Telruptive

In a video posted on Youtube in January 2011, PHD student [now Dr. not surprisingly] Zdenek Kalal shows off his doctor’s thesis: Predator. Predator is a computer vision algorithm that shows how this nacent industry has matured in a few years.

First you define the object you want to track. In this case Zdenek selected his face.

Afterwards the face is automatically recognized. Even when the head is moved sideways.

 Finally it is even possible to recognize a face between many others on a photo.

Computer Vision is one of those domains that has been underutilized by most, except of course for Facebook, Google, etc. However in the age where people are moving from voice to video chat and even continuous live broadcasting, everybody that wants to add extra value towards end-users, or customers/advertisers, should be looking at the possibilities of computer vision. Imagine what is possible if you combine a Kinect or Leap with Predator: online advertisers and secret services ‘ paradise.

The whole video can be found here:

As well as the original source code and an alternative C++ implementation in the making.

A lot of people are talking about home automation, M2M in cars, etc. However there is a simpler solution than investing thousands of euros to automate everything. What if a new standard was developed that would combine UPnP, REST and WiFi and it would be embedded in most consumer appliances, cars, etc.? The idea is simple: allow devices to be discovered [UPnP] connected to your home network [WiFi] and allow them to expose their main functionality [REST].

What would be the big deal? 

At the moment you can connect your SmartTV to your home network and download a mobile app that will discover your television and allow it to be controlled remotely. This is all nice and well. However it keeps on limiting the consumer on using one app per device. The real difference would be if every device could be integrated with via a very easy API [REST]. Ideally there would be standard APIs with the minimum common functionality per type of device, for instance for cars, fridges, ovens, radios, etc.

What type of use cases are possible?

At home people could turn the oven on and get a notification on their mobile when it is warmed up or when your pie is ready even. Parents can get alerted when their children left the fridge open.

On the road your car could talk to your iPad and the entertainment system could be driven from your iPad. New apps could be downloaded and installed inside the car.

At work people could be voting about the temperature of the air-conditioning. The Coke machine could be linked to your Paypal and you would not have to carry coins any more.

A lot more use cases are possible. However easy integration [REST], auto-discovery [UPnP] and connectivity [WiFi] are the basics…

Innovation is a high-risk activity. You invest in something with the only certainty that you know (some of) your costs and none of your future revenues. Traditional wisdom tells managers to focus on a business case. If the business case is more positive than the other alternatives and gives a good return-on-investment, then you should invest. However this approach is flawed when dealing with innovative projects. There is not reference to calculate future revenues. Yes you can “guestimate” and make nice assumptions. However no business case would have indicated that you should invest in a 23-year-old that has put photo’s of his fellow students online. Some years later that photo page is worth many billions. For every positive example unfortunately there are a long list of failures.

The solution: focus on incremental innovation. Or not?

Nokia would be the best example of this strategy. You make the best hardware platform, a relatively easy software and make sure people can reliably make calls and send messages. Every investment decision had a positive ROI and positive margins. Unfortunately Nokia’s stock is close to becoming junk.

Can you make a business case for highly innovative projects?

Yes you can make a business case. Especially costs can be estimated and some high-level revenue estimates can be made. As long as this business case is used to validate if the project is economically viable, then there is no problem. The major problem is when this business case is compared with incremental innovation projects or investments in the core business. The outcome will be always negative. Disruptive innovations tend to go for lower margin business with inferior offerings that often cannibalize the core business. Over time the disruptive innovation will move up the value ladder and will be able to substitute the core business. Unfortunately the Innovator Dilemma in which you attack your core business and substitute it with an inferior margin business is difficult to accept by conventional managers. There are some companies that have excelled at this. The best example is Amazon that is seeing its core business of book sales being threatened by electronic books. The answer has been to provide e-book readers and tablets below the hardware costs with the idea to dominate the electronic book market by offering a total solution to easily buy books.

Ostrich techniques

The technique used by most companies when faced with disruptive innovation attacks is to consider them inferior and to ignore them. Unfortunately over time these solutions will substitute the existing offerings. This process is currently happening: e.g. SMS versus Whatsapp, LBS versus Mobile Phone location, calls versus Skype or Voxtrot, etc.

Unlike incremental innovation, being first in the market for disruptive innovation is key because the winner takes most of market. Number two can still take some market share but number three is no longer profitable. Examples: Google Search/Adwords/Youtube, Facebook, Linkedin, Twitter, etc.

The worst strategy for operators is the ostrich technique because implementing LTE will offer disruptive innovators all the tools they need to offer voice services over the top.

Discovery-driven planning versus business cases

In 1995 Harvard Business Review came up with discovery-driven planning. The idea has been successfully implemented by venture capitalists. You do not give money to a new venture to develop a new product, launch it and expand globally. You give money to develop a prototype in a few months. If this goal is met, you give money to validate the prototype with early adopters, etc.

Operators should start using discovery-driven planning to introduce disruptive innovations. Employees, partners, customers, etc. can “complain” about inefficiencies in the current offerings. The most urgent “inefficiencies” are selected, for instance via voting. Afterwards small innovation groups, made up out of experts in different domains, are formed to find solutions on paper for these “inefficiencies”. These paper-based solutions are presented to selected early adopters. Via continuous feedback the solution can be designed, the future price can be determined, the costs can be estimated and a high-level business case can be made. Early adopters are asked to find beta users. If a certain number of beta users express interest in the solution then the team will receive funding for a prototype.

Beta users are able to see the prototype come to live and to give continuous feedback. The prototype should evolve from paper to a real service in as few months as possible, 2-6. Afterwards the beta users get a limited amount of time to start subscribing to the real service and to extend the number of beta users. If a certain limit is reached within a certain time frame, then the beta product will get a next investment round. This investment round will bring the product from closed beta to a public launch. The last stage is expansion. If the public launch is successful then the last round of funding is provided that allows the service to expand, e.g. within all markets of the operator.

Any idea/service that does not make a stage gets killed. The complete disruptive innovation program should get a budget and should be initially independent from the core business. Direct support from the CEO and other senior executives is a must. Business cases are used to set prices, etc. but not to compare disruptive innovations with core business investments.

A little test. Name a European dotcom that has changed people’s life in the last years? No clue? With only a minor change, substituting European for American and the list would be long: Google, Facebook, Twitter, LinkedIn, Zynga, etc.

Even when innovations make it over the ocean, Europe is limited to doing business development, sales and some limited support. Look at the job pages of the big dotcoms and you will see the VP of Engineering in California and the business development manager in Europe. So the future is defined in California and Europe is just a market to sell the innovations that have been tried and certified in the USA.

Most people would not care less if Zynga would come from the USA or Tongo [No harm meant to anybody from Tongo]. However Europe is missing out on some major innovations that can boost the productivity of any small or medium enterprise. Think about Square, Quickbooks, Dwolla, etc. as examples.

Europe some years ago was leading the mobile and telecom industry with Ericsson, Vodafone, Telefonica, Orange, Deutsche Telekom and Nokia being clear examples. Nowadays it is Apple, Google, Facebook, etc. that lead the mobile and telecom revolution. Many might not realize it but Google has not only disrupted the mobile operating system market. Google has the first global software-defined network in the world. Google is writing history and being a major driver behind Openflow. Also the USA is leading together with Britain in White Spaces and other future wireless innovations.

What needs to change in Europe?

The European Union and local governments have always had a preference to over-protect the communication industry. Many laws protect former state-monopolies from getting real competition. The European Union should really look at White Spaces as a way to bring much-needed innovation back into the industry. Instead of selling the licenses to White Spaces to the usual suspects, the European Union should declare White Spaces as a “free” WiFi on Steroids alternative to LTE. White Spaces can be the solution for rural areas that want to get 21st century broadband connectivity.

Also the laws that oblige telecom companies to give national service are outdated. We do not have gigabit fiber-to-the-home in big cities because competitors are obliged to give universal service. Why not let 10 competitors fight without obligation to connect everybody? The free markets will connect those people and companies that are economically viable. By obliging universal connectivity, everybody is connected to a slow network. Leading to European broadband mediocrity.

Telecom companies that have started to set-up venture capitalist offerings are going the right way. Unfortunately too little money is poured into new ventures. Telefonica’s Wayra is offering $30-70K during a 6 months incubation. That means €46K to €109K on an annual basis as seed capital. What can you buy for this kind of money? Virtually nothing. Only one or two people teams at most. Great people would earn more money in their day job so they are unlikely to jump on Wayra. More realistic numbers would be €150-200K, which would allow teams of 3-10 people plus potential for hardware and other types of innovation. The chances that a 2 people team on a small budget makes a world-changing impact are very slim because you need multiple skills to really innovate.

Crowdfunding  should also be high on the list of the European Union. Let people participate in ventures as very small minority stakeholders via collective seed investment. Give Europe some chance of building a European Kickstarter on steroids. Cross-European laws would need to be put in place for this.

We need European Entrepreneur Heroes as well. Europe needs a European version of Steve Jobs, Jeff Bezos, Larry Page, Mark Zuckerberg and Marc Benioff. People that can convert a vision into a multi-billion industry. People that will be role models for future generations.

If Europe wants to leave the current recession behind, it needs to think about moving away from farming subsidies into investing in innovation. We need modern digital laws and a general legal simplification to allow more entrepreneurs to start innovative companies. European corporations should set-up more venture capitalist funding and crowd funding should be high on everybody’s agenda.

M2M sensors are predicted to generate more data than their human counterparts in the coming years. Unfortunately the price that will be paid for moving this traffic will be substantially lower than human data traffic. So it makes sense to think about ways to dramatically reduce the amount of data M2M sensors transmit.

How to do it?

In recent weeks I have been playing with RapidMiner. This program might be soon installed on a lot of Windows machines next to MS-Office. RapidMiner allows complete data mining layman to easily get hidden information out of the data they have at hand in files, Excels, Access, databases, etc.

RapidMiner shows how with some simple drag-and-drop in 5 minutes you can use complex algorithms like Neural Networks, Support Vectors Machines, Bayesian Classifiers, Decision Trees, Genetic Algorithms, etc. to make sense out of data.

The fact that you can easily train an algorithm to take a decision on your behalf could be a key factor to reduce the amount of M2M sensor data. So instead of sending all the data to a central point and making decisions there, you would put intelligence into the sensors.

This artificial sensor intelligence would not only be limited to single sensor failure. By applying genetic and swarm algorithms and copying mother nature, you would be able to have different sensors behave like for instance an ant colony. Individual sensors would start sharing alarm data and if enough or the right sensors agree then they would launch collective alerts.

Wireless technologies based on for instance White Spaces technologies can be used, and are already used for instance in Cambridge, to cheaply have many sensors communicate with one another. Also harvesting techniques should be used to avoid having to install batteries into the sensors.

The last part of the puzzle would be extra features in a M2M PaaS to manage the distribution of intelligence for de-centralized and self-organizing sensor networks.  Sensors are likely to send data to a central server in which humans will have to train computers on what type of data is critical. Once the trained models are available, then they can be distributed to sensors. The M2M PaaS would focus from then on, on adjusting the algorithms in case certain alarms were not caught or when alarms were launched unnecessary.

If you are a VC and you are unclear where to invest then this post might be of interest to you.

Some Disruptive Technologies and ideas that startups might be working on or for which you might want to assemble a team:

Alternative networks

WiFi and 3/4/5G have their limitations. Any alternative networking technology that can change complete industries is probably a good pick. An example would be LiFi.
Networks as a Service – Software-Defined Networks – Openflow

This area is very hot at the moment. Today’s network are very hard to configure and manage, they are very tightly-coupled with hardware, they can not be extended easily.

Anything that makes Software-Defined Networks/Openflow easy for mass adoption is going to be a winner.

Anything that allows enterprises to buy a box once and get the network software later based on day-to-day business requirements, e.g. think about appstore for Openflow.

Anything that links Openflow to the Cloud.

M2M Disruptive Technologies
Printing electronics to make sensors cheaper.

Battery-free electronics to make sensors more mobile and less expensive to maintain.

Auto-discovery sensor mesh networks to avoid paying expensive 3/4G subscriptions.

M2M appstores to allow people to reuse the work others did.

Super-easy M2M APIs/PaaS. Look at Pachube as a model to beat.

Cloud Disruptive Technologies

Niche SaaSification in which applications that are only used in small niches can be offered as SaaS subscriptions in a global way.

Plug-and-Cloud Equipment for Hybrid Cloud & Exposure (Single Sign-on, Internal data sources, Internal integrations) – on-site equipment that allows enterprises in an easy and secure way to expose their internal assets to the Cloud e.g. employee single sign-on, secure exposure of company data, secure exposure and easy integration of company applications

Plug-and-Play SaaS integrations that allow multiple SaaS offerings to be easily integrated without programming.
Mobile

Mobile PaaS = mobile GUI drag-and-drop designer + no-programming back-end systems like Usergrid + plug-and-play integration with external and enterprise APIs + enterprise mobile app / SaaS stores + BYOD made easy solutions (some elements are optional)

Big Data / Data Analytics

Visual data miner as a service

Big Data PaaS (easy tools/APIs for complex big data operations like mood analysis, natural language processing, etc.)

Gamification/Crowdsourcing

Kaggle type of services but for other domains e.g. competition to create the easiest/best mobile interface or API

Kaggle + Kickstarter => competition together with crowdfunding. Who can build the best solution for this problem, gets their venture funded.

Nail-it-then-scale-it/Lean Startup type of crowdsourcing in which ideas get tested (e.g. paper prototypes, business model discovery, etc. before actual prototype) and funding is delivered bit by bit. Ideally with stock options of the funders in the new venture.
Enterprise/Consumer Telecom

Managed enterprise software-defined networks or BYOD – services that help enterprises to maintain their networks or devices that employees bring along in a managed way hence no experts need to be hired and the service is pay-as-you-go instead of CAPEX.

Cloud + Set-up Boxes – Appstores for ADSL/Cable Modem set-up boxes, SDKs to manage large sets of consumer’s set-up boxes, etc.

Conclusion

These are just a handful of ideas. If you want more or need more detail, let me know at maarten at telruptive dot com. Also if you are in need of an external adviser or executive in a new venture, let me now…

Every company is using Microsoft Office and especially Excel to do some sort of data analytics. However data volumes have grown exponentially and have outgrown Spreadsheets. You need experts in the business domain, in data analytics, in data migration/extraction/transformation/loading, in server management, etc. to get data analytics done on Big Data scale. This makes it expensive and only usable for the happy few.

Why? There must be easier ways to do it.

I think there are. For those unfamiliar with data analytics but eager to learn, you should take a look at a product called RapidMiner. It is close to amazing how a non-expert is able to use Neural Networks, Decision Trees, Support Vector Machines, Genetic Algorithms, etc. and get meaningful results in minutes. The amazing part is also that RapidMiner is open source hence for usage by 1 analyst it is free.

Rapid-i.com, the company behind RapidMiner, also offers server software to run data analytics remotely. It is here where big data opportunities meet easy data analytics. What if RapidMiner data analytics could be ran on hundreds of servers in parallel and you pay by usage just as you pay for any Cloud compute and storage instances?

RapidMiner as a Service

RapidMiner as a Service, RMaaS, would allow millions of business people to be able to analyse Big Data “without Big Investments”. This type of Data Analytics as a Service would provide any SME with the same data analytics tools as large corporations. Data could come from Amazon S3, Amazon’s DynamoDB, Hosted Hadoops, any webservices, any social network, etc.

Visual as a Service

RapidMiner as a Service is only one of the many domain specific tools that could be offered as a visual drag-and-drop Cloud service. VAS as a Service is another example in which complex telecom assets can be easily combined in a drag-and-drop manner. There are many more. These services will be the real revolution of Cloud Computing since they combine IaaS/PaaS/SaaS into a new generation of solutions that bring large savings for new users and potential large revenues for their providers…

The short answer is no unless you operate in a part of the world where there is no regional IaaS. The longer answer is:

Amazon is running their AWS services with a cost-plus pricing model. This means they aim for a 10% profit margin. Every time they have improvements in their economies of scale, they lower the price to get back to the 10%.

Although Amazon has healthy gross-margins, the IaaS is all about investing in hardware and R&D. This means that volume is the name of the game. Although Amazon is making IaaS into a billion dollar business, the number two player (Rackspace) is around $285M for their IaaS business. This shows the winner-takes-it-all.

How are operators going to compete?

Competing at price with Amazon AWS, Rackspace, Gogrid, etc. will not be an option given that they are lowering pricing continuously.

Competing with better technology is also almost impossible because Amazon is THE marketleader for IaaS innovation with services like DynamoDB. IT players are just doing catch-up and any operator that will use an RFQ process will just be buying previous-generation-software and hardware. This means in Cloud terminology: legacy systems.

Operators could give better SLAs then the 99.95% offered by Amazon. However in the world of cloud computing, SLAs do not mean anything. If you want availability, then you are better to implement a multi-cloud strategy in which you use multiple cloud providers and your software can move dynamically between them.

Trust? IBM and other IT players can provide that as well. They have been in the Cloud space for more time then telecom and are quicker at deploying technology.

Networking reliability, QoS and speed? Yes but only for a niche segment of the market. A segment that is unlikely to be big if you look at the local nature of most operators.

Geo-localization reasons? YES. This is probably the only valid reason why in Africa, some parts of Asia and Latin-America, operators should look at IaaS. However in Europe, the US, Australia, Japan, Korea, Singapore, etc. this can not be the driver.

So unless you are targetting some very specific low-latency or high data volume nice markets or are in a part of the world where reliable networking and electricity is hard to get, you are unlikely to make your CEO happy with IaaS. You should think about other parts of Cloud Computing like PaaS, business processes as a service, networking as a service, etc.

This post is part of a series that focuses on new ideas for existing telco assets. See also: numbering plans, call routing and caller privacy.

The telecom industry is known for having some of the most complex billing, rating and mediation solutions. Prepaid, post-paid, events, fixed with overage,  discounts, real-time, etc. The problem is that billing and services have been extremely tightly integrated with the network. Most of the more obscure network elements and telecom protocols include CDRs, tariff plans, SMS and even MMS as hard-coded elements that can not be separated from the control or user data. The end result is unnecessary complexity.

Divide and conquer

Too many times billing systems need to be connected at extremely low-levels in the network. Additionally billing systems have become toolkits that come close to programming environments in features and complexities. Billing solution providers have focused on adding features to win RFPs instead of making their solutions easy to manage and integrate.

To introduce new services quicker, billing will have to be moved outside of the network. Networks should produce usage data but in a generic format, not service specific. It is each service that defines its own metering and  billing strategy, ideally based on some common metering & billing framework. This means that the configuration of the billing system only focuses on bundling and discounting and not on service-level billing. Each service configures its own metering & billing and as such less integrations and customizations are needed to a central billing authority. Thousands of services can be launched without needing months of integrations and customizations.

New features

New features could be added to give more future to existing services. Examples could be:

Inside call billing events, whereby similar to in-app-billing one of the two parties is able to do and accept transactions while talking. This would enable a lot more premium services, e.g. support in which you pay if the issue is resolved, donations to non-profit organizations inside a phone call, etc.

During call bill direction reversal, caller pays until the one being called accepts to start paying and even pay a premium.  Usage examples could be proactive premium services that call subscribers and get their authorization to start paying premium charges (or risk being blocked). This allows for try before you buy type of businesses.

Micro-payments or subscriptions, allows subscriptions to services that only cost €0.05/month or €0.01/event. Apple and others are enjoying a juicy revenue share from in-app purchases but can not offer micro-amounts yet due to the high cost of credit card processing. Operators are still able to offer new services until disruptive players like Google Wallet, Paypal, Square, etc. take the market.

Revenue sharing calls, share the revenue of a call either for normal or premium calls on an ad-hoc basis. Similar to the premium call concept but without having to sign up to expensive premium numbers. This could be combined with smart numbering plans.

This post is part of a series on redesigning telco assets. See also Numbering Plans, Call Routing and Billing.

What is the problem?

Traditionally some callers wanted to have their privacy. Think about famous musicians that would have millions of fans calling their mobile if their number got out. Paris Hilton was probably one of the more visible VIPs with problems in this area.

Hiding a number is no longer a guarantee for privacy.

The solutions

Everybody at some moment wants to have some caller privacy. Remember that call from the sales person that did not want to give up or sometimes you just do not want to talk to a person any more, e.g. think ex-partner…

Traditional solutions were about blacklisting numbers. However white or black is not enough. Perhaps you want certain persons to call at certain moments but not at others, e.g. during working hours vs. during holiday. You might even want to know if a call is urgent or not, e.g. your mother might want to talk to you while you are in a meeting. It is important to know if she wants to talk about the weather or about your father who just got brought to hospital.

Also famous people will likely want to have millions of fans calling them, as long as their fans are calling a premium line and an automated system takes all the calls. They could share twitter/Facebook like news with their fans, organize competitions, etc.

However all these solutions rely on smart caller privacy in which one-solution-fits-all is no longer good enough. Open APIs for call routing as discussed in a previous post, should be combined with stronger caller identification. Caller id has long been flagged as totally insecure. Call routing should have more secure mechanisms in which for instance optional SIP headers can contain secure signatures. These secure signatures can then be used for those subscribers that pay for extra security, e.g. important business people.

Also call privacy routing should allow for external rules to be consulted. This should allow an Outlook schedule to be consulted to see if a business person is busy. To check if a person is on a white list, a yellow list, a green list or a black list. Each list can have custom logic, e.g. request the caller if the subject is of low importance, day-to-day business, urgent or an emergency.

Incoming call screening should also be different. Instead of just sharing a caller id that can easily be turned off, a subscriber should be able to enable other services. Examples could be caller profile sharing: get a picture, name, profile, etc. before answering. Also in case somebody flags an emergency then this emergency is summarized on the screen so the subscriber can validate that it really is an emergency.

Where is the revenue?

Many services are possible but again instead of the operator trying to design them all, it is better to open capabilities to others and to live of revenue share.