Vodafone Reaches Out to Silicon Valley

Vodafone Group plc (NYSE: VOD) opened a research and development center in Silicon Valley on Friday in an effort to discover and bring to market new products and services for its global mobile networks.

The Redwood City, Calif.-based center, called Vodafone Xone, will seek out new technologies from startups and venture capital portfolios that can potentially become Vodafone applications or services. The facility has office and test space for up to 24 companies.

Companies will be able to test their technologies in the Xone's lab as well as on Vodafone's European networks, which are connected through a dedicated backbone. The center will also collaborate with Verizon Communications Inc. (NYSE: VZ)'s innovation centers in San Francisco and Waltham, Mass., which will give some companies access to the Verizon Wireless 's development LTE network in the U.S.

In addition, companies participating in the Xone could also receive investment from Vodafone's venture capital arm, Vodafone Ventures.

Why this matters
Vodafone is not the first European telecom company to set up shop in Silicon Valley. Ericsson AB (Nasdaq: ERIC), for example, has the office of its chief technology officer based there.

But the location is nonetheless significant because it is a sign of an industry shift: The largest European mobile operator -- and one of the world's largest by revenue -- has gone to the U.S. to look for mobile service innovation. (See Europe Set for LTE Laggard Status.)

The operator hasn't turned its R&D back on Europe, though. Vodafone has major innovation centers in Madrid and Dusseldorf, which are dedicated to network research and development.

Xone is different, however, as its focus is on applications and services with major input from third parties, rather than the underlying and supporting infrastructure. Vodafone has long understood the importance of focusing on new Web services development and has a senior technology post dedicated to next-generation data applications strategy. (See Vodafone Seeks New Tech Strategy Guru.)

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— Michelle Donegan, European Editor, Light Reading Mobile