Three-pronged innovation strategy

To generate even greater innovation capacity, we rely not only on our own innovations but also successfully integrate new ideas from outside Deutsche Telekom. Group Innovation+ generates differentiation and growth from innovation in three different ways: from in-house developments, from partnerships and from start-up funding.

Chart: Three-pronged innovation policy

IN-HOUSE DEVELOPMENTS

In 2016, Group Innovation+ played a leading role in the further development and roll-out of various innovative products, some of which are presented below.

  • BMW ConnectedDrive. As of 2016, users can book a Wi-Fi hotspot via our HotSpot Drive portal. The mobile hotspot makes it possible to connect up to 10 Wi-Fi-enabled devices to the high-speed Internet at the same time, without any need for SIM cards. They can be used to surf the Net worldwide. Depending on their needs, users can choose from among various different data passes and acquire them with ease. In the reporting year, we also began upgrading ConnectedDrive to LTE. An eSIM is being integrated in vehicles for the first time and can be updated over the air when the need arises.
  • Our TelekomCLOUD portal embraces our total cloud offering for enterprises of all sizes. It offers customers software, platform and infrastructure solutions that can be configured and booked directly online. Our software-as-a-service (SaaS) business application offer ranges from traditional office applications and virus protection solutions to secure online storage and conferencing and collaboration tools from our secure data centers in Germany. The AppDirect platform acts as a “power strip” (Steckerleiste) for the entire Group and enables full onboarding for new solutions in fast track mode. The offer is rounded off by qualified consulting and support services provided by our certified cloud experts in the dedicated Cloud Customer Interaction Center established by Group Innovation+.
  • Our Voice Encryption Services guarantee tap-proof communications on the go, while working at home or at distributed company sites. This helps companies protect themselves comprehensively from information loss as a result of eavesdropping.
  • Our flexible, modular VPN service known as Managed VPN Suite enables rapid, easy integration of remote users, distributed sites and machines.
  • Business customers benefit from our secure cloud storage: Secure Data Drive is encrypted and operated in compliance with Germany’s privacy laws at our certified data center. For more information on our new products, please refer to the section “Highlights in the 2016 financial year”.

T-Labs. With our central research unit, Telekom Innovation Laboratories (T-Labs), we operate our own research and development facilities at international locations, including Berlin, Darmstadt and Bonn in Germany, Beer Sheva and Tel Aviv in Israel, and Mountain View in the United States. There, some 500 experts and scientists from a broad range of disciplines develop and test new technologies. They cooperate closely with industrial partners, international universities, and research institutions on the basis of open innovation for our operating segments. At its main Berlin site, T-Labs has been associated with Technische Universität Berlin since 2004 in one of the biggest and best-known public-private partnerships in Europe. In 2016, T-Labs focused on a range of topics including the following:

  • immmr. immmr is based on a digital carrier concept and is a new service that we launched to carry the traditional telephony and messaging product over into the digital world. Users can communicate from any device via their mobile number. This makes new products and services available, e.g., virtual phone numbers, multiple identities and group video communication. We launched immmr in the Slovak Republic in December 2016, with seven other countries scheduled to follow suit in 2017.
  • Access technologies. T-Labs develops systems and prototypes that make it possible to effectively bundle different access technologies and assign them to the appropriate application, as we did for example in 2016 in the Well-Fi project. In it, we combine the latest Wi-Fi technologies with smart network management. As everything around us gets smarter – smartphones, smart home, smart city – it is also vital to have easy, intelligent access to the Internet at home. The growing number of network devices is making it more difficult to supply a constant high-quality Wi-Fi signal to all areas of our homes. Well-Fi guarantees outstanding Wi-Fi quality in every room; service interruptions and poor signal coverage are now things of the past. In the reporting year we launched a technical field trial with Makedonski Telekom to show how suitable Well-Fi is for day-to-day usage.
  • Intelligent cloud robotics. There is growing demand for flexibility and efficiency in industrial manufacturing (Industry 4.0), with new application areas also emerging in the home and service environments. This presents new challenges for robotics – work performed by and with robots. Thanks to high-speed networking, secure cloud infrastructures and application functions based on artificial intelligence, robots are metamorphosing from high-quality repetitive tools to universal cognitive and collaborative tools. Embedded in the Internet of Things, they can perceive their environment, can cooperate with humans and offer benefits in a broad range of applications. As part of the Low Latency Compute initiative in our Intelligent Cloud Robotics T-Labs project, we cooperate with leading research institutions to address the economic and technical challenges presented by this development, carry out feasibility studies and develop prototypes for industrial and service robotics. We started building a laboratory with different robot types in mid-2016 and will be making it available to potential business partners in future.
  • Smart farming. Agricultural engineering has assumed a leading role in digitization. Connected, self-steering machines equipped with a vast number of sensors are now already in standard use. The object of the Smart Farming project, funded by the Federal Ministry for Economic Affairs and Energy as part of its Smart Service World program, is to develop open, standardizable and, at the same time, secure, robust and efficient system architectures for communication between various machines and back-end systems, and to test them in practical application scenarios. The aim is to develop a multi-vendor system concept which gives farmers maximum freedom to compile a machine estate. Farmers can then select the most suitable provider without being tied to any specific manufacturer. 15
  • Data analytics. In the area of data analytics, our T-Labs works on use cases, pilot projects and concepts that will enable the suitable use and analysis of big data. One example is our Data Cockpit research project, an innovative Web interface that makes the use of personal data transparent for customers. It reinforces their trust in our Company by granting them full control over their data at all times.

PARTNERSHIPS

As well as developing in-house solutions, Group Innovation+ repeatedly chooses to collaborate with partners on innovations, in accordance with our Group strategy. The object is to establish a broader range of innovative products and services that can be offered to customers. In doing so, Deutsche Telekom taps the vast innovative strength of Silicon Valley, Israel, Germany, and other innovation hotspots.

We would like to present some examples of these successful partnerships below. For more information on our cooperations and partnerships, please refer to the section “Highlights in the 2016 financial year”.

  • We collaborate with Zimperium to offer companies of all sizes end-to-end protection for their mobile devices. Mobile Protect Pro offers security for mobile applications and protection from attacks over Wi-Fi and other wireless connections as well as from vulnerabilities in mobile operating systems.
  • At the end of 2016, T-Mobile Czech Republic joined forces with our partner Mojio to bring a connected car service to market which transforms customers’ vehicles into smart cars, giving them an overview of car usage, handling and condition. Since Mojio is an open platform, customers stand to benefit in future from other practical offers, e.g., help with finding a parking space.
  • In collaboration with our partner FON and with over 2.5 million access points, we provide one of the largest Wi-Fi networks in Europe. FON enables customers to share their private Wi-Fi access with our other clients. This service was launched in Hungary in 2016.

START-UP FUNDING

In May 2012 Deutsche Telekom opened its incubator, a start-up support center, known as hub:raum in Berlin. hub:raum (www.hubraum.com) invests in start-ups during the early phase, supports them with co-working space and mentoring, and connects them pragmatically to our Group. hub:raum therefore functions as an interface between us and the world of start-ups. It is also part of our future initiative, in which we place increased focus on cooperations. During the reporting year, hub:raum supported four start-ups: 9

  • Teraki has developed data-reduction software for the Internet of Things (www.teraki.com). T-Systems used Teraki during a customer proof of concept to reduce big data to such an extent that it can be restored without loss even under difficult transmission conditions.
  • Contiamo offers small and mid-sized enterprises web-based business intelligence solutions. The software consolidates diverse business information at a central location and makes it easier to analyze for specific purposes. In analyses for our Customer Touchpoint Suite we rely on the cloud-based business intelligence solution from Contiamo.
  • M2Mgo offers a cloud-based content management system as SaaS which can be used to program and operate web apps (www.m2mgo.com). It is a cost- and time-saving toolkit for companies that makes it easy for them to develop individual web portals for the Internet of Things.
  • Flexperto develops and markets an Internet-based SaaS software solution that goes much further than traditional videoconferencing systems and is set to become the standard software for online consulting. Flexperto combines schedule management, communication, encrypted video consulting, encrypted messaging system/instant messaging, telephone consultation, billing and customer management (www.flexperto.com).

Beside this, hub:raum organized the narrowband IoT prototyping program with over 35 start-ups during the Challenge Up! IoT start-up program (with Intel and Cisco) in 2016.

We have restructured our commitment in the areas of venture capital, private equity and technology innovation with our Deutsche Telekom Capital Partners group (DTCP), which was established at the beginning of 2015, and are extending it considerably. DTCP is Deutsche Telekom’s investment management group and is positioned at the center of our redesigned investment concept. DTCP offers growth capital for start-ups with a proven business model, investments in mature companies, and strategic consulting in the technology, media, and telecommunications sectors. Its object is to create value for the Group, investors, portfolio companies and other stakeholders. We plan to invest a total of EUR 450 million over the next five years via DTCP. DTCP’s investments have a strong financial drive. The group aims to acquire shares in companies, to see these companies grow, and to sell the shareholdings again at a profit. Choosing the most successful start-ups and collaborating closely with them leads to strategically relevant cooperation options and business relationships with the Group.

DTCP also provides advice to our strategic investment fund Telekom Innovation Pool (TIP) on investments that are primarily strategically motivated. TIP focuses its investment activities not only on external start-ups that are identified as being of major strategic relevance but also supports and implements in-house ventures as spin-offs. In this case, ideas from Deutsche Telekom are spun off as young companies, making greater entrepreneurial freedom and shorter decision paths possible. Additionally, DTCP advises DTVF (Deutsche Telekom Venture Funds GmbH) on its portfolio. The aim is to support the development of the around 55 existing investments (including through follow-up investments) and divest them at a profit.

DTCP was already conducting successful deals in its first full year in business. This involved the profitable sale of the start-ups Nexmo (to Vonage) and Replay (to Intel). DTCP also made six further venture capital investments in 2016, investing in cyber security companies SafeBreach and Fireglass, in the intelligent data traffic management systems NS1 and Aryaka, in big data analytics tool Paxata, and in the evalue ventures fund.

PATENTS

Patents are gaining more and more significance in the telecommunications industry. Market players and their areas of activity are changing, with a knock-on effect on our IPR (intellectual property rights) agenda. On the one hand, our Group’s scope for action must be maintained. On the other hand and alongside our own research and development activities, we want to pave the way to open innovation through collaboration projects and partnerships. National and international IPRs are vital for these types of activity. We are strongly dedicated to generating our own property rights. In the reporting year, we filed 275 patent applications, taking the total number of IPRs held by the Group to around 7,900.

We pursue our intense efforts to develop and structure our IPR portfolio. This secures the value of the rights we hold and ensures they are in line with our Group’s strategic objectives. We have put in place a professional patent law management process to keep our IPR assets safe. Additionally, we are represented on various standardization bodies in our industry. We manage our IPRs on the basis of cost/benefit aspects, filing only selected applications subject to a strict schedule.