2X @20% @20% 2020

© Peter Linder 2014 – All Rights Reserved
© Peter Linder 2014 – All Rights Reserved

The first 20 years of mobile and internet evolution was characterized by innovating for users, but this ‘smartphonification’ is rapidly approaching saturation in developed markets. However, the current growth wave is different. It is being driven by a mobile and cloud-centric evolution in which the pace of innovation is accelerating with businesses in focus. The question now is: how large can this transformation be?

The first five billion mobile users and their primary devices have been driving a significant market. The emerging mobile-cloud revolution has the potential to unlock even greater business values as enterprises transform to smart enterprises on top of the smartphone wave. So how much value might the next 45 billion devices be expected to generate? My hypothesis is that the new devices on average can generate 1/10th of the monthly revenues generated by a smartphone. Such a scenario mean network revenues could double in a mobile and cloud-centric business world by taking advantage of extended network capabilities to support the new devices?

With the adoption of new network architectures we will see a significant reduction of elements in the networks as we move towards optimized, virtualized and software-defined networks. Considering the fast pace of evolution in computing and storage technologies, it is possible to envision a scenario where a future network can be run with 20 percent of the network elements deployed today. The net result of this is that powerful programmable platforms are coming in, and legacy network elements are being retired.

The massive growth in connected devices, connectivity types and new business models call for a very high degree of automation of network operation procedures. This affects all steps including configuration, provisioning, monitoring and charging and billing. In addition, businesses expect the network to be agile, with the ability to serve their changing needs with on-demand service delivery capabilities. Imagine if it was possible to run the network with a significantly lower staff, say 20 percent of current levels – and require a much different skill set from employees.

A vital industry question is how fast this transformation will go? The smartphone wave and the very fast ramp up that came with it was a surprise to many network operators. Given the very strong momentum among industries in adopting mobile-first strategies for transforming their operations, fast and large-scale adoption for the mobile and cloud-centric wave is also likely to be very strong.

Imagine if already by 2020, the new network and new operational models can be fully deployed by operators. In addition, legacy networks would need to be phased-out gradually and a reality by 2020. Businesses could be fully mobilized and leveraging the mobile and cloud-centric advancements with the network playing a key role in the middle.

Here are my predictions regarding the size of these transformative forces:

* Potential revenue growth is tied to both customization of network services and business model innovation, in order to secure that value is both created and captured.
* The possible reductions in network elements and staff are tightly coupled to the ability to phase out the old in addition to building new. Expect the sunset of legacy networks to be harder than the sunrise of the new.

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