In this episode of The 5G Factor, our series that focuses on all things 5G, the IoT, and the ecosystem as a whole, I’m joined by my colleague and fellow analyst, Todd R Weiss, for a look at the top 5G developments and what’s going on that caught our eye.
Our conversation focused on:
Nokia DAC PW Compact Debut. The launch of Nokia Digital Automation Cloud (DAC) Private Wireless (PW) Compact provides a new configuration optimized to fulfill the private wireless connectivity demands of small- and mid-sized industrial sites. With more industries moving toward digital transformation to improve their business processes, a compact version of Nokia’s private wireless solution can deliver the security and reliable connectivity across a multitude of SME environments. We examine how the new solution bolsters Nokia’s commitment to accelerate green energy adoption, including the potential digital ecosystem impact the Nokia DAC PW Compact solution can generate by supporting up to 60 percent more energy-efficiency than Wi-Fi, resulting in a considerably lower energy footprint.
Blackberry Spins Out IoT Business Unit for IPO. Blackberry embarked on a major overhaul of its strategic direction following the company’s “Project Imperium” review. Blackberry’s board of directors resolved to separate its Internet of Things (IoT) and cybersecurity business units in preparation for an initial public offering (IPO) of its IoT concern next fiscal year. We consider the warrant behind the move as it further sharpens Blackberry’s primary focus on providing services in security, including managed detection and response (MDR) and critical event management, following its 2019 $1.4 billion acquisition of Cylance. Blackberry’s Cylance technology uses AI to drive threat hunting, attack analysis, and incident response solutions that we deem as key cybersecurity differentiators for Blackberry including IoT applications.
Ericsson ConsumerLab Report Highlights Differentiated 5G Connectivity Opportunities for CSPs. The Ericsson ConsumerLab satisfaction and user-loyalty-focused report, “5G Value: Turning Performance into Value”, highlights the CSP business case potential for 5G as a growing number of subscribers around the world express increased satisfaction with 5G. The comprehensive research, which reflects the views of an estimated 1.5 billion consumers globally, including about 650 million 5G customers, is part of an Ericsson research series which has tracked the evolution of the 5G consumer market since 2019. We review the impact of key takeaways such as 20% of 5G smartphone users are willing to pay premium to CSPs for differentiated QoS and 5G consumers have a threefold more likelihood of switching providers due to poor connectivity experiences as major venues like stadiums, arenas, and airports, can have on CSP decision makers and the 5G ecosystem.
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Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
Transcript:
Ron Westfall: Hello and welcome everyone to The 5G Factor. I’m Ron Westfall, research director here at The Futurum Group, and I’m joined here today by my distinguished colleague Todd R. Weiss, our team analyst focused on key areas such as communications networks. And today we are reviewing the major developments across the 5G and IOT ecosystems that have caught our eye. And so Todd, welcome back to The 5G Factor and many thanks again for joining today how have you been bearing up between our episodes?
Todd R. Weiss: I’m doing well and I’m really excited. We’ve got some really great topics for today, so I’m very pumped.
Ron Westfall: Well, yeah, I think that’s a great jumping off point and let’s dive right in because I think something that we were definitely talking about before the recording was that Nokia launched the Nokia Digital Automation Cloud private wireless compact solution. And basically it’s a new configuration that’s optimized naturally for private wireless connectivity needs of small and medium-sized industrial sites. So this is Nokia definitely honing in on a specific target, and I think that it will sharpen not only their overall messaging in the private wireless space, but also I think improve their overall sales cycles and so forth. And we’ll definitely touch on this more.
Additional details that are important is that we’re seeing more industries adopting these digital capabilities and that definitely can include private wireless to improve their connectivity needs when it comes to things like ultra low latency and quite simply high performance bandwidth coverage throughout entire site. And private wireless can definitely form a strong compliment to existing wifi connectivity, but it could also be implemented standalone. It simply depends on the needs of the customer.
And so this is, I think, a refreshing move because it’s demonstrating that clearly the small to medium business space is important strategically to Nokia. In fact, I’ve seen statistics that indicate that 99% of all jobs can be assigned to the small to medium business space, so that gives you an idea that it impacts a lot of workers throughout the US economy. And the new solution is built for fast delivery. The Nokia DAC private wireless compact solution, we can call it that, is designed to address these growing demands across all of these medium to small size campuses. And naturally the solution’s based on Nokia’s air scale small cell technology. And as a result, it’s tackling some of the toughest environments out there in the industrial arena. And I think we all understand that this is definitely a tall challenge that is being addressed. In fact, we know that industrial sites have lots of machinery, plenty of racks, and so there’s just a lot of density that can create barriers and interference quite simply for many wireless connectivity technologies. And this is something that is well suited in many cases for private wireless to address.
But I also think it’s important that the smaller form factors align to the coverage requirements of many of these smaller industrial sites. And what is I think going to be encouraging is that there’s zero upfront investment required. Quite simply, Nokia working with its reseller partners is going to offer a cost-effective connectivity option for these industrial premise environments. And so Todd, in looking at the announcement, what intrigued you about this particular debut that Nokia is doing?
Todd R. Weiss: Well, I agree with you Ron. I think this Nokia, this private wireless compact is really going to be great. For starters, it’s keeping with Nokia’s commitment to accelerate digital transformation and green energy adoption. The Nokia digital DAC PW contract… Let me say that again. For starters, it is in keeping with Nokia’s commitment to accelerate digital transformation and green energy adoption. The Nokia DAC PW compact is up to 60% more efficient than wifi, that’s a lot, resulting in a much lower energy footprint; and poor connectivity is hindering some SMEs from achieving their full revenue potential.
The logistics sector, according to ABI research, is forfeiting upwards of $664 million, that’s a lot of money, in annual revenue that mission-critical private cellular technology such as the Nokia DAC Private wireless compact could help to realize. That’s a giant thing. For sectors like warehousing where sites are densely populated with metal shells and coverage holes can impact business by causing handover failures, parcel loss and tracking issues. The compact 5G private wireless solution can certainly enhance existing operational use cases. I think it could be huge.
Ron Westfall: Yeah, no, I think you definitely hit the nail on the head, Todd. And I think what’s also going to help adoption is that it’s initially offered in the US within the unlicensed spectrum range, and that is fundamentally the citizen broadband radio service or CBRS spectrum. And as a result, I see the solution is going to align again with the requirements of many of these industrial sites. They will definitely want to have something that could be quickly integrated, that can have smooth assimilation with their existing implementations, including, for example, wifi.
And I thought it’s also important to note that to date Nokia has over 635 private wireless customers. And so clearly they’ve been spearheading this market segment in its nascent stage and have basically shown that there is a business case. However, to really scale this business case, to make private wireless all the more pervasively adopted is that they’re now enlisting key resellers, important ones such as DXC Technology, Future Technologies Venture, Graybar and Trilogy NextGen. And I think that’s a smart move because this is a way for clearly Nokia to be able to, again, achieve that scaling of the solution, to diversify their channels and to quite simply sell more private 5G solutions such as the DAC PW Compact. And I think it’s… Oh, go ahead Todd.
Todd R. Weiss: No, I was going to say to have an audience to sell this to is going to be a huge part of making it a success. So without the partners, it’s going to be a much slower uptake by customers.
Ron Westfall: Right on. And I think that’s something that we can understand in our business because speaking of having a business case that needs to be durable, let’s now turn our view to BlackBerry.
Todd R. Weiss: Oh yeah.
Ron Westfall: Certainly a brand name, a logo that definitely fires up the imagination. And yes, BlackBerry is definitely a going concern and one that I think has made some interesting moves over the last decade plus. So let’s look at what’s going on right now.
Basically, they’ve announced a major shakeup and its strategic direction following its Project Imperium Review, which sounds pretty dramatic. And as result of that review, its board of directors has decided to separate its Internet of Things, IOT, and cybersecurity business units while targeting an IPO for the IOT business next fiscal year. So this is intriguing because we’re seeing a lot of this movement within the IOT space. For example, Ericsson spun out some of its IOT assets. You get the idea that this is definitely a space that’s seeing a lot of this type of spin out, even M&A activity and IPO activity.
So after this review, they decided that one or more of the business units by May will need to actually be determined to have an optimal strategic direction for BlackBerry. So clearly that’s spinning out the IOT unit for an IPO. And I think basically the CEO, John Chen, captured the essence of why the move is being done because both the IOT and cyber businesses possess technology that clearly has market presence, that is being able to make a difference in many customers’ environments. And so the new proposed structure I anticipate can further enhance the operational agility and concentration on delivering these solutions to their clientele.
So really the essence is BlackBerry’s going to become a cybersecurity specialist shop when it’s dedicated to fulfilling the security needs of their customers. And with that, Todd, from your perspective, what are the implications for BlackBerry becoming basically a cybersecurity specialist operation?
Todd R. Weiss: Well, as we were saying before the show, I’ve been covering BlackBerry, oh my, since way before the first iPhone showed up back in 2007. And BlackBerry back then, remember the heyday of BlackBerry, it was the device for everyone. Every executive, everybody in the know everybody who had to have the best of the best devices had a BlackBerry. And at the time you couldn’t imagine that the BlackBerry would go the way of the Edsel, but it did. And it is one of those things, John Chen, I used to go to all those BlackBerry events and conferences in New York, they bring out the latest device, they always had great ideas and great implementations and great software and their security was the thing that made it what it was. The security, the privacy.
But then, as we all know, they didn’t react quickly enough to the iPhone, they let this business that was just mind-bogglingly huge, go right down the toilet. And John Chen, I have thought he and John Legere of T-Mobile, both in the mobile space to me are two of the most incredible leaders. They make things happen they get things done. I have followed John Chen for a long time. So to me, I was saying to you earlier it’s like that movie, what was that? It was like Life of Brian, the Monty Python movie where BlackBerry is there, it’s the knight in the marketplace. And they cut off one arm, they cut off another arm, they cut off a leg, they cut off another leg, but BlackBerry’s still alive. Oh my god, it’s 2023 and we’re still talking about BlackBerry in security.
So to me, I wouldn’t put anything past John Chen making something like this a success. This man has not given up despite his entire hardware business going away, despite his business changing every few years. I would give John Chen the benefit of the doubt. I’m pretty sure we’ll see them do something really well with this IOT, IPO. I really do.
Ron Westfall: Yeah, I agree wholeheartedly. And I think to your point, and thank you for waxing nostalgic about BlackBerry, have a few more thoughts on that, and today this move is pivoting on their 2019 acquisition of Cylance for $1.4 billion. And what I liked about that acquisition is that, again, it’s something that was ahead of the curve in terms of technology trends. Cylance was founded by former McAfee, the veterans. And what I think is interesting is that BlackBerry’s using the Cylance technology to use AI to quite simply hone cybersecurity capabilities. And that includes threat hunting, which I think is refreshing versus having to constantly play defense. This is like, “Okay, let’s go in the offense and find out who are the bad actors out there and preempt them,” which I think is refreshing. Plus attack analysis and the usual incident response solution capabilities and so on.
But yes, I can recall, to your point, Todd, when BlackBerry was at its peak it was called CrackBerry because it was so popular, well basically addictive. In fact, it was interesting that I believe in the US market that it had over 50% of the smartphone market share. But yes, then the iPhone came along, but they did defend their market share for about three years plus. Then the iPhone and then of course Samsung, Android and so forth basically definitely diversified the competitive mix. And now here we are today talking about BlackBerry as a cybersecurity specialist spinning out its IOT unit for an IPO, which is all I think intriguing and exciting news in itself.
And I think that also as a reminder to look at the BlackBerry movie that came out earlier this year, I haven’t actually seen it yet, it’s Canadian produced naturally. But I think one thing that you would be interested in is that Jim Balsillie is portrayed by Glenn Howerton of It’s Always Sunny in Philadelphia fame. So we got our Philadelphia tie-in through our BlackBerry conversation.
Todd R. Weiss: Yes, we did. Yes, we did.
Ron Westfall: And right on Todd, and moving to the third topic that we’re looking at in terms of today’s market is the new Ericsson ConsumerLab Report, one that I always look forward to every year that always has valuable data and insights and this year is no different. In fact, it’s even reporting differentiated 5G connectivity opportunities for the operators out there. And this is something that’s been a long time coming but now we have, I think, some hard data points to help drive the monetization that’s needed out there.
And I think what Ericsson highlighted, and I agree, is that 20% of 5G smartphone users are willing to pay premium to the CSPs, the communication service providers, for differentiated quality of service over their 5G connections. So I think this is a clear data point because all you have to do is look at the fact that there are over 1.5 billion 5G subscribers out there as it is, or at least there is 650 million 5G subscribers out there. But you get the idea that this is something that is going to move the market, just being able to address that 20% segment. And I think that’s going to be very important.
And also I think 5G consumers are indicating that they’re more likely to switch providers because of poor connectivity experiences at specific venues such as entertainment arenas, stadiums and airports. And I think this is a key takeaway for the providers because this, I think, warrants for example, installing more millimeter wave spectrum at these types of environments. And I think that’s going to be a key driver in terms of how the CSPs become smarter about being able to address the needs of their customers.
Todd R. Weiss: Can I throw something in? I want to throw something in.
Ron Westfall: Right on.
Todd R. Weiss: That’s why I’ve stayed with the same cell phone company for 23 years. 23 years I’ve been with the same one. I’m not going to say which one it is. But the same vendor because whenever I travel for work, if I’m in the bottom, the basement, the bowels of the Moscone Center in San Francisco, it works. If I’m in the bottom of the building, the big giant Javits Convention Center in New York, it works. Wherever I am, no matter the airport, the country, I never have a problem. And so I hear from people all the time they don’t get good connectivity in their own house or wherever, it’s like it’s a big deal to change. So if you really have bad problems, this is a giant thing. So this connectivity and finding other ways of providing it is huge to maintain and grow your customers. I absolutely believe these statistics, they make a lot of sense.
Ron Westfall: Yes. And I think yes, part of it is reinforced, but also it’s pointing to new opportunity. And to clarify, yes, this is a survey with impressive scope, it reflects the views of an estimated 1.5 billion consumers globally. So that’s the 1.5 billion figure, and includes about 650 million 5G customers. So there you go, that is some of the key parameters that are part and parcel of this particular survey. And Ericsson has been conducting this since 2019, certainly the 5G consumer market aspect of it. And so Todd, you shared your definite perspective. What else about the survey that you think is important for people to know about?
Todd R. Weiss: Well, I really think that this is a big deal. When people are unhappy with their service and they switch, it’s a big deal. It’s a big deal for the companies, the cell phone companies, all the network companies. It’s a big deal. This report identified four trends that you and I both were talking about were really interesting. The 5G network dissatisfaction drivers are evolving beyond just coverage. So it’s not just coverage, but customers still value 5G outdoor coverage and speed. It’s a big deal. And in markets where 5G population coverage exceeds 80%, longtime users also prioritize video quality, that’s huge to them, and upload speeds for the apps they use. And this all reflects evolving expectations. TikTok and everything else that people use, if you get poor service, you’re not going to be happy.
And the other one, 5G, it’s reshaping video streaming, like we were just talking about, and augmented reality usage. Emerging formats are increasingly driving usage in 5G data consumption as service providers bundle rich media content into 5G plans. It’s becoming a commodity, but the commodity has to deliver and these providers have to deliver. If customers expect it and they don’t get it, they’re gone, they’ll find somebody who can do it. And it’s expensive to be getting new customers, it’s expensive to watch customers walk away. It changes all the dynamics. So it should be a big deal to these companies.
Other things, 5G performance at key locations influences customer loyalty. It’s sort of the same thing. About 17% of consumers, this study shows, across 28 markets have switched service providers since the launch of 5G, driven primarily by issues with 5G network performance. I mean the writing is on the wall, 5G network performance, we want it, we want it now and we want it to be really good.
A significant influence is 5G experience in critical, we already talked about it, locations such as arenas and airports, and 5G consumers will pay premiums for differentiated connectivity. The study sees that clearly, 20% of the smartphone users expect differentiated 5G connectivity. These individuals, the study says, value premium connectivity and are willing to pay a premium of up to about 11% for a 5G plan that ensures elevated network performance. This is huge to consumers and business people who use their mobile phones, they’ve got to communicate and they are willing to pay for it and they demand that it be in their plans.
Ron Westfall: Right on, Todd. And this actually triggered two new thoughts in terms of, what is the impact of the key data points? One thing I’m intrigued by is how many of the consumers are basically self-employed gig workers and so forth, for example, an Uber driver or somebody who’s operating a kiosk at a entertainment venue like a concert. These are people I think are strong candidates for quality on demand offers from the service providers as well as the expanding hybrid workforce where more people are working from not only their home office but remote locations such as coffee shops and so forth. It can actually help the business, and I think it would be very well warranted for them to do this, is to authorize them to be able to pay for quality on demand or just have it as part of their service when they are working for the company basically using their own phone. So there’s a lot of overlap here that exists today, but it’d be interesting to see how this can develop into better monetization for the operators.
But I think onus is still on them. I think, yes, these are valuable takeaway points, but I think one thing that we know is that most of the operators out there have still not implemented 5G standalone. And that’s going to be essential, particularly with the 5G core capabilities that support things such as programmability, that support network slicing and other capabilities are going to be key for the operators to achieve these monetization milestones. In fact, at the beginning of this year, the GSM came out with a report that of the 524 operators globally that have invested in 5G, only 22% have invested in 5G standalone. So what are we waiting for? Clearly those numbers have to click up, go up in order for the operators to really take full advantage of their 5G investments. That’s understood, but this is all the more, I think, encouragement incentive for that to happen.
And so with that, I think, note that is let’s put this into full gear, let’s put the pedal to the metal in 5G standalone deployments. This I think will conclude our 5G Factor Show today. So again, Todd, thank you so much for joining our conversation.
Todd R. Weiss: Thank you, it was great. We can talk about BlackBerry on every call and get passionate about it.
Ron Westfall: Yes, a sequel, stay tuned, we have to see how this IPO pans out.
Todd R. Weiss: We’ll have a section, “What’s new in BlackBerry this week?” That’s what we’ll do.
Ron Westfall: Yes, so much more to comment on. And to our viewing audience and listening audience out there, once again, thank you so much for tuning in and we look forward to your subscription to The 5G Factor and the Futurum Tech Webcast series. And with that good 5G day everyone.
Other insights from The Futurum Group:
MWC23 LV: Nokia Debuts Network as Code To Spur App Innovation
5G Factor: T-Mobile, Vodafone, Orange, and Telefonica Shine at 5G Sustainability
Ericsson: Network Platform Rising
Author Information
Ron is an experienced, customer-focused research expert and analyst, with over 20 years of experience in the digital and IT transformation markets, working with businesses to drive consistent revenue and sales growth.
He is a recognized authority at tracking the evolution of and identifying the key disruptive trends within the service enablement ecosystem, including a wide range of topics across software and services, infrastructure, 5G communications, Internet of Things (IoT), Artificial Intelligence (AI), analytics, security, cloud computing, revenue management, and regulatory issues.
Prior to his work with The Futurum Group, Ron worked with GlobalData Technology creating syndicated and custom research across a wide variety of technical fields. His work with Current Analysis focused on the broadband and service provider infrastructure markets.
Ron holds a Master of Arts in Public Policy from University of Nevada — Las Vegas and a Bachelor of Arts in political science/government from William and Mary.
