Amadeus Capital
Amadeus’ highlights from Mobile World Congress (MWC) 2014
 
This is the 14th year that Amadeus has been at MWC – as attendees and/or speakers. 2014 was also the 10th year in which we hosted the Amadeus MWC Dinner for a select group of CEOs, investors and analysts – an invitation-only event at which people can speak freely, in confidence, but whose themes we highlight at the end of this brief report. 
 
Mobile World Congress 2014 Dinner 3
 
At the main MWC event, these were our main ‘takes’: 
 
With Whatsapp’s announcement of its intention to launch voice in Q2, Whatsapp now has the potential to rival Skype and the next three years may well see the international calls market becoming a duopoly between these two players. 
 
The OTT challenge (again) this year centered on discussion around net neutrality, carriers’ strategic positioning and zero rating. 
 
Few carriers seem to be making the wholesaler model actually work, though Tele2 in Sweden now boasts its success with a hilarious mass audience marketing campaign titled “Born to be cheap”. Facebook was out in force pushing for zero-rating, particularly with emerging market operators in order to connect the “next billions of users”.
 
With Whatsapp, Facebook could become the largest MVNO (Mobile Virtual Network Operator) ever. As with Google, mobile operators in developed markets seem to be at a loss on how to react to the OTT threat and make the “smart connectivity” model work. 
 
Mobile financial services had a stream that was long on aspiration and short on reality. As we all know, mobile financial services may be the next wave of services in most emerging markets, but few operators can point to success – yet. Exceptions can be found in Africa, including M-Pesa, and MTN Mobile Money. 
 
Emerging markets themselves were a leitmotif of the whole event, with issues including: how to achieve more universal coverage, low cost smartphones, and getting users on to data plans. Our view from MWC 2014 is that operators like MTN, America Movil, Etisalat, Maxis, Vimpelcom may now be as advanced in these markets as some developed markets operators. 
 
Discussions underlined two key facts that we see all the time in sourcing opportunities for our Amadeus IV Digital Prosperity Fund: first, emerging markets are all different, with each having its own characteristics; second, that many so-called emerging markets have now in fact emerged. 
 
Mobile World Congress 2014 Dinner 1
 
Machine to Machine (M2M) remains the current hot topic and, after three years of “the next billions of connected devices” presentations, this year saw some solid cases presented. IBM mentioned 120m “real” M2M connected devices – probably a realistic number, excluding dongles, laptops, etc. Applications that drive tens of thousands of units are considered by the market to be “big”, hundreds of thousands “huge”. Automotive remains the largest market with multiple applications – as evidenced by the recent acquisition of our portfolio company Octo Telematics.
 
Our impressions on network technologies were: 
  • everyone must have “small cells” somewhere in their offering – the term was probably the most name-checked in the large halls 
  • Software Defined Networks – including SON – were again much hyped, but still more laboratory trials than real deployments
  • MIMO (multiple inputs – multiple outputs) and ET (envelope tracking) are becoming “established” technologies with testing equipment vendors now reporting strong “design-in and testing” activities with most OEMs 
  • Security – from identity, to privacy, to network equipment integrity and security. Carriers are looking for solutions and there are, as yet, few vendors with strong point solutions or any large vendors with a wide portfolio. 
  • All the IT players were singing the Big Data and Customer Analytics tunes, though few real carrier customer cases with clear ROIs were presented.
 
We saw the introduction of a number of new and impressive devices. Many of these had their own wearables, whether as watch or wristband (seemingly all replicating Fitbit), which underlined the importance of the Bluetooth semiconductor players. 
 
For us, the most interesting area of the new apps, with many innovative start-ups, was m-health (mobile health). In our view, the convergence of information technology and healthcare is an important investment opportunity today. 
 
Mobile World Congress 2014 Dinner 2
 
And away from the big event, at the Amadeus MWC Dinner, opinions were, as always, freely expressed and often controversial, whether about individual companies or trends and opportunities. There was optimism about capital markets, which have opened up in the past year and are driving M&A and VC exits. Some tables discussed where the hardware start-ups are today – and if any VCs are now backing them; most investment in this key area seems to be in Israel or from corporates. People wondered which mobile financial services were actually working. The view was that cash-in and cash-out were successful but that regulatory hurdles hampered development of other services. Some doubted if, in finance, there would ever be an industry body like the GSMA in mobile communications, contributing to global interoperability. Views were also expressed on the unexpected rise of 4k (UltraHD) for video capture and output, albeit not on mobile. And we discussed which semi-vendor has the best chance of challenging Qualcomm (but we’ll keep the consensus to ourselves). 
 
And finally, for the fun: the most impressive DEMO of the WEEK for us was KYOCERA’s Smart Sonic Receiver. The technology is being licensed to many handset makers and thanks to tissue conduction enables you to hear audio clearly in incredibly noisy conditions just by putting the screen against your head. 
 
 
 
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