Once again, the past year brought many surprises to the technology industry as innovation, competition and market twists and turns kept everybody on their toes. IHS Technology analysts on the Thought Leaders Council created a list of 56 notable surprises in 2015 and voted on them to identify and rank the top 30 technology industry surprises of 2015. IHS Technology will post five surprises each day this week in a countdown to the number one surprise of 2015. In the previous two days, numbers 30 to 16 were published. Today numbers 15 to 11 are presented.
Enjoy!!!
#15 Chinese Chip Manufacturers Plan Aggressive Expansion in Weak Market
The forecasted rapid expansion within the Chinese foundry industry is not being driven by global increase in semiconductor demand. Unlike in 2004 when the semiconductor industry faced potential chip allocations the semiconductor industry in 2016 is facing a serious short-term decrease in demand. Globally the high penetration of handsets and PC’s has resulted in reduced growth rates and slowing demand for chip components. Although the largest market for consumer electronics is in China and India the highest concentration of component manufacturers are not located within these countries. This mismatch of end market consumption and manufacturing has resulted in the significant flow of Chinese RMB into foreign countries.
The Chinese government views this as a major opportunity to develop a self-sustaining economic engine. Unfortunately if demand fails to grow while manufacturing output increases the industry will face significant pricing pressure and potentially the reduction of competition. Taken to the extreme, aggressively funded state expansions could lead to global tariffs which in the end will inhibit innovation and ultimately result in increased costs which will be passed directly to consumers.
For more information visit, https://technology.ihs.com/424219/global-manufacturing-market-tracker
#14 Twenty Service Providers Go Live with SDN and NFV in 2015
In late 2014, we predicted that service providers would achieve about 10 deployments of SDN and NFV in their live traffic networks, including small trials or limited new services. Early in 2014, we learned from the IHS-Infonetics SDN and NFV Strategies, Global Service Provider Survey, March, 2014 (http://www.infonetics.com/pr/2014/SDN-and-NFV-Strategies-Survey-Highlights.asp), that 52% of those operators planned to deploy the vE-CPE use case of NFV in 2015. vE-CPE is virtual enterprise CPE; that is managed services like firewalls delivered via software running on servers in COs or data centers, rather than on firewall hardware appliances at enterprise sites and branch offices. Also about 1/3 planned to use NFV for IMS core and/or CDNs.
But, we observed during the rest of 2014 that operators were uncovering numerous issues and problems in Proof of Concept tests, and in some attempts to move to live field trials. The issues and problems would take time to resolve and often involved organizations outside of the lab and CTO groups including service design/marketing, OSS/BSS (including billing), network operations, and IT. With all of the uncovered problems, we thought it unlikely that more than 10 operators could move new services or operations onto SDN and/or NFV for commercial deployment.
The surprise for 2015 is that about 20 operators managed to put some service or operation onto SDN and/or NFV. Most of these are in what we call “contained domains”—either a small customer set, a narrow version of an existing service, or a brand new service. Some examples: Telefonica has a small consumer trial going in Brazil. NTT and DT have different versions of cloud services offered over SDN. Orange Business Systems has 10 customers running on an SDN/NFV service. Several operators are deploying limited VoLTE based on a new software/virtualized IMS core functions. Since VoLTE is a new service, mobile operators can keep all their existing mobile core functions in place, and only use NFV/SDN for the VoLTE service. AT&T, Telstra/PacNet, and COLT all have Ethernet service offerings based on SDN with customer self-service portals to help with automation. Akamai is using virtualized CDN software.
For more information visit, https://technology.ihs.com/546605/network-operators-reveal-software-defined-networking-sdn-plans-timing-and-challenges
#13 Foxconn’s Manufacturing Pivot to India from China
Last Summer I had the opportunity to tour Normandy on the 70th anniversary of VE Day. One of the most impressive aspects of the 1944 Allied Invasion was the infrastructure that was built to provide logistics support for the resupply of the Allied troops fighting in France.
In September of 2014 Prime Minister Modi announced a new initiative to improve the manufacturing sector by increasing tariffs on imported goods. The tariffs on smartphones increased from 4.5% to nearly 13%. This caught many OEMs by surprise in that the majority of mobile devices for the Indian markets were made in China.
By summer Foxconn announced their intent to open 10 manufacturing centers in India and hire 1 Million people. Three of those centers were opened later in 2015 supporting production for Xiaomi, Apple, Oppo, and other OEM’s. This pivot by Foxconn to South Asia is not unprecedented. From 2008 – 2014 Foxconn was focused on moving from the coastal areas to Inland China to mitigate labor availability and rising costs is the east. However, the speed of the initial move to India is still impressive in its scope and ability to overcome any and all anticipated difficulties in navigating the myriad of processes and regulations imposed by the various Indian government and local manufacturing centers. Foxconn’s Chairman Guo “military like” ability to rapidly move and ramp large scale manufacturing and logistics operations that meet the discerning requirements of major OEM’s is truly amazing. We need to look back to the 1940’s at the Liberation of Europe and the Marshall Plan to find comparable logistic endeavors.
For more information visit, https://technology.ihs.com/Services/420062/outsourced-manufacturing-intelligence-service
#12 Tesla Envisions an Off-Grid World
In April this year, Tesla unveiled its new company called Tesla Energy along with two new products that are derived from one of the core technologies of its electric car – battery. In an effort to mass-produce batteries to achieve economy of scale, Tesla is diversifying into the energy storage market for home and businesses applications by launching the Powerwall and Powerpack battery systems, respectively. Weighing at 100kg and with the capacity of 10kWh, the Powerwall is a large lithium-ion battery designed to look attractive when mounted on a wall and can be charged by electricity generated from solar panels and the grid. Conversely, the Powerpack is the larger industrial version of Powerwall with 100kWh capacity and can be scaled from powering a single building to providing energy to an entire town.
The launch of the batteries could not be timelier as countries in the world will begin to take impactful measures to cut carbon emissions after the deal to keep global temperature increase below 2 Celsius is reached in the Paris COP21 climate summit. Tesla’s battery technology will play an important role in the world’s gradual transition towards renewable energy sources by driving solar energy adoption at a greater scale and rate than before as it can provide an unprecedented energy storage solution to the masses that is cheaper, more efficient and reliable. Although initially priced at $3,000, the costs of Powerwall are expected to fall by 50% to $125/kWh by 2020 as battery cell technology advances and scale benefits are reaped. Complemented by the falling prices and increasing efficiency of solar panels, the implications of the Powerwall could be significant for developing countries such as India and the African nations that have poor grid infrastructure. It is crucial for Tesla to reduce the costs of these batteries to an affordable price point quickly if it wants to introduce the Powerwall solutions to these countries, which will soon be investing heavily in renewable technologies with funding channeled from the $100 billion per year climate finance pledged in Paris COP21.
Although Tesla is rising quickly in the energy storage market, electric car is still Tesla’s core interest. The carmaker hopes to ramp up demand for its Powerwall and Powerpack to justify the massive production capacity of the Gigafactory when it begins operation in 2017. It is in Tesla’s grand plan to launch the affordable Model 3 EV in 2017, which will be competitively priced at $35,000. To do that, Tesla aims to leverage the Gigafactory to drive down battery costs to less than one-fifth of the EV’s bill-of-materials. Ultimately, successful implementation of the Gigafactory model will enable Tesla to make a strong entrance into the affordable EV market and propel it to become the largest lithium-ion battery supplier in the world.
For more information visit:
- https://technology.ihs.com/Categories/450477/smart-grid-energy-storage
- https://technology.ihs.com/531410/teardown-tesla-powerwall
#11 Operators Embrace New Technologies to Tackle IOT
Low Power Wide Area Network (LPWAN) technologies are a key area of focus for operators in building their overall M2M/IoT strategies. In the past year, a number of new LPWAN technologies have become available and even more are being considered for standardization by 3GPP. This plethora of LPWAN alternatives poses a challenge for operators as they seek to choose the best option going forward. The buzz around the LPWAN market has grown intense over the past year, and some operators worry about falling behind in a potentially important and fast-moving new market. However, IHS believes that operators have the time to be patient and let a formal cellular LPWAN standard mature through the 3GPP RAN Work Item process.
IHS estimates that the total installed base of LPWAN connections—across all technology variants, including some not discussed above—totaled nearly 23 million connections in 2014 and will rise to about 191 million connections by 2019. These calculations are based on both a “bottom-up” estimate of actual deployed shipments and the TAM opportunity for LPWAN (and reasonable penetration rates) across a range of market segments, including industrial automation, smart energy, and smart cities. This forecast represents very fast, impressive growth. However, the 2019 projection of 191 million connections is still relatively small compared to the 541 million cellular M2M/IoT connections forecast for that year. While IHS anticipates continued fast growth for LPWAN beyond 2019, and the potential is certainly there for LPWAN-based M2M/IoT connections to eventually outstrip connections using current 2G/3G/4G technologies, the point is that operators can afford to wait for a full 3GPP LPWAN standard to come to the market by mid-year 2016, with full commercialization in 2017.
IHS believes that a number of different LPWAN technologies will continue to exist in the market, at least over the near to medium term. There is significant space in the market for LPWAN technologies that operate in unlicensed spectrum and enable both private and public network services that can be deployed by non-traditional actors, in addition to operators. Ultimately, the IoT will comprise a rich fabric of different connectivity technologies, targeting different use cases and operating using a range of economic models.
For more information visit, https://technology.ihs.com/551217/operators-face-an-overabundance-of-options
Information and analysis provided by the following analysts for IHS Technology:
- Len Jelinek - Senior Director
- Michael Howard - Senior Research Director
- Dan Panzica - Senior Principal Analyst
- Vinita Jakhanwal - Senior Director
- Bill Morelli - Director
- Ash Sharma - Senior Research Director
- Dale Ford - Vice President of Thought Leadership
Posted on 17 December 2015