A napkin strategy

“Jim, if you think Telco’s are capable of anything “Cloud” you need your head checked.” I clapped back with, “First, 5G networks are Cloud by design, investigate it. Secondly, anyone with a fixed mindset might as well accept failure. Third, Elon went from payments to building an electric vehicle company and launching astronauts into space? How? Mindset!” I grabbed the nearest napkin and started sketching out what I saw as a possible developer experience. My colleague was skeptical; I was brimming with optimism. Dream big I thought, and still think today.

A lot has changed since the early days of the Public Cloud. Virtualization has become the de facto. Enterprise data centers are physically shrinking and the cost of launching a startup has plummeted. A credit card, an MVP, and cases of Red Bull are common ingredients to launching a Startup and reaching the world. Emerging players such as Google, Facebook, Netflix, Uber and AirBnB created significant mobile markets by connecting people, streaming content, and launching the sharing economy. The Cloud has become, and is, a big part of our professional and consumer lives. Digitally transforming enterprises are betting on Clouds (private, hybrid, public, and multi-cloud) as transformation enablers backed by its unlimited computing resources. In fact, IDC reported almost a year ago that digital transformation (on ICT) spending could top $2.3 trillion by 2023. Financial services, discrete and process manufacturing, and retail sectors are expected to be the three largest spenders according to their analysis.

Application platforms have evolved significantly as well since mainframe, client/server, and broad adoption of virtualization in the early 2000’s. Early years of Infrastructure as a Service (IaaS) made sense; it was easy. Startups were building web applications and needed dynamic scale without the scale headaches. For enterprises, virtualization paved the way for smaller data centers, new management tools, and the ability to burst onto public clouds on demand. The evolution of platforms has been a constant, and it is evolving again in the form of edge computing, connectivity (5G), and artificial intelligence. Innovative startups that took advantage of early cloud capabilities will likely lead demand for connectivity and edge computing, as well.

You might notice that I pair “connectivity” and “edge” a lot. It is for good reason. Digital transformation is about collecting, analyzing, and acting on data. Data will be connected through an array of sensors, machines, and IoT devices. All that data needs to be processed and analyzed. If analyst predictions prove accurate, digitally transforming enterprises could become the major drivers behind the move to edge and private cellular networks. Still not convinced? A report presented earlier this year by ABI Research predicts that by 2036 enterprise demand for 5G spectrum will overtake consumer. That is an industry game changer and an opportunity to build a 5G and edge ecosystem.

Last week the 5G Open Innovation Lab proudly announced our Fall 2020 Batch #2 program. In case you missed it, the following 16 Startups were announced:

1. Bluebox Labs — Bluebox uses Co-pilot to offer an affordable software ecosystem for any car, providing security, convenience, and savings to the user — http://bluebox.io/

2. FreedomFi — FreedomFi uses commodity hardware, open source software and CBRS shared spectrum to build cost efficient private LTE networks and future 5G IoT deployments — http://freedomfi.com/

3. GenXComm — GenXComm’s Photonic Processors realize full duplex core technology to send and receive information at the same time on the same frequency, drastically improving uplink throughput and reducing latency. — https://genxcomm.com/

4. Innov8.ag — Innov8.ag combines on-farm and off-farm data with machine learning to inform grower decisions and maximize resource efficiency — https://www.innov8.ag/

5. Kubermatic Gmbh — Kubermatic’s platform automates the operations of Kubernetes clusters across multi-cloud, on-premises, and edge environments with a single management UI, addressing the operational challenge of running Kubernetes at scale. — http://kubermatic.com/

6. Latent AI — Latent AI provides LEIP, a modular and fully integrated workflow to simply and accelerate AI training and development for edge computing — https://latentai.com/

7. Mangata Networks — Mangata Networks provides scalable global coverage, with satellite and terrestrial solutions for high capacity and affordable backhaul. — https://mangatanetworks.com/

8. MATRIX Labs — MATRIX Labs offers affordable FPGA-driven development boards with sensors, mics, and wireless communication protocols to facilitate IoT app creation — https://www.matrix.one/

9. Megh Computing — Megh Computing uses FPGA accelerators to deliver an efficient and scalable platform for Real Time Stream Processing of Big Data Analytics, to be deployed in the public, private, and/or edge cloud — https://www.megh.com/

10. Mimik — Mimik provides a hybrid edgeCloud platform to turn any device into a cloud server, increasing data privacy and development speed while lowering the cost of the cloud — https://www.mimik.com/

11. MixComm — MixComm addresses the challenges constraining 5G mmWave performance by extending the link range, reducing power consumption, and reducing RF front-end costs with their Front-End IC’s — http://mixcomm.com/

12. Moeco IoT — Moeco combines a web platform with low-cost sensors to provide an end-to-end solution for data and sensor management as well as insight generation — http://www.moeco.io/

13. Nodle — Nodle is a decentralized wireless network of millions of smartphones and Bluetooth devices connecting people and things privately and securely — http://www.nodle.io/

14. QuayChain — QuayChain builds digital infrastructure in multi-user industrial locations to create Smart Industrial Hubs, harvesting data on their own to augment solutions in real time — http://www.quaychain.com/

15. Taubyte — Taubyte is a distributed edge platform that eliminates software development, deployment, and routing complexity at the edge, allowing (I)IoT developers to focus on product features, while reducing costs and time to market — https://taubyte.com/

16. Per Vices — PerVices delivers a flexible, multi-channel transmit and receive solution using their high-performance software defined radio (SDR) platforms — http://www.pervices.com/

Today we have more news to share. Our network of Founding Partners is growing to include Amdocs, Microsoft, Dell and VMware. Their support, and that of T-Mobile, Intel, NASA, and Avanade, recognize the opportunity we have built and affirms their combined commitment to being active platform leaders. It also signals their belief in the future of connectivity and edge driven by the value this community is creating. John Saw, our Lab Advisory Board member, often says that “T-Mobile is building a network larger than itself”. Similarly, Clayton Christensen once said, “Markets that do not exist cannot be analyzed: Suppliers and customers must discover them together.” Today’s announcement underpins John’s, and T-Mobile’s, approach to thinking beyond traditional boundaries and Clayton’s belief on the communal benefits of mutual discovery and understanding. 5G and edge is not about one organization, it’s about a collaboration of many.

Our partners’ deep roots in Telco, enterprise, and the public cloud was our goal since we quietly launched in 2018 and today are finally realizing it. With the demarcation line between private, hybrid, public, multi, and edge clouds blurring, the value of future 5G networks goes beyond connectivity to extend into local computing (the edge). Furthermore, we believe enterprises will push for ubiquitous, and secure, network interoperability influencing public cloud and Telco’s collaboration. At stake is $3.4T in annual global IT spending (according to Gartner).

Our journey is early in its developments. That said, there are arguments for why it matters now. They include:

1. Telcos have been efficient at capturing value from their core mobility business (consumer and enterprises). Since 1993 monthly average APRU has been steadily dropping from its hey day of $76.55 to $36.86 in 2019. To increase value Telco’s need to look beyond.

2. Net profit margin for US Telco’s averaged 8.91% last quarter compared to 18.1% for Cloud vendors. Applications create value pulling through platforms (operating systems, cloud, edge, hardware, etc).

3. According to the KeyBanc Capital Market report for 2020 SaaS Survey Results, 59% of respondents (companies generating $5M+ in ARR) reported that average initial contract deal sizes ranged from $15K to $250K. Cloud is a lucrative market with edge and connectivity as the future destination.

As I have said before, 5G networks are virtualized and software defined environments dependent on large-scale computing and vast network reach. Statista reports over 395,000 mobile wireless cell sites operate in the US all running fiber networks with most capable of hosting high-performance computing. As the 5G ecosystem grows there are viable use cases where edge computing makes sense. They include:

1. Remote rendering services (processing image and video data real time)

2. Analytics and data processing (processing IoT data locally with real-time insights)

3. Gaming (distributed computing for latency-sensitive gaming applications)

4. Autonomous anything (edge support for inferencing, neural networks, etc.)

5. Private 5G networks (targeting enterprises)

The combination of real estate and rise in popularity for application containers are drivers for an ecosystem approach. Our plans for the 5G Open Innovation Lab is to focus on building those bridges. Often this discussion ends up evolving into a Cloud vs. Telco edge debate. But, I just do not see it that way. Public clouds are growing in importance. With the right platform capabilities Telco’s can support the public cloud through their ultra-fast network access paired with high-value compute services developers can build on.

We are bridge builders, ecosystem catalysts, and force multipliers. Having the direct support of our Founding Partners is the catalyst to work with leading enterprise Startups solving the hard problems of today while understanding what is ahead. We are proud of what we have accomplished and grateful for the support and commitment provided by all our partners. Our community is built on collaborative principals, a commonly shared growth mindset, and the courage to build something bigger than us all.

And yet, we are just starting.



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