On April 25, 2017, the JIC Investment Forum themed with "Information Industry Constructing Intelligent Future", which was jointly sponsored by China Jianyin Investment (JIC) and Caixin Media, was held in Beijing. The forum focused on investment opportunities in the information industry and was designed to analyze the development trend and the status of China's intelligent manufacturing at the forefront of global IT development, as well as jointly look into the future trend and investment opportunities of the information industry in the new global pattern of the industry.
A roundtable themed "Informatization boosting Intelligent Manufacturing" was also held during the forum, bringing together representatives from leading institutions in the industry to share their respective cutting-edge views and conduct in-depth discussions on the focus issues of the information industry.
I would like to answer four questions:
First, will Moore’s Law not work?
It is because of the continuous development of semiconductor technology that gives the Chinese information industry the opportunity to catch up and surpass. The import of China’s integrated circuit (IC) hit $227.1 billion in 2016. The gap between capacity and demand is being narrowed via indigenous R&D, joint ventures, M&A etc. China has made remarkable headway in IC design as well as chip manufacturing and packaging. The price of IC is expected to drop sharply from the consumers’ point of view.
Second, will a new operating system be invented to beat IOS and Android?
The 5G era is approaching, and we do need a new operating system in terms of safety and technological progress.
I have several observations on the operating system: Firstly, Chinese enterprises have said goodbye to the days when the operating system was controlled by foreign players. Secondly, the development of a new operating system must start with the kernel to fully meet the different needs of mobile networks. Many operating systems have stagnated over the years because of Linux kernel. Thirdly, newly developed operating system must have functions better than existing ones. Fourthly, the new operating system should be compatible with existing ones, otherwise, all APPs will have to be redeveloped. It’s advised that such a mega project should be led by competent authorities, with the establishment of a designated R&D team consisting of a range of mobile manufacturers, telecom operators and internet service providers.
Third, what opportunities will 5G bring?
Technically speaking, the changes of 5G will involve three scenarios: strengthening of mobile broadband, mass communication and highly reliable low–latency communication.
But the combination of Internet of Things (IOT) and artificial intelligence will be the focus of 5G application, the size of which will far surpass the previous applications of internet and mobile internet.
There are two types of telecom applications: One is we want to do something, but the speed makes it impossible, like simultaneous interpretation. The other is the lack of knowledge on the application of available technology. For instance, people didn’t know 3G could be used in networking until iPhone was invented by Steve Jobs. The technical indicators of 5G are now available, and I’m confident that Chinese version of Steve Jobs and BAT will appear, presenting promising and boundless opportunities.
Fourth, where will the telecom operators head?
Telecom operators are also trying to transform: on one hand, operators are reforming current network structure from hardware-drive to software-drive and defining the network by network-based virtualization and software to slash costs. For example, AT&T claims to be transforming from a hardware company to a software one. On the other hand, new M&A trends arise because telecom operators don’t want to be channels only. Previously, the operators expand their size and scale through the acquisition of similar business, but now the M&A is extended to the outside of the industry - such as AT&T’s acquisition of DirecTV, and it is currently acquiring Time Warner; Verizon also acquired Yahoo. The acquisition is not only about synergy now, which has become a trend. The telecom operators have plenty of cash and they are blazing a trail.
My topic is "Information technology and new momentum of industrial innovation and development ", I will talk about it in the following five aspects:
First, the software industry is being industrialized. We are using the software to define the whole world. Not everyone in the world can become a programmer or a software expert. Therefore we will need to conduct supply-side reform, and to produce, deliver, prepare and use the software in a massive, intensive, standardized and modular manner. Today, a lot of new software technologies are being developed based on this new trend. The software industry is shifting from handicraft to industrialization, which represents a new mega-trend for software development.
Second, cloud computing. The basic concept of cloud computing is to transfer the previously complex handheld devices to the servers, data centers and clouds. The future rise of big industries must be based on the cloud. What technologies will rise? The cloud will certainly do; so do cloud allies, such as data centers, and big data, which is based on cloud for accumulating, computing, analyzing and processing. We can also develop AI with big data. The rise of one end will inhibit the other. In fact, over the past decade, the development of terminal industry lags far behind that of cloud-centric industries because of big changes in the industry. It is inevitable and will continue for at least 20 to 30 years.
Third, big data. Big data matured about 5 years later than cloud. The cloud market has boomed while big data is still at its infancy. Firstly, the big data technology is not yet stable. It is still at the stage of cloud computing a few years back; secondly, the application of big data has just begun to extend from the leading internet industry to other industries.
Fourth, block chain. Block chain is essentially a new type of database technology. All the existing accounting technologies involve lending and borrowing. But in case of deletion and fraud, the previous database technology is very suitable for double entry. The block chain enables more people to do bookkeeping. In the past, only post-auditing was available. But now, auditing could be done by machines, and manual post-auditing is no longer necessary. Real-time auditing is accessible, which is a very big change.
Fifth, data center technology. The success of the cloud will have an inevitable impact on the surrounding industrial chains. To the upper end, it has sparked the revolution of big data. The prosperity of big data has spawned the flourishing of artificial intelligence. To the lower end, it will also promote the development of infrastructure, such as servers and data centers. Meanwhile, the data center technology is also changing greatly. The future for data center is the trend of data center and the history of the computer.
The change or trend of today’s data center is the same as the history of the computer. It requires modularization, high integration, intelligence sharing, server development, open-up and standardization.
Nowadays, hardware, power distribution, surveillance and security of data centers are making new changes and create new investment opportunities, this is all because of the development of cloud. All the existing technologies used by data centers are not designed only for themselves. Today, data centers have become so important with so much traffic, and it is necessary to redesign the products for data centers. The hardware technology of the data center has experienced big changes as well, including configuration, management, etc.
Based on our previous work and research, I’d like to share three observations with all of you:
Firstly, the past, present and future of the information industry.
What are the emerging technologies at present? First, let’s say a building has 84 km of optical fiber. Host’s needs will be communicated to home appliances via a common language, and computers can also receive information from mobile phones and sensors. A visitor will receive a brooch with an inner-placed microchip at the doorstep, through which personal preference will be set up automatically.
When stepping into a room, one will be greeted by his or her favorite melody, which can be adjusted at any time, it owes to the big data with the feature of weak artificial intelligence. After 20 years’ development, these technologies have entered ordinary families and been serving their work and life. Meanwhile, cloud computing, Internet of Things (IOT) and big data have become mega industries worth trillions of dollars respectively. They are the frontiers of the IT development and have a very promising future within a foreseeable time.
Secondly, the relationship between the frontier of information industry and the intelligent manufacturing.
In order to achieve industrial upgrading and cost reduction, industrial enterprises must find an IT-solution provider. Regarding the data flow, solution providers will find software platforms to form customer software solutions. And software platforms will find operators to form a hardware platform, the most basic capability of which is the basic sensor of IOT. From the opposite direction, the generation and transmission of the bottom-level data is provided by the internet. The hardware platform translates the data collected by the physical layer into the readable data for software platform to process and analyze.
Industry solution layer receives the key data output and will optimize each step in the whole production process. Finally, manufacturing enterprises achieve what they want, and improve their performance. It is obvious that the Internet of Things provides the generation and transformation of hardware data; big data makes processing and industry solutions possible. The combination of the two will achieve our goal - intelligent manufacturing.
Thirdly, investment in the related industrial chains.
I will focus on IOT and big data particularly: firstly, the industrial chain of IOT consists of perceptual layer, network layer, platform layer, and application layer. The overall capability is provided by large companies. At the stage of perceptual layer, what we value most are chips, sensors- and basic data sensing devices, such as RFID tags. It is one of the important sources of big data with investment opportunities. The most-focus areas in the application layer are intelligent manufacturing, intelligent transportation and intelligent logistics. Intelligent transportation, through a series of sensing tools, produces the value worth hundreds of billion yuan, which is inseparably linked with the ecological chain of internet of vehicles.
As to intelligent logistics, because of e-commerce, China's express delivery system has rapidly developed. The system is currently using the bar-code-based decomposition system. All the courier companies are overwhelmed with orders on “November 11th shopping day”. Given the rising cost of labor, I think intelligent logistics will lead a wave of booming development in the next few decades.
Secondly, the industrial chain of big data consists of five elements.
Let’s take a look at the infrastructure, more specifically, it refers to cloud computing infrastructure. The current focus is on storage device.
Three major pillars support the fundamental layer of big data. By 2020, it will only take 1 second to download 1 GB data. The speed of chips and networks are increasing 10 times every five years. Where is the storage device?
During the past 5 years, the storage rate has increased by only 24%. We can say that storage device has obvious shortcomings. We think the imbalanced development of infrastructure in the area of big data or cloud computing will definitely bring investment opportunities.
(Chairman of the China Association for Public Companies and former Chairman of China Mobile Communications Corporation)
(former Director of the Internet Center of China Academy of Information and Communications Technology (CAICT) in the Ministry of Industry and Information Technology and Deputy Director of the Communications Standards Research Institute, CAICT)
(Managing Director of JIC Technology Investment)