroom (@NTSB_Newsroom) March 2, 2019


A little bird …

We hear a lot. But we’re not selfish. Let’s share.

blinky-cat-bird

It’s no secret that Pittsburgh is one of the hubs of autonomous vehicle development in the world. But what’s not so widely known — except for a group of government and company insiders — is that Mayor William Peduto is on the verge of issuing an executive order that will give more visibility into testing there. 

The city’s department of mobility and infrastructure is the central coordinator of this new executive order that aims to help guide testing and policy development there. The department is going to develop guidelines for AV testing, we’re told. And it appears that information on testing will be released to the public at least once a year.

Got a tip or overheard something in the world of transportation? Email me or send a direct message to @kirstenkorosec.


Deal of the week

Daimler and BMW are supposed to be competitors. And they are, except with mapping (both part of the HERE consortium), mobility services (car sharing, ride-sharing), and now the development of highly automated driving systems. The deal is notable because it illustrates a larger trend that has emerged as the AV industry hunkers down into the “trough of disillusionment.” And that’s consolidation. If 2016, was the year of splashy acquisitions, then 2019 is shaping up to be chockfull of alliances and failures (of some startups).

Also interesting to note, and one that will make some AV safety experts cringe, both companies are working on Level 3 driving automation, a designation by the SAE that means conditional driving automation in which multiple high levels of automation are available in certain conditions, but a human driver must be ready to take over. This level of automation is the most controversial because of the so-called “hand off” problem in which a human driver is expected to take control of the wheel in time.

Speaking of partnerships, another deal that got our attention this week involved New York-based mapping and data analytics startup Carmera and Toyota Research Institute-Advanced Development. TRI-AD is an autonomous drive unit started by Toyota with Denso and Aisin. TRI-AD’s mission is to take the research being done over at the Toyota Research Institute and turn its into a product.

The two companies are going to test a concept that will use cameras in Toyota test vehicles to collect data from downtown Tokyo and use it to create high definition maps for urban and surface roads.

TRI-AD considers this the first step towards its open software platform concept known as Automated Mapping Platform that will be used to support the scalability of highly automated driving, by combining data gathered from vehicles of participating companies to generate HD maps. AMP is new and has possible widespread implications at Toyota. And TRI-AD is full of A-listers, including CEO James Kuffner, who came from the Google self-driving project and Nikos Michalakis, who built Netflix’s cloud platform, and Mandali Khalesi, who was at HERE.

Read more on Khalesi and the Toyota’s open source ambitions here.

Other deals:


Snapshot

Snapshot this week is a bit untraditional. It’s literally a snapshot of myself and my grandmother, months before her 100th birthday. Her memorial service was held Saturday. She died at 101. She loved cars and fast ones, but not so much driving them. And every time I got a new press car, we’d hit the road and she’d encourage me to take the turns a bit faster.

She also loved road trips and in the 1920s, her father would drive the family on the mostly dirt roads from New Jersey to Vermont and even Canada. In her teens, she loved riding in the rumble seat, a feature found in a few vehicles at the time including the Ford Model A.

She was young at heart, until the very end. Next week, we’ll focus on the youngest drivers and one automotive startup that is targeting that demographic.


Tiny but mighty micromobility

Lyft’s S-1 lays out the risks associated with its micromobility business and its intent to continue relying on third parties to manufacture its bikes and scooters. Here’s a key nugget about adoption:

“While some major cities have widely adopted bike and scooter sharing, there can be no assurance that new markets we enter will accept, or existing markets will continue to accept, bike and scooter sharing, and even if they do, that we will be able to execute on our business strategy or that our related offerings will be successful in such markets. Even if we are able to successfully develop and implement our network of shared bikes and scooters, there may be heightened public skepticism of this nascent service offering.”

And another about seasonality:

“Our limited operating history makes it difficult for us to assess the exact nature or extent of the effects of seasonality on our network of shared bikes and scooters, however, we expect the demand for our bike and scooter rentals to decline over the winter season and increase during more temperate and dry seasons.”

Lyft, which bought bike-share company Motivate back in July, also released some data about its electric pedal-assist bikes this week, showing that the pedal assist bikes are, unsurprisingly, more popular than the traditional bikes. They also traveled longer distances and improved winter ridership numbers. Now, Lyft is gearing up to deploy 4,000 additional electric bikes to the Citi Bike system in New York City.

One more thing …

Google Maps has added a feature that lets users see Lime scooters, pedal bikes and e-bikes right from the transit tab in over 80 new cities around the world. Users can click the tab to find out if Lime vehicle is available, how long it’ll take to walk to the vehicle, an estimate of how much their ride could cost, along with total journey time and ETA.


Notable reads

If take the time to read anything this week (besides this newsletter), spend some time with Lyft’s S-1. The ride-hailing company’s prospectus mentions autonomous 109 times. In short, yeah, it’s something the company’s executives are thinking about and investing in.

Lyft says it has a two-pronged strategy to bring autonomous vehicles to market. The company encouraging developers of autonomous vehicle technology to use its open platform to get access to its network and enable their vehicles to fulfill rides on the Lyft platform. And Lyft is trying to build its own autonomous vehicle system at its confusingly named “Level 5 Engineering Center.”

  • The company’s primary investors are Rakuten with a 13 percent stake, GM with 7.8 percent, Fidelity with 7.7 percent, Andreessen Horowitz with 6.3 percent and Alphabet with 5.3 percent. GM and Alphabet have business units, GM Cruise and Waymo respectively, that are also developing AV technology.
  • Through Lyft’s partnership with AV systems developer and supplier Aptiv, people in Las Vegas have taken more than 35,000 rides in Aptiv autonomous vehicles with a safety driver since January 2018.
  • One of the “risks” the company lists is “a failure to detect a defect in our autonomous vehicles or our bikes or scooters”

Other quotable notables:

Check out the Pedestrian Traffic Fatalities by State report, a newly released report from Volvo Car USA and The Harris Poll called  The State of Electric Vehicles in America.


Testing and deployments

Again, deployments doesn’t always mean the latest autonomous vehicle pilot.

On Saturday, Sidewalk Labs hosted its Open Sidewalk event in Toronto. This is part of Sidewalk Toronto, a joint effort by Waterfront Toronto and Alphabet’s Sidewalk Labs to create a “mixed-use, complete community” on Toronto’s Eastern Waterfront

The idea of this event was to share ideas and prototypes for making outdoor public space the “social default year-round.” One such prototype “hexagonal paving” got our attention because of its use case for traffic control and pedestrian and bicyclist safety. (Pictured below)

These individual precast concrete slabs are movable and permeable, can light up and give off heat. The idea is that these hexagonal-shaped slabs and be used to clear snow and ice in trouble spots and light up to warn drivers and pedestrians of changes to the street use or to illuminate an area for public uses or even designate bike lanes and hazard zones. And because they’re permeable they can be used to absorb stormwater or melted snow and guide it to underground stormwater management systems.

Sidewalk Labs tell me that the pavers have “plug and play” holes, which allow things like bike racks, bollards, and sign posts to be inserted. Sidewalk Labs initially built these with wood, and the new prototype is the next iteration, featuring modules built from concrete.


On our radar

There is a lot of transportation-related activity this month.

The Geneva Motor Show: Press days are March 5 and March 6. Expect concept, prototype and production electric vehicles from Audi, Honda, Kia, Peugeot, Pininfarina, Polestar, Spanish car company Hispano Suiza, and Volkswagen.

SXSW in Austin: TechCrunch will be at SXSW this coming week. Here’s where I’ll be.

  • 2 p.m. to 6:30 p.m. March 9 at the Empire Garage for the Smart Mobility Summit, an annual event put on by Wards Intelligence and C3 Group. The Autonocast, the podcast I co-host with Alex Roy and Ed Niedermeyer, will also be on hand.
  • 9:30 a.m. to 10:30 a.m. March 12 at the JW Marriott. The Autonocast and founding general partner of Trucks VC, Reilly Brennan will hold a SXSW podcast panel on automated vehicle terminology and other stuff.
  • 3:30 p.m over at the Hilton Austin Downtown, I’ll be moderating a panel Re-inventing the Wheel: Own, Rent, Share, Subscribe. Sherrill Kaplan with Zipcar, Amber Quist, with Silvercar and Russell Lemmer with Dealerware will join me.
  • TechCrunch is also hosting a SXSW party from 1 pm to 4 pm Sunday, March 10, 615 Red River St., that will feature musical guest Elderbrook. RSVP here

Self Racing Cars

Finally, I’ve been in contact with Joshua Schachter who puts on the annual Self Racing Car event, which will be held March 23 and March 24 at Thunderhill Raceway near Willows, California.

There is still room for participants to test or demo their autonomous vehicles, drive train innovation, simulation, software, teleoperation, and sensors. Hobbyists are welcome. Sign up to participate or drop them a line at contact@selfracingcars.com.

Thanks for reading. There might be content you like or something you hate. Feel free to reach out to me at kirsten.korosec@techcrunch.com to share those thoughts, opinions or tips. 

Nos vemos la próxima vez.

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5G phones are here but there’s no rush to upgrade

Posted by | 5g, Android, Apple, Asia, barcelona, broadband, Caching, China, deutsche telekom, donovan sung, Europe, european commission, european union, huawei, Intel, Internet of Things, iPhone, LG, Mobile, mwc 2019, Qualcomm, Samsung, singtel, smartphone, smartphones, south korea, TC, telecommunications, Xiaomi | No Comments

This year’s Mobile World Congress — the CES for Android device makers — was awash with 5G handsets.

The world’s No.1 smartphone seller by marketshare, Samsung, got out ahead with a standalone launch event in San Francisco, showing off two 5G devices, just before fast-following Android rivals popped out their own 5G phones at launch events across Barcelona this week.

We’ve rounded up all these 5G handset launches here. Prices range from an eye-popping $2,600 for Huawei’s foldable phabet-to-tablet Mate X — and an equally eye-watering $1,980 for Samsung’s Galaxy Fold; another 5G handset that bends — to a rather more reasonable $680 for Xiaomi’s Mi Mix 3 5G, albeit the device is otherwise mid-tier. Other prices for 5G phones announced this week remain tbc.

Android OEMs are clearly hoping the hype around next-gen mobile networks can work a little marketing magic and kick-start stalled smartphone growth. Especially with reports suggesting Apple won’t launch a 5G iPhone until at least next year. So 5G is a space Android OEMs alone get to own for a while.

Chipmaker Qualcomm, which is embroiled in a bitter patent battle with Apple, was also on stage in Barcelona to support Xiaomi’s 5G phone launch — loudly claiming the next-gen tech is coming fast and will enhance “everything”.

“We like to work with companies like Xiaomi to take risks,” lavished Qualcomm’s president Cristiano Amon upon his hosts, using 5G uptake to jibe at Apple by implication. “When we look at the opportunity ahead of us for 5G we see an opportunity to create winners.”

Despite the heavy hype, Xiaomi’s on stage demo — which it claimed was the first live 5G video call outside China — seemed oddly staged and was not exactly lacking in latency.

“Real 5G — not fake 5G!” finished Donovan Sung, the Chinese OEM’s director of product management. As a 5G sales pitch it was all very underwhelming. Much more ‘so what’ than ‘must have’.

Whether 5G marketing hype alone will convince consumers it’s past time to upgrade seems highly unlikely.

Phones sell on features rather than connectivity per se, and — whatever Qualcomm claims — 5G is being soft-launched into the market by cash-constrained carriers whose boom times lie behind them, i.e. before over-the-top players had gobbled their messaging revenues and monopolized consumer eyeballs.

All of which makes 5G an incremental consumer upgrade proposition in the near to medium term.

Use-cases for the next-gen network tech, which is touted as able to support speeds up to 100x faster than LTE and deliver latency of just a few milliseconds (as well as connecting many more devices per cell site), are also still being formulated, let alone apps and services created to leverage 5G.

But selling a network upgrade to consumers by claiming the killer apps are going to be amazing but you just can’t show them any yet is as tough as trying to make theatre out of a marginally less janky video call.

“5G could potentially help [spark smartphone growth] in a couple of years as price points lower, and availability expands, but even that might not see growth rates similar to the transition to 3G and 4G,” suggests Carolina Milanesi, principal analyst at Creative Strategies, writing in a blog post discussing Samsung’s strategy with its latest device launches.

“This is not because 5G is not important, but because it is incremental when it comes to phones and it will be other devices that will deliver on experiences, we did not even think were possible. Consumers might end up, therefore, sharing their budget more than they did during the rise of smartphones.”

The ‘problem’ for 5G — if we can call it that — is that 4G/LTE networks are capably delivering all the stuff consumers love right now: Games, apps and video. Which means that for the vast majority of consumers there’s simply no reason to rush to shell out for a ‘5G-ready’ handset. Not if 5G is all the innovation it’s got going for it.

LG V50 ThinQ 5G with a dual screen accessory for gaming

Use cases such as better AR/VR are also a tough sell given how weak consumer demand has generally been on those fronts (with the odd branded exception).

The barebones reality is that commercial 5G networks are as rare as hen’s teeth right now, outside a few limited geographical locations in the U.S. and Asia. And 5G will remain a very patchy patchwork for the foreseeable future.

Indeed, it may take a very long time indeed to achieve nationwide coverage in many countries, if 5G even ends up stretching right to all those edges. (Alternative technologies do also exist which could help fill in gaps where the ROI just isn’t there for 5G.)

So again consumers buying phones with the puffed up idea of being able to tap into 5G right here, right now (Qualcomm claimed 2019 is going to be “the year of 5G!”) will find themselves limited to just a handful of urban locations around the world.

Analysts are clear that 5G rollouts, while coming, are going to be measured and targeted as carriers approach what’s touted as a multi-industry-transforming wireless technology cautiously, with an eye on their capex and while simultaneously trying to figure out how best to restructure their businesses to engage with all the partners they’ll need to forge business relations with, across industries, in order to successfully sell 5G’s transformative potential to all sorts of enterprises — and lock onto “the sweep spot where 5G makes sense”.

Enterprise rollouts therefore look likely to be prioritized over consumer 5G — as was the case for 5G launches in South Korea at the back end of last year.

“4G was a lot more driven by the consumer side and there was an understanding that you were going for national coverage that was never really a question and you were delivering on the data promise that 3G never really delivered… so there was a gap of technology that needed to be filled. With 5G it’s much less clear,” says Gartner’s Sylvain Fabre, discussing the tech’s hype and the reality with TechCrunch ahead of MWC.

“4G’s very good, you have multiple networks that are Gbps or more and that’s continuing to increase on the downlink with multiple carrier aggregation… and other densification schemes. So 5G doesn’t… have as gap as big to fill. It’s great but again it’s applicability of where it’s uniquely positioned is kind of like a very narrow niche at the moment.”

“It’s such a step change that the real power of 5G is actually in creating new business models using network slicing — allocation of particular aspects of the network to a particular use-case,” Forrester analyst Dan Bieler also tells us. “All of this requires some rethinking of what connectivity means for an enterprise customer or for the consumer.

“And telco sales people, the telco go-to-market approach is not based on selling use-cases, mostly — it’s selling technologies. So this is a significant shift for the average telco distribution channel to go through. And I would believe this will hold back a lot of the 5G ambitions for the medium term.”

To be clear, carriers are now actively kicking the tyres of 5G, after years of lead-in hype, and grappling with technical challenges around how best to upgrade their existing networks to add in and build out 5G.

Many are running pilots and testing what works and what doesn’t, such as where to place antennas to get the most reliable signal and so on. And a few have put a toe in the water with commercial launches (globally there are 23 networks with “some form of live 5G in their commercial networks” at this point, according to Fabre.)

But at the same time 5G network standards are yet to be fully finalized so the core technology is not 100% fully baked. And with it being early days “there’s still a long way to go before we have a real significant impact of 5G type of services”, as Bieler puts it. 

There’s also spectrum availability to factor in and the cost of acquiring the necessary spectrum. As well as the time required to clear and prepare it for commercial use. (On spectrum, government policy is critical to making things happen quickly (or not). So that’s yet another factor moderating how quickly 5G networks can be built out.)

And despite some wishful thinking industry noises at MWC this week — calling for governments to ‘support digitization at scale’ by handing out spectrum for free (uhhhh, yeah right) — that’s really just whistling into the wind.

Rolling out 5G networks is undoubtedly going to be very expensive, at a time when carriers’ businesses are already faced with rising costs (from increasing data consumption) and subdued revenue growth forecasts.

“The world now works on data” and telcos are “at core of this change”, as one carrier CEO — Singtel’s Chua Sock Koong — put it in an MWC keynote in which she delved into the opportunities and challenges for operators “as we go from traditional connectivity to a new age of intelligent connectivity”.

Chua argued it will be difficult for carriers to compete “on the basis of connectivity alone” — suggesting operators will have to pivot their businesses to build out standalone business offerings selling all sorts of b2b services to support the digital transformations of other industries as part of the 5G promise — and that’s clearly going to suck up a lot of their time and mind for the foreseeable future.

In Europe alone estimates for the cost of rolling out 5G range between €300BN and €500BN (~$340BN-$570BN), according to Bieler. Figures that underline why 5G is going to grow slowly, and networks be built out thoughtfully; in the b2b space this means essentially on a case-by-case basis.

Simply put carriers must make the economics stack up. Which means no “huge enormous gambles with 5G”. And omnipresent ROI pressure pushing them to try to eke out a premium.

“A lot of the network equipment vendors have turned down the hype quite a bit,” Bieler continues. “If you compare this to the hype around 3G many years ago or 4G a couple of years ago 5G definitely comes across as a soft launch. Sort of an evolutionary type of technology. I have not come across a network equipment vendors these days who will say there will be a complete change in everything by 2020.”

On the consumer pricing front, carriers have also only just started to grapple with 5G business models. One early example is TC parent Verizon’s 5G home service — which positions the next-gen wireless tech as an alternative to fixed line broadband with discounts if you opt for a wireless smartphone data plan as well as 5G broadband.

From the consumer point of view, the carrier 5G business model conundrum boils down to: What is my carrier going to charge me for 5G? And early adopters of any technology tend to get stung on that front.

Although, in mobile, price premiums rarely stick around for long as carriers inexorably find they must ditch premiums to unlock scale — via consumer-friendly ‘all you can eat’ price plans.

Still, in the short term, carriers look likely to experiment with 5G pricing and bundles — basically seeing what they can make early adopters pay. But it’s still far from clear that people will pay a premium for better connectivity alone. And that again necessitates caution. 

5G bundled with exclusive content might be one way carriers try to extract a premium from consumers. But without huge and/or compelling branded content inventory that risks being a too niche proposition too. And the more carriers split their 5G offers the more consumers might feel they don’t need to bother, and end up sticking with 4G for longer.

It’ll also clearly take time for a 5G ‘killer app’ to emerge in the consumer space. And such an app would likely need to still be able to fallback on 4G, again to ensure scale. So the 5G experience will really need to be compellingly different in order for the tech to sell itself.

On the handset side, 5G chipset hardware is also still in its first wave. At MWC this week Qualcomm announced a next-gen 5G modem, stepping up from last year’s Snapdragon 855 chipset — which it heavily touted as architected for 5G (though it doesn’t natively support 5G).

If you’re intending to buy and hold on to a 5G handset for a few years there’s thus a risk of early adopter burn at the chipset level — i.e. if you end up with a device with a suckier battery life vs later iterations of 5G hardware where more performance kinks have been ironed out.

Intel has warned its 5G modems won’t be in phones until next year — so, again, that suggests no 5G iPhones before 2020. And Apple is of course a great bellwether for mainstream consumer tech; the company only jumps in when it believes a technology is ready for prime time, rarely sooner. And if Cupertino feels 5G can wait, that’s going to be equally true for most consumers.

Zooming out, the specter of network security (and potential regulation) now looms very large indeed where 5G is concerned, thanks to East-West trade tensions injecting a strange new world of geopolitical uncertainty into an industry that’s never really had to grapple with this kind of business risk before.

Chinese kit maker Huawei’s rotating chairman, Guo Ping, used the opportunity of an MWC keynote to defend the company and its 5G solutions against U.S. claims its network tech could be repurposed by the Chinese state as a high tech conduit to spy on the West — literally telling delegates: “We don’t do bad things” and appealing to them to plainly to: “Please choose Huawei!”

Huawei rotating resident, Guo Ping, defends the security of its network kit on stage at MWC 2019

When established technology vendors are having to use a high profile industry conference to plead for trust it’s strange and uncertain times indeed.

In Europe it’s possible carriers’ 5G network kit choices could soon be regulated as a result of security concerns attached to Chinese suppliers. The European Commission suggested as much this week, saying in another MWC keynote that it’s preparing to step in try to prevent security concerns at the EU Member State level from fragmenting 5G rollouts across the bloc.

In an on stage Q&A Orange’s chairman and CEO, Stéphane Richard, couched the risk of destabilization of the 5G global supply chain as a “big concern”, adding: “It’s the first time we have such an important risk in our industry.”

Geopolitical security is thus another issue carriers are having to factor in as they make decisions about how quickly to make the leap to 5G. And holding off on upgrades, while regulators and other standards bodies try to figure out a trusted way forward, might seem the more sensible thing to do — potentially stalling 5G upgrades in the meanwhile.

Given all the uncertainties there’s certainly no reason for consumers to rush in.

Smartphone upgrade cycles have slowed globally for a reason. Mobile hardware is mature because it’s serving consumers very well. Handsets are both powerful and capable enough to last for years.

And while there’s no doubt 5G will change things radically in future, including for consumers — enabling many more devices to be connected and feeding back data, with the potential to deliver on the (much hyped but also still pretty nascent) ‘smart home’ concept — the early 5G sales pitch for consumers essentially boils down to more of the same.

“Over the next ten years 4G will phase out. The question is how fast that happens in the meantime and again I think that will happen slower than in early times because [with 5G] you don’t come into a vacuum, you don’t fill a big gap,” suggests Gartner’s Fabre. “4G’s great, it’s getting better, wi’fi’s getting better… The story of let’s build a big national network to do 5G at scale [for all] that’s just not happening.”

“I think we’ll start very, very simple,” he adds of the 5G consumer proposition. “Things like caching data or simply doing more broadband faster. So more of the same.

“It’ll be great though. But you’ll still be watching Netflix and maybe there’ll be a couple of apps that come up… Maybe some more interactive collaboration or what have you. But we know these things are being used today by enterprises and consumers and they’ll continue to be used.”

So — in sum — the 5G mantra for the sensible consumer is really ‘wait and see’.

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