May 17, 2017

LightCounting releases a research note on the latest OpenStack event

The latest summit of the OpenStack community was held in Boston on May 2-6, 2017. It attracted 5,000 attendees from 63 countries. The first of these forums was held in 2011 with just 600 attendees and the community has grown rapidly. OpenStack was formed by NASA and Rackspace with an objective of making mega datacenter technology, deployed by Internet Content Providers (ICPs) such as Amazon and Google, available to a broader set of enterprise customers. The use of white boxes and open-source software offers a lower cost alternative to the traditional proprietary enterprise hardware and software from Cisco, HPE and Oracle. Patrick Weeks – a keynote speaker from General Electric – summarized it passionately by saying “have not we paid enough to our equipment partners already?” Jonathan Bryce, Executive Director of OpenStack stated their mission as “achieving cost savings (enabled by Cloud technologies) at a smaller scale”.

Edward Snowden was a guest speaker at the event, video conferenced in from Russia. He encouraged software developers to work with “the free spirit of technology in mind” and not to conform to the interests of large corporations and governments. He compared software engineers of the 21st century with nuclear scientists of the 20th century in terms of their impact on global security. Mr. Snowden’s speech was well received. It was passionate, idealistic and a bit tragic. Comments by Mark Collier moderating the event did not help. He welcomed Mr. Snowden by saying “too bad you can not join us in Boston” and ended by inviting him to the next event in Sydney. These software geeks have no manners.

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Politics aside, the free spirit of technology was obvious at the event: the freedom of innovation, the liberty of the open-source community. The fulfillment of creating something new, while being part of a vibrant community of fellow software geeks, is inspiring. Cisco, HPE and Oracle are members of Openstack, but there were no keynote speakers from these companies. Speakers from Rackspace and RedHat dominated the stage. Ironically, these two companies are now earning billions of dollars in annual revenues after several years of rapid growth. New large corporations are replacing the old ones to the disappointment of Mr. Snowden, but what is the alternative? Quoting Sir Winston Churchill “capitalism is the worst economic system, except for all the others.”    

What is behind the success of Rackspace, RedHat and many other smaller vendors embracing the OpenStack approach?  These vendors cater to large and mid-size enterprises that are trying to replicate the methodology developed by ICPs for public clouds and transform their datacenters into private or hybrid clouds. Many of these first attempts failed since the transformation proved to be too radical. Vendors led by Rackspace come to the rescue and offer managed private cloud services. They bring expertise in building datacenters using white boxes, open-source software and put clients on a path to scale up their private clouds, using a radically new approach. Stitching together a solution from an existing infrastructure using internal resources did not work for many of their customers in the past.

Easystack, a Chinese start-up company, also presented at the event, as it starts developing business in the US. The company has more than 100 customers in China, benefiting from the government policy on the adoption of Cloud technologies in China. Many governmental and private enterprises in China are starting to move their IT operations to the Cloud. This trend is likely to accelerate in 2017-2019, according to the new Cloud plan released by the Chinese government that calls for tripling the size of the cloud computing industry in China over the next three years: http://www.isvoc.com/20170427742.html (The link includes an English translation at the bottom).

Anni Lai of Huawei commented on the increasing number of Cloud business opportunities around the world. Many governments, local telecom service providers and enterprises are looking for help in developing Cloud infrastructure and services. In many of these cases, the public Clouds offered by leading ICPs are not viable options. Data security and conforming with local regulations are some of the barriers for adoption of public Clouds worldwide.

LightCounting placed AT&T and Verizon as the top risk takers in the report titled “How Cloud Services and Cloud Computing are Changing Service Provider Networks” published in February 2017. However, the Chinese operators are now catching up fast. All of them are very active in the Openstack community. China Unicom was just elected to a seat on the community’s board. The Chinese government’s new Cloud plan, mentioned above, just adds even more urgency to their efforts.

3D Sensing for Self-Driving Cars Reaches the Peak of Inflated Expectations

LightCounting releases a new report addressing illumination in smartphones and automotive lidarIn 2019, the market for VCSEL (vertical cavity surface-emitting laser) illumination in smartphones will exceed $1.0 billion – now nearly triple the size of the market for communications VCSELs. That’s quite remarkable for a market that didn’t exist three years ago.3D sensing in smartphones felt like an overnight sensation, but the technology foundations were laid down years ago with Microsoft’s Kinect – a motion-sensing peripheral for gamers released in 2010 but discontinued in 2017 after lackluster sales. Lumentum supplied lasers to the Kinect almost a decade before the iPhone opportunity emerged; the company was ready to profit from the iPhone X opportunity when Apple decided to launch 3D sensing for facial recognition in September 2017.

Figure: 3D depth-sensing meets the Gartner Hype Cycle

3D Sensing

Source: Gartner with edits by LightCounting

If all technologies follow the Gartner Hype Cycle, shown in the Figure above, then 3D sensing in smartphones is now moving up the slope of enlightenment. Android brands raced to add 3D sensing to their flagship phones in 2018 – the Xiaomi Mi8 Explorer and Oppo Find X phones were first – although these only sold in single digit million quantities. Huawei also brought out new phones with 3D sensing, but the ongoing U.S. export ban on the Chinese company must be hurting the company’s traction outside China. Apple continues to dominate the market as all new iPhones released by Apple since 2017 have included 3D sensing on the front of the phone. Apple is expected to introduce 3D sensing for ‘world-facing’ applications in 2020, which adds another laser chip to every phone.

Last year illumination for lidars were not included in our market forecast since LightCounting considered it unlikely that lidar would penetrate the consumer market to any great extent over the forecast period. All indicators now point to a market for lidar illumination ramping up in 2022 and beyond. Optical components firms are now shipping prototypes and samples of VCSELs, edge emitters and coherent lasers to customers developing next-generation lidar systems – many of them building on their expertise in illumination for optical communications and smartphones.

As was the case with smartphones, the foundations for lidar technology were laid down much earlier – in this case with the DARPA Challenge 2007, where the winning vehicle used a 64-laser lidar system from Velodyne Acoustics (now Velodyne Lidar). Lidar is considered by the majority of the industry to be an essential part of the sensor suite required for autonomous driving, helping the vehicle to navigate through the environment and detect obstacles in its path. The first commercial deployments have begun. In Germany, lidar on the Audi A8 enables the car to drive itself for limited periods under specific conditions. In Phoenix, Arizona, you can hail a ride in a Waymo robotaxi.

Investor enthusiasm for lidar is undeniable with nearly half a billion dollars invested in lidar start-ups in 2019 according to our analysis of publicly available investment data. Notable deals include $60 million for U.S. company Ouster in March, Israel’s Innoviz Technologies Series C round of $132 million in the same month, and $100 million for U.S.-based Luminar Technologies in July. Interestingly, these examples illustrate the variety of lidar approaches: each company is building a different type of lidar based on a different wavelength: 850nm for Ouster, 905nm for Innoviz and 1550nm in the case of Luminar. There’s an open technology battle and they can’t all be winners.

The automotive lidar market seems to be close to the peak of ‘inflated expectations’. It’s easy to understand why. The automotive industry is enormous, with nearly 100 million vehicles (including trucks) produced annually. Players like Baidu, GM Cruise and Waymo are backed by deep corporate pockets, and new entrants like Aurora and Pony.ai are attracting hundreds of millions in investment. Intel’s $15.3 billion purchase of Mobileye in 2017 was also directed at autonomous driving. Sensor company AMS is in a $4.8 billion battle to acquire German semiconductor lighting firm Osram with its eye firmly on lidar.

However, signs indicate that the descent into the trough of disillusionment could have already begun. Waymo has yet to roll out its robotaxi services more widely – and this summer admitted that its vehicles needed more testing in the rain. GM Cruise has delayed launch of commercial services for self-driving cars beyond 2019 and is reluctant to commit to a new timescale, with its CEO Dan Ammann observing that safety is paramount; automotive is not an industry where you can “move fast and break things” he said. A casualty of the slow pace was optical phased array lidar developer Oryx Vision, which closed its doors in August and started to hand money back to investors.

While lidar is being deployed commercially today, prices are not conducive to mass production, and there are open questions around regulation, safety, ethics and consumer acceptance. Do local laws prohibit self-driving cars? Will they really be safer than humans? Who is responsible for a crash? LightCounting remains skeptical about the pace of adoption of autonomous vehicles, but will be watching the market closely and with optimism.

More information on the report is available at: https://www.lightcounting.com/Sensing.cfm.


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