For a private equity investor focussing on high-growth companies, MWC provides a great showcase of developing technology and an opportunity to continue to educate ourselves with regard to future trends. For example, the continued mega-trend towards the Internet of Things is evident as soon as you collect your badge and are presented with the official MWC bag, filled with marketing materials on IoT connectivity and smart devices.
This strong IoT theme runs throughout, with most exhibitors wanting to demonstrate leadership or applications in this field. For instance, Qualcomm has developed software for proximity services which allows consumers to input preferences into their phone (a penchant for jazz music was the example at the demo) and this can be used for individuals to find other like-minded people, or businesses to instantly respond and market to the desires of the majority of nearby consumers. They were also showcasing software to enable roaming instantly between WiFi and LTE zones, as well as the now obligatory smart fridge.
As private equity investors, we have still yet to see many more mature businesses in this space, with our recently exited investment of Wireless Logic one of the few consistently making material cash profits. The world of IoT is exciting and growing rapidly but companies developing software or applications in vertical specific markets are generally either divisions of large corporates or venture businesses.
There’s a separate section within the exhibition called Innovation City that housed many IoT companies developing things from the smart tennis racquet (which gives information on power, shot type etc) to the connected car. Ford had a stand with smart cars and smart powered push bikes. We are told that some OEMs will be launching cars in 2017 that will take over basic controls whilst in traffic jams, further controls in 2019 and all controls by 2022.
However, this will require extremely low latency given the reaction times involved which, together with the future volume of connections (50 to 100 billion by 2020 according to various sources), will require a new connectivity network. MWC had lots of discussion about the development of 5G, with early launches expected in the run up to the Tokyo Olympics in 2020. The debate on the required standards for 5G should be had openly – ironically not a strong point for the communications industry – as well as the debate on net neutrality given the vast number of new and varying applications that compete for bandwidth.
The exhibition still hosts a number of unveilings of consumer goods, this year including new smart phones and wearable tech, particularly smart watches. They don’t yet appear to be particularly useful or must-have gadgets, but there are an increasing number of them – Pebble, the crowdfunded star, unveiled two new watches; LG’s watch doubles as the key for your Audi including all the details about the remaining range, service levels etc; Huawei’s can also be a Bluetooth headset; and we’re still waiting for the Apple Watch that might drive real growth in this market.
Finally, it was interesting to hear that Google is going to launch an MVNO in the US so that the MNOs can learn from any good ideas! It also highlighted another key theme in the mobile world – how is all of this increased connectivity going to be carried? As Zuckerberg pointed out in his keynote address, carriers do the bulk of the work to connect the world’s billions. These networks need continued investment and, with the rollout of 4G only just happening in the UK yet the discussion already about 5G, will core network investment be able to keep pace with the rapid progress in IoT?
As a long term investor in the technology space, ECI is keen to make further investments in the IoT and broader mobile sector so if you have an investment opportunity which you’d like to discuss, please do get in touch.
Contact Paul McCreadie for further information.
