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5G phones are here but there’s no rush to upgrade

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This year’s Mobile World Congress — the CES for Android device makers — was awash with 5G handsets.

The world’s No.1 smartphone seller by marketshare, Samsung, got out ahead with a standalone launch event in San Francisco, showing off two 5G devices, just before fast-following Android rivals popped out their own 5G phones at launch events across Barcelona this week.

We’ve rounded up all these 5G handset launches here. Prices range from an eye-popping $2,600 for Huawei’s foldable phabet-to-tablet Mate X — and an equally eye-watering $1,980 for Samsung’s Galaxy Fold; another 5G handset that bends — to a rather more reasonable $680 for Xiaomi’s Mi Mix 3 5G, albeit the device is otherwise mid-tier. Other prices for 5G phones announced this week remain tbc.

Android OEMs are clearly hoping the hype around next-gen mobile networks can work a little marketing magic and kick-start stalled smartphone growth. Especially with reports suggesting Apple won’t launch a 5G iPhone until at least next year. So 5G is a space Android OEMs alone get to own for a while.

Chipmaker Qualcomm, which is embroiled in a bitter patent battle with Apple, was also on stage in Barcelona to support Xiaomi’s 5G phone launch — loudly claiming the next-gen tech is coming fast and will enhance “everything”.

“We like to work with companies like Xiaomi to take risks,” lavished Qualcomm’s president Cristiano Amon upon his hosts, using 5G uptake to jibe at Apple by implication. “When we look at the opportunity ahead of us for 5G we see an opportunity to create winners.”

Despite the heavy hype, Xiaomi’s on stage demo — which it claimed was the first live 5G video call outside China — seemed oddly staged and was not exactly lacking in latency.

“Real 5G — not fake 5G!” finished Donovan Sung, the Chinese OEM’s director of product management. As a 5G sales pitch it was all very underwhelming. Much more ‘so what’ than ‘must have’.

Whether 5G marketing hype alone will convince consumers it’s past time to upgrade seems highly unlikely.

Phones sell on features rather than connectivity per se, and — whatever Qualcomm claims — 5G is being soft-launched into the market by cash-constrained carriers whose boom times lie behind them, i.e. before over-the-top players had gobbled their messaging revenues and monopolized consumer eyeballs.

All of which makes 5G an incremental consumer upgrade proposition in the near to medium term.

Use-cases for the next-gen network tech, which is touted as able to support speeds up to 100x faster than LTE and deliver latency of just a few milliseconds (as well as connecting many more devices per cell site), are also still being formulated, let alone apps and services created to leverage 5G.

But selling a network upgrade to consumers by claiming the killer apps are going to be amazing but you just can’t show them any yet is as tough as trying to make theatre out of a marginally less janky video call.

“5G could potentially help [spark smartphone growth] in a couple of years as price points lower, and availability expands, but even that might not see growth rates similar to the transition to 3G and 4G,” suggests Carolina Milanesi, principal analyst at Creative Strategies, writing in a blog post discussing Samsung’s strategy with its latest device launches.

“This is not because 5G is not important, but because it is incremental when it comes to phones and it will be other devices that will deliver on experiences, we did not even think were possible. Consumers might end up, therefore, sharing their budget more than they did during the rise of smartphones.”

The ‘problem’ for 5G — if we can call it that — is that 4G/LTE networks are capably delivering all the stuff consumers love right now: Games, apps and video. Which means that for the vast majority of consumers there’s simply no reason to rush to shell out for a ‘5G-ready’ handset. Not if 5G is all the innovation it’s got going for it.

LG V50 ThinQ 5G with a dual screen accessory for gaming

Use cases such as better AR/VR are also a tough sell given how weak consumer demand has generally been on those fronts (with the odd branded exception).

The barebones reality is that commercial 5G networks are as rare as hen’s teeth right now, outside a few limited geographical locations in the U.S. and Asia. And 5G will remain a very patchy patchwork for the foreseeable future.

Indeed, it may take a very long time indeed to achieve nationwide coverage in many countries, if 5G even ends up stretching right to all those edges. (Alternative technologies do also exist which could help fill in gaps where the ROI just isn’t there for 5G.)

So again consumers buying phones with the puffed up idea of being able to tap into 5G right here, right now (Qualcomm claimed 2019 is going to be “the year of 5G!”) will find themselves limited to just a handful of urban locations around the world.

Analysts are clear that 5G rollouts, while coming, are going to be measured and targeted as carriers approach what’s touted as a multi-industry-transforming wireless technology cautiously, with an eye on their capex and while simultaneously trying to figure out how best to restructure their businesses to engage with all the partners they’ll need to forge business relations with, across industries, in order to successfully sell 5G’s transformative potential to all sorts of enterprises — and lock onto “the sweep spot where 5G makes sense”.

Enterprise rollouts therefore look likely to be prioritized over consumer 5G — as was the case for 5G launches in South Korea at the back end of last year.

“4G was a lot more driven by the consumer side and there was an understanding that you were going for national coverage that was never really a question and you were delivering on the data promise that 3G never really delivered… so there was a gap of technology that needed to be filled. With 5G it’s much less clear,” says Gartner’s Sylvain Fabre, discussing the tech’s hype and the reality with TechCrunch ahead of MWC.

“4G’s very good, you have multiple networks that are Gbps or more and that’s continuing to increase on the downlink with multiple carrier aggregation… and other densification schemes. So 5G doesn’t… have as gap as big to fill. It’s great but again it’s applicability of where it’s uniquely positioned is kind of like a very narrow niche at the moment.”

“It’s such a step change that the real power of 5G is actually in creating new business models using network slicing — allocation of particular aspects of the network to a particular use-case,” Forrester analyst Dan Bieler also tells us. “All of this requires some rethinking of what connectivity means for an enterprise customer or for the consumer.

“And telco sales people, the telco go-to-market approach is not based on selling use-cases, mostly — it’s selling technologies. So this is a significant shift for the average telco distribution channel to go through. And I would believe this will hold back a lot of the 5G ambitions for the medium term.”

To be clear, carriers are now actively kicking the tyres of 5G, after years of lead-in hype, and grappling with technical challenges around how best to upgrade their existing networks to add in and build out 5G.

Many are running pilots and testing what works and what doesn’t, such as where to place antennas to get the most reliable signal and so on. And a few have put a toe in the water with commercial launches (globally there are 23 networks with “some form of live 5G in their commercial networks” at this point, according to Fabre.)

But at the same time 5G network standards are yet to be fully finalized so the core technology is not 100% fully baked. And with it being early days “there’s still a long way to go before we have a real significant impact of 5G type of services”, as Bieler puts it. 

There’s also spectrum availability to factor in and the cost of acquiring the necessary spectrum. As well as the time required to clear and prepare it for commercial use. (On spectrum, government policy is critical to making things happen quickly (or not). So that’s yet another factor moderating how quickly 5G networks can be built out.)

And despite some wishful thinking industry noises at MWC this week — calling for governments to ‘support digitization at scale’ by handing out spectrum for free (uhhhh, yeah right) — that’s really just whistling into the wind.

Rolling out 5G networks is undoubtedly going to be very expensive, at a time when carriers’ businesses are already faced with rising costs (from increasing data consumption) and subdued revenue growth forecasts.

“The world now works on data” and telcos are “at core of this change”, as one carrier CEO — Singtel’s Chua Sock Koong — put it in an MWC keynote in which she delved into the opportunities and challenges for operators “as we go from traditional connectivity to a new age of intelligent connectivity”.

Chua argued it will be difficult for carriers to compete “on the basis of connectivity alone” — suggesting operators will have to pivot their businesses to build out standalone business offerings selling all sorts of b2b services to support the digital transformations of other industries as part of the 5G promise — and that’s clearly going to suck up a lot of their time and mind for the foreseeable future.

In Europe alone estimates for the cost of rolling out 5G range between €300BN and €500BN (~$340BN-$570BN), according to Bieler. Figures that underline why 5G is going to grow slowly, and networks be built out thoughtfully; in the b2b space this means essentially on a case-by-case basis.

Simply put carriers must make the economics stack up. Which means no “huge enormous gambles with 5G”. And omnipresent ROI pressure pushing them to try to eke out a premium.

“A lot of the network equipment vendors have turned down the hype quite a bit,” Bieler continues. “If you compare this to the hype around 3G many years ago or 4G a couple of years ago 5G definitely comes across as a soft launch. Sort of an evolutionary type of technology. I have not come across a network equipment vendors these days who will say there will be a complete change in everything by 2020.”

On the consumer pricing front, carriers have also only just started to grapple with 5G business models. One early example is TC parent Verizon’s 5G home service — which positions the next-gen wireless tech as an alternative to fixed line broadband with discounts if you opt for a wireless smartphone data plan as well as 5G broadband.

From the consumer point of view, the carrier 5G business model conundrum boils down to: What is my carrier going to charge me for 5G? And early adopters of any technology tend to get stung on that front.

Although, in mobile, price premiums rarely stick around for long as carriers inexorably find they must ditch premiums to unlock scale — via consumer-friendly ‘all you can eat’ price plans.

Still, in the short term, carriers look likely to experiment with 5G pricing and bundles — basically seeing what they can make early adopters pay. But it’s still far from clear that people will pay a premium for better connectivity alone. And that again necessitates caution. 

5G bundled with exclusive content might be one way carriers try to extract a premium from consumers. But without huge and/or compelling branded content inventory that risks being a too niche proposition too. And the more carriers split their 5G offers the more consumers might feel they don’t need to bother, and end up sticking with 4G for longer.

It’ll also clearly take time for a 5G ‘killer app’ to emerge in the consumer space. And such an app would likely need to still be able to fallback on 4G, again to ensure scale. So the 5G experience will really need to be compellingly different in order for the tech to sell itself.

On the handset side, 5G chipset hardware is also still in its first wave. At MWC this week Qualcomm announced a next-gen 5G modem, stepping up from last year’s Snapdragon 855 chipset — which it heavily touted as architected for 5G (though it doesn’t natively support 5G).

If you’re intending to buy and hold on to a 5G handset for a few years there’s thus a risk of early adopter burn at the chipset level — i.e. if you end up with a device with a suckier battery life vs later iterations of 5G hardware where more performance kinks have been ironed out.

Intel has warned its 5G modems won’t be in phones until next year — so, again, that suggests no 5G iPhones before 2020. And Apple is of course a great bellwether for mainstream consumer tech; the company only jumps in when it believes a technology is ready for prime time, rarely sooner. And if Cupertino feels 5G can wait, that’s going to be equally true for most consumers.

Zooming out, the specter of network security (and potential regulation) now looms very large indeed where 5G is concerned, thanks to East-West trade tensions injecting a strange new world of geopolitical uncertainty into an industry that’s never really had to grapple with this kind of business risk before.

Chinese kit maker Huawei’s rotating chairman, Guo Ping, used the opportunity of an MWC keynote to defend the company and its 5G solutions against U.S. claims its network tech could be repurposed by the Chinese state as a high tech conduit to spy on the West — literally telling delegates: “We don’t do bad things” and appealing to them to plainly to: “Please choose Huawei!”

Huawei rotating resident, Guo Ping, defends the security of its network kit on stage at MWC 2019

When established technology vendors are having to use a high profile industry conference to plead for trust it’s strange and uncertain times indeed.

In Europe it’s possible carriers’ 5G network kit choices could soon be regulated as a result of security concerns attached to Chinese suppliers. The European Commission suggested as much this week, saying in another MWC keynote that it’s preparing to step in try to prevent security concerns at the EU Member State level from fragmenting 5G rollouts across the bloc.

In an on stage Q&A Orange’s chairman and CEO, Stéphane Richard, couched the risk of destabilization of the 5G global supply chain as a “big concern”, adding: “It’s the first time we have such an important risk in our industry.”

Geopolitical security is thus another issue carriers are having to factor in as they make decisions about how quickly to make the leap to 5G. And holding off on upgrades, while regulators and other standards bodies try to figure out a trusted way forward, might seem the more sensible thing to do — potentially stalling 5G upgrades in the meanwhile.

Given all the uncertainties there’s certainly no reason for consumers to rush in.

Smartphone upgrade cycles have slowed globally for a reason. Mobile hardware is mature because it’s serving consumers very well. Handsets are both powerful and capable enough to last for years.

And while there’s no doubt 5G will change things radically in future, including for consumers — enabling many more devices to be connected and feeding back data, with the potential to deliver on the (much hyped but also still pretty nascent) ‘smart home’ concept — the early 5G sales pitch for consumers essentially boils down to more of the same.

“Over the next ten years 4G will phase out. The question is how fast that happens in the meantime and again I think that will happen slower than in early times because [with 5G] you don’t come into a vacuum, you don’t fill a big gap,” suggests Gartner’s Fabre. “4G’s great, it’s getting better, wi’fi’s getting better… The story of let’s build a big national network to do 5G at scale [for all] that’s just not happening.”

“I think we’ll start very, very simple,” he adds of the 5G consumer proposition. “Things like caching data or simply doing more broadband faster. So more of the same.

“It’ll be great though. But you’ll still be watching Netflix and maybe there’ll be a couple of apps that come up… Maybe some more interactive collaboration or what have you. But we know these things are being used today by enterprises and consumers and they’ll continue to be used.”

So — in sum — the 5G mantra for the sensible consumer is really ‘wait and see’.

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Tesla shows off underwhelming human robot prototype at AI Day 2022

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Enlarge / The walking Optimus prototype demonstrated at the AI Day 2022 event.

Tesla

Today at Tesla’s “AI Day” press event, Tesla CEO Elon Musk unveiled an early prototype of its Optimus humanoid robot, which emerged from behind a curtain, walked around, waved, and “raised the roof” with its hands to the beat of techno music.

It was a risky reveal for the prototype, which seemed somewhat unsteady on its feet. “Literally the first time the robot has operated without a tether was on stage tonight,” said Musk. Shortly afterward, Tesla employees rolled a sleeker-looking Optimus model supported by a stand onto the stage that could not yet stand on its own. It waved and lifted its legs. Later, it slumped over while Musk spoke.

Video of Tesla AI Day 2022

The entire live robot demonstration lasted roughly seven minutes, and the firm also played a demonstration video of the walking Optimus prototype slowly picking up a box and putting it down, slowly watering a plant, and slowly moving metal parts in a factory-like setting—all while tethered to an overhead cable. The video also showed a 3D-rendered view of the world that represents what the Optimus robot can see.

Three stages of the Tesla Optimus robot so far, presented at AI Day 2022.
Enlarge / Three stages of the Tesla Optimus robot so far, presented at AI Day 2022.

Tesla

Tesla first announced its plans to built a humanoid robot during its AI Day event in August of last year. During that earlier event, a human dressed in a spandex suit resembling a robot and did the Charleston on stage, which prompted skepticism in the press.

At the AI Event today, Musk and his team emphasized that the walking prototype was an early demo developed in roughly six months using “semi-off the shelf actuators,” and that the sleeker model much more closely resembled the “Version 1” unit they wanted to ship. He said it would probably be able to walk in a few weeks.

Goals of the Optimus project include high-volume production (possibly “millions of units sold,” said Musk), low-cost (“probably less than $20,000”), and high-reliability. Comparing the plans for Optimus to existing humanoid robots from competitors, Musk also emphasized that the Optimus robot should have the brains-on-board to work autonomously, citing Tesla’s work with its automotive Autopilot system.

Tesla shared some specifications of its
Enlarge / Tesla shared some specifications of its “Latest Generation” prototype Optimus robot.

Tesla

Shortly afterward, Musk handed over the stage to Tesla engineers that gave jargon-heavy overviews about developing the power systems, actuators, and joint mechanisms that would make Optimus possible, replete with fancy graphs but with few concrete specifics about how they would apply to a shipping product. “We are carrying over most of our design experience from the car to the robot,” said one engineer, while another engineer said they drew much of their inspiration from human biology, especially in joint design.

Earlier in the demonstration, Musk said that they were having the event to “convince some of the most talented people in the world to come to Tesla and help bring this to fruition.” Musk also emphasized the public nature of Tesla several times, mentioning that if the public doesn’t like what Tesla is doing they could purchase stock and vote against it. “If I go crazy, you can fire me,” he said.

[This is a developing story and will be updated as new information comes in.]

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High-severity Microsoft Exchange 0-day under attack threatens 220,000 servers

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Microsoft late Thursday confirmed the existence of two critical vulnerabilities in its Exchange application that have already compromised multiple servers and pose a serious risk to an estimated 220,000 more around the world.

The currently unpatched security flaws have been under active exploit since early August, when Vietnam-based security firm GTSC discovered customer networks had been infected with malicious webshells and that the initial entry point was some sort of Exchange vulnerability. The mystery exploit looked almost identical to an Exchange zero-day from 2021 called ProxyShell, but the customers’ servers had all been patched against the vulnerability, which is tracked as CVE-2021-34473. Eventually, the researchers discovered the unknown hackers were exploiting a new Exchange vulnerability.

Webshells, backdoors, and fake sites

“After successfully mastering the exploit, we recorded attacks to collect information and create a foothold in the victim’s system,” the researchers wrote in a post published on Wednesday. “The attack team also used various techniques to create backdoors on the affected system and perform lateral movements to other servers in the system.”

On Thursday evening, Microsoft confirmed that the vulnerabilities were new and said it was scrambling to develop and release a patch. The new vulnerabilities are: CVE-2022-41040, a server-side request forgery vulnerability, and CVE-2022-41082, which allows remote code execution when PowerShell is accessible to the attacker.

“​​At this time, Microsoft is aware of limited targeted attacks using the two vulnerabilities to get into users’ systems,” members of the Microsoft Security Response Center team wrote. “In these attacks, CVE-2022-41040 can enable an authenticated attacker to remotely trigger CVE-2022-41082.” Team members stressed that successful attacks require valid credentials for at least one email user on the server.

The vulnerability affects on-premises Exchange servers and, strictly speaking, not Microsoft’s hosted Exchange service. The huge caveat is that many organizations using Microsoft’s cloud offering choose an option that uses a mix of on-premises and cloud hardware. These hybrid environments are as vulnerable as standalone on-premises ones.

Searches on Shodan indicate there are currently more than 200,000 on-premises Exchange servers exposed to the Internet and more than 1,000 hybrid configurations.

Wednesday’s GTSC post said the attackers are exploiting the zero-day to infect servers with webshells, a text interface that allows them to issue commands. These webshells contain simplified Chinese characters, leading the researchers to speculate the hackers are fluent in Chinese. Commands issued also bear the signature of the China Chopper, a webshell commonly used by Chinese-speaking threat actors, including several advanced persistent threat groups known to be backed by the People’s Republic of China.

GTSC went on to say that the malware the threat actors eventually install emulates Microsoft’s Exchange Web Service. It also makes a connection to the IP address 137[.]184[.]67[.]33, which is hardcoded in the binary. Independent researcher Kevin Beaumont said the address hosts a fake website with only a single user with one minute of login time and has been active only since August.

Kevin Beaumont

The malware then sends and receives data that’s encrypted with an RC4 encryption key that’s generated at runtime. Beaumont went on to say that the backdoor malware appears to be novel, meaning this is the first time it has been used in the wild.

People running on-premises Exchange servers should take immediate action. Specifically, they should apply a blocking rule that prevents servers from accepting known attack patterns. The rule can be applied by going to “IIS Manager -> Default Web Site -> URL Rewrite -> Actions.” For the time being, Microsoft also recommends people block HTTP port 5985 and HTTPS port 5986, which attackers need to exploit CVE-2022-41082.

Microsoft’s advisory contains a host of other suggestions for detecting infections and preventing exploits until a patch is available.

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Bruce Willis sells deepfake rights to his likeness for commercial use

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Enlarge / Deepfake Bruce Willis as he appeared in a 2021 commercial for Russian mobile company MegaFon.

MegaFon

Bruce Willis has sold the “digital twin” rights to his likeness for commercial video production use, according to a report by The Telegraph. This move allows the Hollywood actor to digitally appear in future commercials and possibly even films, and he has already appeared in a Russian commercial using the technology.

Willis, who has been diagnosed with a language disorder called aphasia, announced that he would be “stepping away” from acting earlier this year. Instead, he will license his digital rights through a company called Deepcake. The company is based in Tbilisi, Georgia, and is doing business in America while being registered as a corporation in Delaware.

In 2021, a deepfake Bruce Willis appeared in a Russian cell phone commercial for MegaFon.

Deepcake obtained Willis’ likeness by training a deep learning neural network model on his appearances in blockbuster action films from the 1990s. With his facial appearance known, the model can then apply Willis’ head to another actor with a similar build in a process commonly called a deepfake. Deepfakes have become popular in recent years on TikTok, with unauthorized deepfakes of Tom Cruise and Keanu Reeves gathering large followings.

In a statement on Deepcake’s website, Bruce Willis reportedly said:

I liked the precision of my character. It’s a great opportunity for me to go back in time. The neural network was trained on [the] content of Die Hard and Fifth Element, so my character is similar to the images of that time.

With the advent of the modern technology, I could communicate, work, and participate in filming, even being on another continent. It’s a brand new and interesting experience for me, and I [am] grateful to our team.

According to Deepcake’s website, the firm aims to disrupt the traditional casting process by undercutting it in price, saying that its method “allows us to succeed in tasks minus travel expenses, expensive filming days, insurance, and other costs. You pay for endorsement contract with the celeb’s agent, and a fee for Deepcake’s services. This is game-changingly low.”

While the Telegraph report claims that Willis is “the first Hollywood star to sell his rights to allow a ‘digital twin’ of himself to be created for use on screen,” Ars Technica could not verify that claim outside of the context of a first license with the firm Deepcake. Evidence suggests that a similar licensing precedent exists—in Hollywood, deepfakes have already been used in several Star Wars films and TV shows, for example.

Looking deeper, the concept of having a “digital twin” isn’t new to Willis, either. In 1998, he starred in a PlayStation video game called Apocalypse that involved digitizing his face and capturing the motion of his body as he acted out scenes. Still, it’s notable to see an aging actor sidelined by illness who is willing to volunteer a digital double to work for him. James Earl Jones did so recently with his voice for Darth Vader. It’s possible we’ll see much more of this as deepfake technology improves.

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