A Conference Note From Hartmut Leuschner

• Cloudcity events attracted large crowds, envisioning shift from traditional to cloud native networks that would move all network management and network computing power into cloud, putting hyperscalers into driving seat
• Component shortages driving significant demand for used cellphones; major smartphone brands acquiring bulk of used devices to fill shortage-related gaps; Samsung (005930 KS) among most active buyers in North America and Europe

Cloud to Threaten Traditional Network Suppliers
With its first presence at Mobile World Congress (MWC) Barcelona, Cloudcity (a privately funded market place for companies that engage in public cloud) has been the most talked-about theme at the event. Cloudcity had a steady stream of prominent visitors -- from CEOs of major network operators like Vodafone PLC, Telefonica S.A. and Verizon Communications Inc. to managers of leading software providers and infrastructure vendors -- to find out why the organizers were taking over the entire show floor that was owned by Ericsson LM in previous years. (Ericsson pulled out of the show this year, citing COVID reasons.)

The manager of one of the organizers said carriers in North America and Europe are waking up to the idea that a large proportion of their wireless network will be managed through the public cloud in the future. Interest peaked after Dish Network Corp. recently signed a contract worth up to $10 billion with Amazon.com Inc. to build a cloud native network on its AWS platform and run all network-related computing functions on the AWS cloud. The manager said in Dish’s case, “everything north of the 5G base stations” (or when data leaves the base station) will be in the cloud, likely making Dish the largest AWS cloud customer in the world. The manager said although the core network will still be built by traditional infrastructure suppliers (in Dish’s case, the core network will be built by Nokia Corp.), all the data management services, analytics and network computing will move to the cloud provider, moving meaningful spending away from base station vendors. (OTR Global’s Feb. 26 note found European network operators had started to look at public cloud vendors, favoring Microsoft Corp.’s Azure.)

Used Cellphone Market Heating Up
Global component shortages were the other major topic at MWC. The manager of a U.S.-based cellphone distributor said shortages for mobile phones are so severe that it is now having an impact on the global market for used phones. He said the used cellphone market is experiencing fresh demand from two sides: from consumers who start buying used phones when a new version of their most sought-after device is not available, and from major handset brands buying large quantities of used phones to fill component-related supply gaps with refurbished devices. He said Samsung Electronics Co. Ltd. (005930 KS) has become the dominant buyer of used Samsung phones in the United States and other markets, pushing up prices of used devices significantly. “Samsung’s action clearly shows how much trouble they are facing right now with phone shortages,” he said. (OTR Global’s June 16 note highlighted significant shortages with Samsung phones in Europe.) The manager said Apple Inc. has also become more active in buying used iPhones, but has not been as aggressive as Samsung because Apple has, in his opinion, a popular trade-in program that supplies Apple with plenty of stock for refurbished iPhones.