As I type this, I am on a plane to Barcelona for Mobile World Congress (MWC). This is my eighth or ninth year of attendance. Not as long a history as some, but long enough to see some changes.
There are only so many options for traveling from San Francisco to Barcelona. So I usually assume that half the people on my flight are going to the show. I will admit to occasionally (often) peaking at people’s laptops to see if I can guess where they work.
I remember being on a flight in 2009 and seeing two guys in the coach cabin from Facebook. They were preparing slides for a presentation. And I remember thinking “How interesting, the app guys are starting to show up at MWC.” Back then Facebook was still below 250 million subscribers, a rising star but not the powerhouse they have since become.
Now, here we are five years later, and how things have changed. Facebook has acquired WhatsApp, and WhatsApp is poised to overtake global SMS traffic. Think about that for a second.
For those not familiar with it, MWC is the world’s leading mobile conference. It has become the most concentrated venue for meeting people in the industry. I think there are few conferences in other industries that can compare to the density of MWC. This is a global event for a global industry. But in my time attending the show, I have seen a remarkable transformation of the definition of ‘mobile’. The show used to be event where telecom equipment and software vendors gathered to sell things to the telecom operators. There were a lot of grey beards and Nordic accents. This was a show for all things “carrier grade” and the halls were filled with base stations, antennas and test equipment. There were also halls filled with software companies making obscure products with odd acronyms like OSS/BSS, or with no products that were readily discernible. Those companies sold complex systems integration packages to the equipment vendors who then sold to the carriers, essentially custom software.
This all began to change, and you can probably guess when that was – 2008 six months after the iPhone launch. Since then, there has been a steady shift in attendance. The conference has gotten younger. There are now a lot more software and app vendors. When I run into grey beards from the old days, they lament how much the show has changed, and caution they are probably not coming back next year.
The most crowded booths used to be Nokia, Ericsson and Alcatel Lucent. Then for a period, Google had the most crowded booth with its giant slide and Android pins. Google has stopped hosting a booth, letting their hardware partners be the focus, but the change has taken place.
I am curious to see how the show looks this year because it feels like the telecom industry is going to shift soon, and shift hard.
All those OSS/BSS system vendors? They make software that handles carrier billing and management systems for facilitating telecom services like SMS. Six or seven years ago, as SMS traffic was skyrocketing, a large portion of the show was focused on products (both hard and soft) for managing text message systems.
Yet this week Facebook paid $19 billion to acquire a company whose messaging traffic is set to exceed global SMS traffic. A company with 30 engineers built a platform that replicates the multi-million dollar systems sold by dozens of vendors. Building “carrier scale” systems no longer means what it once did. This is another one of those areas where software improvements and the plummeting cost of computing are radically altering the competitive landscape.
Yes, the carriers are still important. Someone needs to handle the regulatory hurdles of getting base stations and access equipment installed, but much of the value on top of that has shifted to other, much smaller companies. Maybe the carriers can fight off these changes by blocking ‘net neutrality’, but the end-user has moved away from them, and that change is permanent.
I think the next step will come as smart carriers recognize their limitations and focus on things they can do well. A big topic in networking in recent years is “Network Function Virtualization” (NFV) which is the notion that carriers are trying to replace many of the single-purpose appliances in their network with software that runs on more generic (dare I say commodity) servers. NFV is more complicated than that, but the underlying dynamic is the same. They are finding ways to dramatically lower the cost of their services. They have no choice.
I do not see any Facebook people on this flight. I suspect they flew private, or at least chartered. Joining me in coach are the OSS/BSS guys, two are sitting right in front of me.
Times are changing.
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