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Vodafone (NYSE: VOD), Europe’s largest operator by revenues, is taking some decisive steps to keep pole position for the longer term: today it has opened a new R&D Center, Vodafone Xone, to try to seek out the best and brightest innovations in wireless technology and services. Yet despite Vodafone’s roots in Europe, and the UK specifically, Xone will not be based there, but in Silicon Valley, where it hopes to tap into startup culture to find the next big things for its business.
Large telecoms operators can be quite cumbersome when it comes to rolling out new services and innovations, and the same most likely applies to Vodafone.
That hasn’t kept it from making tens of billions of dollars in revenues over the years. But longer term, new technology innovations — and the players that implement them fastest — could threaten that bottom line. That is the primary driver for a company like Vodafone putting itself in the middle of what is currently the heart of technology innovation, Silicon Valley.
Vodafone will be wooing startups from across the board — including those working on content delivery and data analytics, back end services like billing, and network and device architecture — with the promise of added technical expertise, financial assistance, logistical support, facilities, events. Up to 24 companies can fit into the office and test space set up in Xone.
Ans the operator has lined up some impressive features at the center, including a “fully functional replica of Vodafone’s global networks,” 2G and 3G networks, and an IP network. Vodafone’s connection to Verizon Wireless (NYSE: VZ) — it owns 45 percent — also will give companies access to Verizon’s R&D facilities, including its LTE network. It also notes on the Xone site that some companies may even become the target for strategic investments by way of Vodafone Ventures.
Will all these incentives, plus the possibility of rolling out products to 382 million Vodafone customers worldwide, be enough to attract top talent? It won’t be the first European telco to reach out west for R&D: both Telefonica (NYSE: TEF) and France Telecom (NYSE: FTE) have done this over the years.
Even if startups flock to Xone, Vodafone will ultimately have to face another key issue: figuring out how to implement all these new things quickly and without too much pain for the parts of its business that still work well.
A startup that can figure out how to do that might have the most valuable of technology of all.