Still I look to find a reason to believe

Posted on Friday, November 30, 2018

We are winding up the year and it is human nature to ask ‘before and after’ questions about what is, let’s face it, and arbitrary point in time. Quo vadis? has been a question since biblical times. But sometimes we find ourselves going places we struggle to have faith in.

While reading’s annual survey, I came across two related questions displayed side-by-side:

  • What is the most overhyped emerging technology today?
  • Which of the following are likely to be priority investment areas for your company in 2019?

You can download the full report here.

(The report says 1,500 professionals participated, over-weighted towards Europe. Roughly 40% were service providers, 24% were vendors, consultants (such as your humble scribe) 20% and the ubiquitous Other (Who’s left? Clients maybe?) was 17%.)

It seemed natural to put the data from these two questions on a scatter diagram and see what the relationship was. The result is the lead chart. The horizontal dimension is the result of the question about overhyped emerging technologies and the vertical dimension is the question about investment priority.

There were two emerging technologies (plus the ubiquitous Other) that did not appear in the investment priorities responses: “Virtual reality/augmented reality” (labelled VR/AR) and “Automotive (connected car)” (labelled C-V2X). And there were three investment priorities that were not considered to be ‘emerging’ I suppose: “Cloud infrastructure and services”(labelled Cloud Infra), “Broadband access technologies (e.g. ultrabroadband)” (labelled UBB) and Security. For completeness, I included them along their respective axes.

The only surprise, to me, was C-V2X, which I would have thought would have been a priority for the vendors, the consultants and certain large operators. Maybe it was an issue with the questionnaire design. I think it unlikely that investment is being re-evaluated along the lines of my curmudgeonly comments. Note that along the ‘hype’ dimension, C-V2X is in the lower half of the list i.e. considered to be less-overhyped.

On that point, I broke each of the axes into two levels (High / Low) by looking at the average and the median and then picking a number that was a whole-multiple of 10%. That created the four sectors seen in the graph.

  1. Over-invested is the sector where a technology is considered to have a High degree of overhype and yet is a high investment priority.
  2. Under-invested is the opposite: a Low degree of overhype but lower down the investment priority list.
  3. Goldilocks are the two ‘just-right’ sectors: either High overhype and lower investment priority (lower right) or Low overhype and higher priority (upper left).

In the over-invested we find 5G and IoT. 5G being here is no doubt a reflection of the 40% of operators in the survey. They know they have to invest because of competitive pressure but the business case remains unclear. IoT surprises me because I would have thought that here the case was well established. Maybe it is but growth has been slower than originally forecast. (Ericsson has distanced itself completely from the 50B connected devices in 2020 number that appeared in every presentation a few years ago.)

Or maybe again it is the heavy weighting on operators in the sample: they are not the ones making big money off IoT – the vendors and the consultants are – so from the CSP’s perspective it is overhyped.

The two under-invested technologies are Automation and NFV/SDN. (NFV and SDN were separate choices in the investment priorities question but since their results were so similar – 31% and 30% respectively – I felt confident in averaging the responses to combine the categories.) Given the potential of these two, I would have expected them to have been higher ranked. I may be splitting hairs because they are not that far below the average. However, I have seen survey research that correlates degree of Automation with attitude towards risk, innovation and adoption of new ideas. Since operators struggle with these and regulation discourages them, this correlation could be reflected here.

For NFV/SDN, there has been evidence of a slowdown as integration issues become challenging. There may also be a couple of ‘questionnaire’ issues. Only very large CSPs, like AT&T are investing in developing their own Virtualized Network Functions so maybe those who are buying them (and not building them) did not reflect this in their answers. But since Virtualization (in the broad sense) is considered a critical component of 5G, how could 5G be a priority but NFV/SDN not? Unless a significant group of respondents considered NFV/SDN to be precisely such a critical component that they included it in their 5G response and did not identify it separately.

In the two Goldilocks sectors there are only two technologies – Big Data and AI – and these are so close to the boundary in the prioritization direction that they could easily have been in either Under-Invest or Over-Invest respectively. (If 75 respondents had picked AI as a priority instead of Big Data, this would have happened.) Qualcomm does not seem concerned, at least about AI. It just announced that it will sink US$100M in an AI-focused investment fund.

I am still thinking about this but I’m not sure if I can spin this as ‘glass half-full / glass half-empty’. It looks like the glass is more than half-empty: apart from two borderline cases, the industry is putting priority on emerging technologies it believes to be overhyped (IoT and 5G) and under-investing in technologies it considers to be less-overhyped (which is not necessarily underhyped or even correctly hyped).

My point is not to comment on these particular technologies, about whether the survey’s conclusions about hype or about investment priority correspond to my beliefs.

My point is about how we make investment decisions: even when we believe something is overhyped, we still make it a priority. Why is that? Why do we find ourselves going places we struggle to have faith in?

Part of this is fear. Personally, we may think something is (to be polite) ahead of its time but competitive pressure makes us invest anyway. Or we are afraid that if we do not start investing now, it will be too expensive to get in at a later date. Next generation upgrades like 5G are often accelerated for one or both of these reasons.

Part of this is fashion. Precisely because there is hype, there will be investment. It is always scary when the boss goes on vacation or has a long flight and can catch up on their reading. They can come back with their heads full of articles in the popular press which may or may not yet represent stable technology or even practical application. Robots! Self-driving hotel rooms! Driverless flying taxis! Minority Report! Tom Swift and His Repelatron Skyway! The Jetsons! Star Trek! To infinity… And beyond!

Part of this is cognitive dissonance. We look for a way to justify ideas, even if we privately think them to be crazy. Fear and fashion mean we are under pressure – sometimes self-imposed – to invest and, if we are going to commit millions or hundreds of millions of the shareholders dollars, we have to convince ourselves that the idea will work.

That is, we look to find a reason to believe.

If I listened long enough to you / I’d find a way to believe it’s all true.

Title Reference: From Reason to Believe by Tim Hardin recorded by a number of artists but what plays in my head is the Rod Stewart version from his excellent 1971 number one album Every Picture Tells a Story. The song was the A side to Maggie May which itself went to number one and obviously buried Reason to Believe from a commercial standpoint. But to me the cut is a fitting way to close an album that does not have a bad song. (Unlike most later Stewart albums that do not, IMHO, have even one good song. Why do you think Ron Wood went to the Stones? But what do I know? Rod ‘the Mod’ has been knighted and Google says his net worth is US$235M. Mine isn’t.)

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