Huawei 2014 Annual Report Download - page 57

55Industry Trends
create a typical "cloud +device" architecture, thus
forming the building blocks of a Better Connected
World where everything is smart.
Smart hardware may come in the form of electronic
devices like watches, TVs, refrigerators, or air
conditioners. It can also be in the form of appliances
which were not previously electronic, such as door
locks, tea cups, automobiles, and even houses. It
may also take the form of industrial equipment
like lathes, robots, and medical equipment. Smart
hardware has extended from smartphones to smart
TVs and wearables and further to smart homes,
smart cars, smart healthcare, smart toys, and
robots. "Smart Everything" is the basis for a Better
Connected World.
■ New user experience: Video will become a basic
Internet service that will redefine the Internet
and the video service industry.
Video has become a basic form of media after print,
images, and animation. It is now the dominant form
of content on the Internet, accounting for 70% of
all traffic (soon to exceed 90%). A 30-minute 4K
video consumes the same amount of data that a 3G
subscriber uses in an entire year.
At the same time, our way of acquiring videos will
change considerably. Instead of using broadcast
services, we may prefer a video experience on
demand, and often bidirectional, thus making video
a medium as opposed to mere content. This two-
way, on-demand approach will soon extend to new
forms of human-machine interaction.
Demand for 4K videos and new user experience will
drive end-to-end network modernization. Yet, the
road to transformation is never smooth because
it presents many challenges: accelerating access
speeds, flattening network architectures, reducing
latency and packet loss, and slashing costs. Solving
these challenges requires new solutions. Content
and applications are the ultimate objective of
"connecting" for users. As such, video is no longer
merely an additional revenue source. Rather, it is an
essential service that helps maintain user loyalty.
Mainstream carriers will have to shift from the
decade-old FMC1.0 to FMC2.0. That means
carriers will no longer just acquire networks,
expand connectivity, and make money from the
demographic dividend. Instead, they will have to
create new value by acquiring content, improving
user loyalty, and profiting from the traffic boom.
Carriers' network advantages will become their core
competency in the 4K video industry. In particular, as
the video experience continues to transition from the
broadcast to on-demand model, carriers will have
a strong position in a trillion-dollar video industry.
■ New business models: Cloud services are in full
swing and will shake up the IT industry.
Cloud computing is much more than just a
technological change; it also transforms business
models. With cloud becoming the new normal in IT,
and with broadband networks extending towards
every corner of the earth, services are overtaking
products. Thanks to the business model revolution
being fueled by cloud services, a huge strategic
opportunity has presented itself for the telecom
industry. Enterprise customers are adopting public
cloud as part of their ICT efforts, allowing carriers
to move beyond their traditional connectivity roles
to create a new market worth trillions.
The transition from private IT infrastructure to
public cloud will be slow. This makes hybrid cloud
a normal enterprise demand in the foreseeable