 Welcome back to beautiful Barcelona, everybody. This is theCUBE and we're here at MWC 2024. I'm Dave Vellante with my co-host and lead analyst at theCUBE Research, Managing Director Shelly Kramer. And we're really excited to have two CUBE alums, great guests, top analysts in the business. Carolina Melanesi is here. She's with Creative Strategies. Great to see you again, Carolina. Thanks for coming back on and Bob O'Donnell from Technalysis Research. Bob, how's it going? Good, good, happy to be here, Dave. Yeah, it's good action, the show is growing. Yeah, well, you know, for me, it's the first time back in five years because, you know, obviously there was COVID, but, and then ironically for me, the day before I was supposed to come last year, I tested positive for COVID. And we were supposed to do this last year. That's right, we were. In 2023. That's funny. Yeah, and then I couldn't do it, but oh well. So, but it's fun to be back. It's such an amazingly beautiful city and I immediately had to go to see how far they had gotten on Sagrada Familia, which was impressive in five years. Like, they got a lot done. But, and obviously the show is, the buzz is amazing, it's incredibly crowded. There's just, you can feel it in the air. It's like. Yeah, you can tell by the lack of taxes in the morning how crowded it is versus last year, so. Right, it was bad last year and it's now it's impossible. But a lot has, a lot has transpired. You remember last year, Carolina, I mean we were talking about ChatGPT, but it wasn't as front and center, obviously as it is today, and it just, boom, exploded. Absolutely, yeah, Genitive AI is everywhere. You know, we saw this to some extent as CES, where you start to talk about AI washing a little bit. And there's certainly some fatigue in listening to people all the time talking about Genitive AI. And actually not necessarily always helping the market understand what Genitive AI can do for you, just because. Everything, if you do everything, come on. Can wash your clothes. Sadly, they cannot do coffee in the morning for me, but I think that the excitement is definitely here and what I think is important is the fact that, first of all, it's not a fad, right? It's not something that's going to disappear in six months. It is actually a tangible, useful thing with a lot of complications. We can talk about bias and what comes with it and how we really need to deploy, you know, ethically, but it is going to impact every aspect of our lives. So. That's why it's so exciting to talk about. It is, it is. Absolutely. So I want to step back a little bit and talk. Yeah, I've got two device geeks here, right? So I wanted to talk a little bit about some of the cool stuff that we've seen here in Barcelona. I think that you both have had a chance to see Qualcomm's new XR Hub. Tell me a little bit about your first insights here. Ladies first. Oh, wow. We're going to go there. Wrong person to say that to. I've known her long enough, I felt like I could do it. I think before I get to the XR Hub, which is a very interesting product and right at the right moment, right after Vision Pro and what Apple is doing in VR, XR, AR, whatever it is that you want to call it, is important that we take this momentum and continue to build the market. And this is exactly what Qualcomm has been doing. But this traditionally has been a smartphone show and the weekend has been about smartphones. What is interesting always for me now that I'm based in the US versus Europe is how much the Chinese brands own of the smartphone market and the momentum that there is even around AI. We don't see this in the US, right? The market is very much focused around three brands nowadays, iPhone and Apple, Samsung and Motorola. That's pretty much it. Well, and sometimes the European market also, they're much less expensive. I mean, they have a lot more affordable devices that we don't really see as much in the US. So I think that plays a big role too. Yeah, that's the benefit of being in Europe where if you don't like the price in your country, you're going to go somewhere else. Right, right, absolutely, absolutely. So the XR Hub is basically the guts of a smartphone in a little cube that connects wirelessly to a headset. Cause one of the challenges with, you know, something like the Vision Pro and other headsets is it's a face computer, like it's a lot of junk on your face. And this isn't. This is literally, so again, it's like the Ray-Ban style sunglasses and then connecting to a device, you know, that's got the smarts. Now, the first ones, if you're going to put a screen on those Ray-Bans, that's going to obviously make it more challenging. But the idea is you put some of the intelligence, it takes the weight, the battery life, all those things, well, not the battery life, obviously the battery, but because it's- From a compute power. From a compute power perspective, it's being powered in that cube, you don't have to compute, you know, have the battery power for the headset. So, you know, it'll be interesting to see how willing people are to have two different devices they need to bring with them. But- That cube is a smartphone? Or it's a- It's the guts of a smartphone. It's just literally- So it's a separate device. A little box. Yeah, it's like a box. It's like a hub. It's like actually- Are you guys going to bring that with you? Are you going to have a separate charger for that? Well, I mean- I mean, traditionally, if you're looking at the smartphone market through the years, at the beginning of the camera phone market was actually Sony Ericsson that had the first two piece, right? So the camera was actually an add-on that you would plug into the end of your phone. Most of the time you were forgetting that. You would pick out your phone and forget the accessory, right? So it's always hard when you have more than one piece for consumers to really, you know, kind of embrace that experience. So you feel like even with Vision Pro, it's more of a developmental platform for programmers? I wouldn't call Vision Pro a developer platform in terms of the reach. I know, Bob and I disagree. Obviously- Okay, so I thought that was the sort of general consensus but you would disagree. The price is the limitation. It is. Of course, right? So it is a niche. That's why people think that, right? But I think it's interesting to me that Apple talks about it as a platform, not necessarily a device. Because that's what they want to build. You know, are people going to go out and spend $4,000? No. If from a use case perspective, I can give you something that is driving more your emotion than your logic, you will. If you're going to make me give an experience of being at Beyonce concert in the front line, am I? And if I look at how much my tickets for Beyonce and my kid would cost me, well maybe- Well, how much do you pay for your PC, you know what I mean? Yeah, that's true. I mean, I don't know. To me, Vision Pro is more of an experiment than anything. Certainly first gen. I mean, but every first gen is. Yeah, but that's not a normal Apple style. So it even breaks from Apple tradition, I would argue. But, you know, it's a great VR headset. If you want a VR headset, most people don't. And that's the bottom line. I agree. I mean, again, I think this XR Cube thing is an interesting concept. There are absolutely practical challenges there. But it allows you to create different types of devices. And look, we're still in the experimentation of days and days of this stuff. And that'll be interesting. What did you think of Zuck's video after the whole Vision Pro thing came out? He basically was saying, we have a superior product. You guys have used them both. I had a lot of comments on different social platform after posting my experience with Vision Pro. And the common remark is I can get the quest for a fraction of the price and have the same experience. And the reality is no. No way. It's not, right? Now, the question is, is it good enough for most people? Yes. So it is really what you want. And then the question though is, look at the number of applications that are native for Vision Pro versus Quest. Apple got to 1,000 at launch day versus the quest being on its first generation plus the pros of four generations. And we're not even close from a number perspective. That's it right there. So that's the power of Apple and the ecosystem. Yeah, no, sorry, Shelly. I mean, at the same time, we'll see how long those companies stay in there, right? There's a big question mark about, you know, and oh, you mean the Apple? Yeah, the Apple ones, yeah. And the other thing is way more of those Apple apps are paid apps versus free ones because the developers were like, well, yeah, we're not going to have a huge audience to sell to, we better charge them. So I don't know, we'll see what happens. That's true for the Quest as well. Yeah, no, I mean, it's fair. You know, because development cost is a thing. But good enough, not going to get it on my face. I'll tell you that right now. No way. But the other thing is, there's got to be better experiences and that's still what we're waiting on. Right. And the demos, you know, I mean, for me, the fun part was the action had Jean-Michel Jauré, if you're an electronic music fan there and he had an application on the VR at Qualcomm event and I actually, having a history of electronic musical equipment doing that, oh yeah, I used to be the editor of Electronic Musician Magazine, so I talked to him afterwards, which was funny. He's like, oh yeah, that was a great magazine, blah, blah, blah, that was fun. Anyway, but the point is, so he's, you know, they're working with a lot of people to try and create experiences that are different, you know, with these headsets. The problem that I have with all of them is they're cool for about five or 10 minutes and you're like, okay, I'm done. Yeah, well, there are people who want to, the feedback on the Vision Pro that I've seen has been, it's uncomfortable, it's very heavy, it's inducing headaches, I mean, and then when you're blind, like Dave and I are, then you have to have some extra things to, you know, so it's not a seamless experience for everyone and for $4,000, I mean, I'm happy to let Carolina and everybody else experiment. You've done a terrific job, I mean, I follow you and I know that you use it on the plane, on the way over here, and so I'm learning from you in terms of what your experiences are and I really appreciate that and I know that's why you do those videos, plus you're a device geek, but I do think that the whole potential here in democratizing experiences, especially beyond the whole, I don't want to have one of those on and work and collaborate with Dave in, I don't need that. I agree with you, I think that the discipline in a way of first adopters in trying to figure out the real use cases versus, you know, you see people walking on the street with it or, like, you know, Apple has a whole list of do's and don'ts, but obviously for liability issues too, right? But that's what it is, like, not everything is conducive to use Vision Pro or any XR device, right? So, you know, I watched the movie and I was like, oh my God, the first reaction was like, I'm never going to watch a movie in my living room in any other way. And as soon as I finished thinking that, I was like, yeah, but it's kind of lonely, because it's just me. It's just you, right? Very isolating. So would you use, is there something you use every day? I have been, for different reasons. I watch movies on my app and my phone because I can pay attention. I have the headphones and nobody's talking. I don't have to shush anybody. I kind of like it. So maybe I should try the Vision Pro. Yeah, and I'm thinking about my family and you know, there was a day when we would actually watch things together and my youngest kids are 18 year old twins and it's like, when we're watching anything, everybody is on a device. It's not a family group thing anymore. So that's very interesting. But you use it every day for what? Like, what do you do? For different things. For collaboration sometimes, obviously now there's a willingness to learn as well whether or not it's going to replace my Mac and I haven't found the workflow yet. I think that's the hardest one to figure out. A lot of it because of kind of behavioral debt, right? You used to do things in a certain way. Entertainment is really great. I watch the Super Bowl in an app that gave me a screen that was four times the size of my TV screen, you know, things like that. So it's more taking away from maybe TV time, not so much smartphone and PC time yet? A little bit of PC time, but it's been additive. So I'm spending more time. On a different kind of screen. All I have to say is ask her in a month if she feels the same way. That's all I'm saying. Well, you know what? Just follow her on Instagram or Twitter and you'll know. I know. I'm important. We only have so much time of the day, you know, and so I'm teasing her, but I just mean I think a lot of people are finding and my own experience with other VR headsets in the past has always been, again, they're exciting and different. And I think that that is what determines a good product from a mediocre product, right? Because it's so different than what you do every day if it becomes painful, either because it gives you headaches or is isolated, whatever the case might be, then you're not going to go back to it. And you're going to spend less and less time, right? Absolutely true. Although if you've spent $4,000 on it, chances are good, you might try harder. You are, but again, it's going to be a door stop in a lot of homes that keep them. I'm telling you. All right, Bob, I want to talk now. Let's talk a little bit about one of your favorite topics, Open RAN. Oh yeah, all right. So what, update it. So first of all, just quick overview for people. Open RAN is this idea that previously, telecom networks were all closed systems. So you bought from Ericsson or you bought from Nokia or a couple other vendors and that's how you made sure they worked because telcos originally were basically utilities, right? They weren't tech focused. They were a utility like the water or something else. As they've evolved over time, there's this idea just as we have in the compute world of mix and match of different things. So the idea with Open RAN was, oh, wouldn't it be great? We can get things more cheaply and it should work better and we're just more competition and all those things you would normally associate with it. And there were frankly some geopolitical issues related to Huawei and concerns about Huawei equipment in certain countries. So that also played into all of this. Problem has been, it turns out it's really, really hard to do something like that and oh, by the way, keep those seven nines of utility and even now, like we saw what happened with AT&T last week, right? And that's before Open RAN sorts of stuff. So it's hard to do, it's hard to actually get the benefits but we're seeing more and more companies start to do it but they're taking it sort of an interesting version of it. They're saying it's Open RAN but it's still all the equipment from one single vendor. It's just that the interfaces are open. It's like, well, that's... Homogeneous Open RAN. Sort of. So it's sort of closed open. Anyway, we are seeing the beginnings of multi-vendor Open RAN but even there, companies are realizing, you know what? A, I need one throat to choke if something does happen on my network. Like, this is life or death kinds of things. You can't go down. So some of the benefits that people thought were going to be great, not so much but we are seeing this slow progress towards it. And then the hope is that other kinds of services and other kinds of applications because you're building your infrastructure differently are going to be possible. Because, you know, one of the challenges, again, we've seen with these 5G networks is telcos have spent a lot of money on all this equipment and there was this big expectation that we'd be doing all these cool crazy things like robotic surgery and fully autonomous cars control over a cellular network. That's never going to happen. So now all of a sudden they're like, wow, we paid for all this frequency spectrum, we paid for all these equipment and in the end, what it's doing for them is it's lowering their costs, which is fine, but not exactly exciting. And so the idea with OpenRAN is it will force a change in the architecture that theoretically will make it easier to deliver services. So that's why you still see- Which can be monetized. Which then eventually can be monetized, so yeah. It's interesting because I was looking recently, kind of did a retrospective because people have been talking about is the AI boom like the dot-com boom? And so we went back, the Telecommunications Act of 1996 like opened up and you remember the level trees, the Enron's and Global Cross, a lot of them went out of business, most of them did, right? But there was a half a trillion dollars spent in the dot-com boom by the telcos and the ISPs, which in today's terms is close to a trillion. And now you see a similar build out from telcos and you see all the cloud guys putting out, it's another trillion, it's like a two trillion dollar build out. So somebody's got to monetize this thing. Well, they are and the people like the cloud, like AWS and Google Cloud and Azure, they're all starting to host some of this open-ran software. Again, the initial step, to be honest with you, we went dedicated hardware to virtual-ran, VRan, where it's the same idea of virtualization in a server and then open-ran. But again, it's that step-by-step change, telcos are more conservative, they move a little bit more slowly, but we're starting to see that, we're starting to see other services and capabilities that become available. And you and I were talking beforehand about something like the Open Gateway Initiative. And the idea there is to develop a set of standard APIs that application vendors can create services that would run on these networks and they would be consistent. Because one of the problems we've had up till now is like if I build an app for Verizon, it may not run on Timo. That's obviously not a sustainable version. No, but that whole providing universal access to operators and really opening up the possibilities for developers, that's I think really exciting and I'm glad to see this initiative. And theoretically, you can start to bring, Dave's pointing, you can start to bring AI into some of these applications that are running on the telco network. So it all starts to tie together in some ways. We've got to jump, but any cool research you're working on that you want to tell people about? We're spending a lot of time on AI, both from an adoption perspective and both as a user, whether I'm a consumer or an enterprise user unwilling and interested in using. We're looking at sustainability as a purchase driver, whether or not there's a lot of debate around this. The reality especially in this market is that sustainability is driving both opportunity and risk if you're not follow the directions that are coming from the regulators. So yeah, those are kind of hot topics that we are looking into right now. You did a big AI study last year. You're probably going to update it. I'm going to do another one this year. Is 2024 going to be the year of AI ROI or is it going to be still elusive and not really give a payback yet so that gain sharing won't happen? Or is it going to be? Well, I don't know that it'll happen on the telco side. I think we will start to see some ROI on in the enterprise world. Second half? I think second half is, and right now it's a lot of proof of concepts, but we'll start to see some real world applications and that's why NVIDIA is crushing it because everybody's building out the infrastructure they need to enable these kinds of things. Well, you think if that happens in the second half do you think that'll accelerate the top line of IT spend which has been kind of constricted? I think it could. I do and AI PCs is another topic that we both look at a lot and we're going to see AI PCs more later this year. We've seen that some of the first ones we're going to see a lot more happening in that front and they're going to start to do some interesting things as well. Most of it's initially what I would call hybrid AI, meaning it'll, some of it will be done on the PC and some of it will be done in the cloud but over time more and more of it will be done locally and then that opens some interesting possibilities. Thanks so much for coming on theCUBE. It's great to have analysts like you that have deep perspectives in your fields and really appreciate the collaboration. Thanks for having us. Thank you. You bet. All right, keep it right there. Shelly and I will be back. John Furrier as well as in the house is Savannah Peterson. This is theCUBE from MWC 2024. Keep it right there.