The battle of big factories in the 5G era

Nearly two years have passed since the issuance of the 5G license. How does 5G change our lives and the world? Can the technological innovation of 5G be transformed into application scenarios and show commercial value? Practitioners in the ICT industry have been working hard to explore.

In the personal digital age, the big is king

From analog mobile phones to high-speed mobile data communication networks, mobile communication has undergone four generations of evolution from 1G to 4G. Telecom operators build "public mobile communication networks", mainly to provide services for individual customers.

Driven by 4G, the biggest winner of the wave of digital development is mobile Internet companies. With the help of capital, some of these companies with super innovative capabilities have grown into top companies in the world, and some have become leaders in certain fields.

Whether it is a telecom operator or a mobile Internet company, the winners at this stage are all large enterprises, or in other words, the larger the enterprise, the stronger the competitiveness. This is because personal digitization has two interesting industrial characteristics:

The first is the network effect, which means that as the number of users in the network increases, all users may obtain greater value from the expansion of the network, so the overall value of the network grows at a higher rate.

Another feature is that the cost of copying information products is very low. Therefore, even if the cost of innovation is high and the risk is high, as long as a good product can be made, the product can be successfully replicated on a large scale, and a large number of customers can be maximized The innovation cost and operating cost of the enterprise are diluted, so as to obtain a generous return.

It is precisely because of the characteristics of this industry that telecom operators and mobile Internet companies that provide information services to individual customers all take scale expansion as their primary goal. Compared with telecom operators with localized operations, mobile Internet companies can carry out global integrated operations based on unified technical standards and open architecture, and their growth rate has risen to a higher level.

However, few people realize that these industrial laws and characteristics are unique to personal digitalization. The digital capabilities that enterprises need cannot be met by standardized products, the magic of network effects is no longer, products cannot be copied at low cost, and previous successful experiences are invalidated.

5G opens a new era of digitalization

During the two sessions, former Finance Minister Lou Jiwei once again expounded the "5G immature" point of view and spoke for many people who are not optimistic about the development of 5G. Those who hold such views generally believe that telecom operators need to invest huge resources to build 5G public mobile communication networks, but in the personal customer market, it is difficult for revenue to reach a new level.

In fact, telecom operators are facing the dilemma of 5G, which is also the current pain point of mobile Internet companies: fast-growing mobile Internet companies have touched the ceiling of the personal digital market, and investment in this field is difficult to continue to grow. Looking for new growth points.

From a technical point of view, 5G's high bandwidth, low latency, and massive IoT are mainly designed for enterprise digitization. Therefore, relying on the development of 5G to seek growth space in the enterprise digital market has become a common goal pursued by practitioners in the ICT industry.

The rapid development of mobile communications in the past few decades has largely benefited from the industrial division of labor and cooperation:

(1) Equipment manufacturers conduct R&D and production of communication equipment and products based on international standards and technological innovation;

(2) Equipment manufacturers sell communication equipment and products to telecom operators, and the telecom operators will lead the network construction to form a wide-area coverage mobile communication capability and promote it to a large number of customers;

(3) Mobile Internet companies develop products and services that meet the information consumption needs of individual customers, and promote them to a large number of customers;

(4) Individual consumers can enjoy the new life of the mobile Internet era based on the communication network provided by telecom operators and the information services provided by mobile Internet companies.

We have seen that in the personal digital age, equipment manufacturers, telecom operators, and mobile Internet companies have clear boundaries among each other, and everyone joins hands to create an industrial space and share industrial dividends.

But in the era of enterprise digitalization, this pattern has undergone a qualitative change——

From the demand side, corporate customers often want personalized, end-to-end overall digital solutions. If you continue to use the serial operation of the industrial chain, not only the cycle is long, but also the ability to respond to individual needs is poor, and it is difficult to meet the requirements of corporate customers.

From the supply side, companies have a desire for growth. In the absence of new market space, they will have the desire to penetrate the upstream and downstream of the industrial chain; especially when the partners of the industrial chain cannot meet the demand, they will have the urge to replace them. .

Big companies are fighting in the same area

Players who have benefited from the rapid development of mobile communications in the past face the digital opportunities brought by 5G and 5G, and now there are no surprises, but full of anxiety. The lack of space in the traditional market, the failure of traditional development models, the pursuit of growth and the advantages of resources in enterprises have driven quiet changes in the industrial ecological pattern.

For telecom operators, the individual customer market is not only saturated, but also homogeneous competition among each other. Seeking customer growth in the stock market can only rely on fierce price wars. The increase in costs and the uncertainty of income may not necessarily be able to give Business brings growth. Therefore, the growth of telecom operators is to seek open source and increase revenue, develop "cloud services", and provide enterprise customers with "cloud-network integration" infrastructure; on the other hand, they seek to reduce costs and reduce costs by taking advantage of the IT technology of CT. "Look for suppliers other than traditional equipment manufacturers to reduce networking and operating costs.

For equipment manufacturers, seeing that telecom operators have a tendency to reduce investment in wide-area coverage, they need to seek new business expansion channels.

On the one hand, equipment manufacturers skip telecom operators and directly provide network element products and even network services to corporate customers;

On the other hand, equipment manufacturers provide enterprise customers with cloud services and even enterprise-level solutions.

Although these measures may cause dissatisfaction with telecom operators, since equipment manufacturers now have a strong voice in the industry chain, the sentiments of telecom operators have not blocked the upward breakthrough of equipment manufacturers.

For Internet companies, they have been preparing for the expansion of the company's digital market for several years, especially focusing on cloud computing for technological innovation and industrial layout.

Nowadays, facing the opportunities of enterprise digitalization brought by 5G, Internet companies are the leaders regardless of professional ability or market influence.

However, the connection capabilities provided by large-scale operations and the overall optimal public communication network may not necessarily be the local optimal infrastructure, and cannot even meet the basic needs of the application.

When Internet companies look down from the perspective of applications and clouds, traditional standardized communication networks will show weaknesses such as high cost, inflexibility, and poor openness. Therefore, Internet companies can rely on strong IT capabilities and combine new technologies in the ICT field. Build digital information acquisition, conversion, connection, and transmission networking capabilities that meet the needs of the cloud.

to sum up

Large-scale companies are suitable for businesses that have a high degree of productization and can be replicated on a large scale. Therefore, large cross-domain platforms are the stage and battlefield of large companies.

In the 5G era, although huge industrial opportunities have erupted for enterprise digitization, because enterprises need personalized and differentiated end-to-end solutions, product replication is very difficult, and there are not many cross-domain common capabilities that can be formed. Whether it is telecom operators, equipment manufacturers or Internet companies, they are exploring their own growth space around the infrastructure platform.

Telecom operators extend to the cloud based on mature standard communication networks, forming a cloud-network convergence infrastructure;

Equipment manufacturers try to provide cloud services, integrate operators' networks or build private networks for customers, and create cloud-network integrated ICT infrastructure for corporate customers;

Internet companies rely on their advantages in the field of cloud computing and their understanding of applications to build a more flexible, open, and low-cost digital connection network. This connection network is the infrastructure of cloud-network integration.

It is not difficult to see that the value space of infrastructure in the entire industry is limited, and there are so many large companies in the limited space, and the intensity of competition can be imagined. In the next article, I will analyze the gains and losses of ecological construction in the struggle of large companies for the right to speak in the industry, and share my research and observations on the ecology of the 5G industry.

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