650 Group Blog
|
Keynotes at the NFV World & Zero-Touch Congress in San Jose, California were very interesting today. We share our observations and view of the main themes from these interesting presentations by Nokia, NEC/Netcracker, Google, CenturyTel. The main theme of these presentations, we think, is this: NFV/SDN is now deeply in the deployment and commercial phase, where compared to 3-4 years ago, it was just a concept. Nokia. The company announced that its Airframe server platform, which is an OCP based design, comes available with either embedded acceleration or pluggable acceleration. This comment includes its software acceleration. The company explained that its Reefshark chipset can be equipped on the Airframe server and can perform better than a non-accelerated server:
In explaining functions that an Airframe with Reefshark can perform, the company gave a good example: massive MIMO beamforming can be assisted by the machine learning capabilities.  Nokia's Henri Tervonen at NFV and Zero Touch World Congress NEC/Netcracker. Enrique Gracia presented several uses cases of the NEC/Netcracker customers that related to NFV/SDN. He explained that 16 customers have deployed one or more of these uses cases. Full Stack OSS/BSS/MANO. A customer deployed this system in 12 weeks to launch a VNF. The system managed both physical and virtual devices. Expand to a new territory using VNFs from home region. A customer now delivers services to a customer outside the home territory by deploying the software and service from the network location at the home location. In this particular case, NEC/Netcracker and its customer do revenue sharing and VNFs include SD-WAN, virtual firewall and others. The service provider is expected to expand its customer addressable base by 40%, mainly targeting small/medium businesses in this non-home region. This system uses MANO, OSS, BSS and the marketplace. The company says in this case, time to revenue is expected to take 50% less time to deploy new VNFs in the future. uCPE (Universal Customer Premises Equipment) deployment instead of branded hardware. The company worked with a service provider company to enable uCPE to be deployed as an alternative to Cisco, Juniper and others' gear.  Enrique Gracia of NEC/Netcracker at NFV and Zero Touch World Congress Google Cloud. Vijoy Pandey, who represented Google Cloud, presented on the topic of using AI/ML to reconfigure its data center system. The company's cloud data center architecture has been evolving continuously since it was first introduced. Currently, the company is using its own AI/ML system to learn from current network traffic patterns in order to design its future network architecture.  Vijoy Pandey, Google Cloud, presenting at NFV and Zero Touch World Congress CenturyTel. The company has deployed Broadcom based Ethernet switches using its own Network OS. These switches do their own packet forwarding. Additionally, the company has built its own orchestration system called VICTOR. It draws upon Ansible, NetCONF, uses the service logic interpreter from ONAP and uses parts of Open Daylight. The company plans to open source this development and the spokesperson Adam Dunstan said, perhaps jokingly, that this might be called ONAP-lite.  Adam Dunstan of CenturyTel speaking at NFV and Zero Touch World Congress
0 Comments
We attended the Huawei Analyst Summit 2018 in Shenzhen, China last week and reported mainly on service provider trends. This week, we highlight some of our observations about Huawei's Enterprise business, specifically, the enterprise business.  The Enterprise Services revenue grew 33% Y/Y in 2017, driven by 56% Y/Y growth in China. The company said it does more enterprise services revenue outside of China, but that China is its largest region. Additionally, the revenue growth seems to be tracking with its overall growth in CSPs (it's services partners), which grew in number by 34% in 2017. The company said that it has historically worked with regional services partners, but it found that in engaging with larger multinational companies, it needed to expand its partner base to include companies that had a presence in all major regions of the world, so in 2017, it signed up with OVS, Arrow and an Asia Pacific company.
The Enterprise Services group plans to increase its subscription services, which today is mainly its SmartNOS offering, which was made available 1-2 years ago. In pursuing this plan, the company is developing automated systems. The company has recently been pursuing expertise in vertical industries and has been selling solutions, instead of just products, it says. In recent years, we have observed this solution selling strategy by Huawei, and it appears to be allowing the company to take share from more product-oriented sales strategies of other vendors in the Europe, Middle East & African geographic theatre. By and large, the revenue in 2017 from Enterprise services is derived almost exclusively from maintenance revenue on hardware sales, plus SmartNOS, so the company's goals represent a significant pivot from the current way of doing business. This signals a significant change in the way Huawei's Enterprise business plans to approach the market, in our view. Huawei Analyst Meeting Recap - a Big Focus on Artificial Intelligence and a Downplay of 5G4/16/2018  Eric Xu, Rotating Deputy Chairman of Huawei addressing audience questions at the Huawei Analyst Summit 2018 The main theme of the the Huawei HAS 2018 meeting keynotes was Artificial Intelligence and, secondarily, nearly ubiquitous networks connections across the world. Huawei expects 86% of enterprises to have experimented with AI by 2025 (<5% in 2018). It is leveraging AI across nearly all its products and will offer a full stack AI solution to all Huawei partners at its @Huawei Connect 2018 conference (Oct 10, 2018).
More specifcially, Huawei is using AI to elevate products & solutions to new levels: cloud, networks, devices, EI, SoftCOM AI, and Intelligent phones. The company's strategy has changed over time and is now AI-focused: 2006-2011: Single strategy: All IP 2012-2017: SoftCOM: All Cloud 2017+: All Intelligence: SoftCom AI (autonomous networks / services 2.0) - this reduces operating and maintence costs The company expects that networks will be 10x more efficient in the operation of equipment as a result of AI. By 2025, Huawei expects 440M AR/VR users, 40% of cars to be 'connected," 80% of users with access to mobile broadband, usage of 1 Gbps / user / day (versus .03 in 2018) and 20B connected devices worldwide. Connected Devices Forecast (Huawei) by 2025: 40B sensors and 100B connections. This thinking is based on data including that there are:
The company's product lines are very diverse; to wit, the company introduced a helmet for the blind, which will be available soon. Huawei expects NB-IoT (LTE-based IoT capability) to reach almost full coverage in China in 2018. Additionally, the company expects NB-IoT to reach 100 networks by the end of 2018 (versus 39 in 2017) and to be available on 1.2M base stations (from 0.5M in 2017) and to be connected to 150M connections (versus 10M in 2017). The company boasted about several developments:
Q&A after keynote: Mr. Eric Xu, Rotating Deputy Chairman of Huawei dodged several important questions relating to trade tariffs, cloud business unit revenue targets, growth rates of each major business units, specifics about AI full-stack claims made during the keynote, and instead focused generally on the AI theme. Xu did, however, however, answer a handful of questions that were quite interesting: Huawei won't acquire DRAM, Flash companies; and that 5G is not so revolutionary - it is just an evolution following LTE. Additionally, Xu mentioned that in 2H18, Huawei will launch end to end 5G solutions and by 3Q19, it will launch 5G capable phones. Xu said Huawei will continue to work with Intel on x86 for the foreseeable future. More Q&A specifics: Trade Tariffs and ZTE. (In a moment of levity, however, Eric Xu smiled when the words ZTE were mentioned - recall that a day earlier, ZTE was penalized by the US). We will focus on our customers and will ultimately survive. Cloud 1.5B by 2020, will you hit the target? Will offer cloud services to telco service providers. Huawei smartphones will leverage the Huawei cloud. Enterprise customers will consume cloud services such as video, computing. In future, trend will be enterprises will move to hybrid cloud and public cloud will take a major share. Huawei cloud provides compute/storage/networking to enterprises and government. 200K x86 servers in Huawei cloud. Revenue with external customers - won't share it with you - maybe . AI chipset question: We don't position chipset as a standalone business - won't sell to external customers. Will be used to differentiate Huawei products. Smartphone - we use multi-vendor strategy always; in other worlds; have multiple Qualcomm, NTK and others. Remain committed to multi-vendor strategy. Don't want vendor lock-in, however. If we only have one vendor, what might happen to our smartphone business, Xu asked. Enteprise business growth? Declined to comment on specifics, but said he encourages each to grow rapidly. How do customers get to 86% AI usage (the question was asked by an audience member by incorrectly referring to the statistic that was made during the keynote - specifically, Huawei said AI experimentation will be 86%, not AI usage)? Will give clearer answer at Huawei Connect 2018. For now, can share that we will use AI on ourselves first, then help customers on various functions such as finance, human resources, networks, etc. Supply chain - will you acqire your suppliers? We do joint innovation with suppliers to meet Huawei's needs; push multi-source strategy, however. Will not invest in DRAM, display, flash. 5G wasn't mentioned much in the presentation, why? We don't have as high expectations as some others; 5G is just one of many products we offer and is just a natural evolution from 4G. You don't have a fundamental difference between 4G and 5G - consumers just see faster speed and lower latency. LTE already support autonomous driving. Past couple years, governments have regarded 5G as too important. June 2018, will only address eMBB - faster speeds. 2019 - will have fully 5G compliant system that does low latency. 4G is pretty robust; we don't see 5G as a national coverage network - it'll just focus on city centers. However, once one carrier announces 5G, then all others must. 50% of Chinese have wireless connection capable of 4K but there are still no 4K stations. 2H18, end to end 5G solutions available. 3Q19, will launch 5G capable phones. Share trends for Huawei at operators. Revenue growth of telecom services is a challenging topic. This revenue growth topic is why titan operators express concern about moving to 5G; instead, Huawei thinks moving to improved intelligence will assist operators. Video will become more and more important as telcos become media companies too. Will AI become a privacy concern? Any technology has double-sided effects. With AI, some believe it can be dangerous. Xu believes in the wisdom of man. Look back to history of mankind, and our humanity can do same for mankind. Will Huawei find alternate suppliers for data center products? (Xu also smiled about this question before answering). Today, Intel is dominant player. Our point of view, we look forward to more diversified landscape; but we work with Intel mainly now. NetApp Analyst Meeting - Focused on Hyperconverged, All Flash Array and Public Cloud Software4/5/2018  At NetApp's analyst meeting today, CEO George Kurian sees opportunity in selling HCI (introduced F2Q18, 4-5 months ago), AFA, share-taking in SAN, and public cloud software and services. Every large customer NetApp talks to, according to Kurian, is using multiple cloud service providers and/or SaaS services and most are using the hybrid cloud, which means using workloads both on the customer premises and public cloud. According the company's marketing and sales executives, the company's sales and marketing strategy is focused on leveraging the company's entrance to the cloud services software market.
Substantial future announcements that were made by NetApp:
Summary of presentations Joel Reich, EVP Products and Operations discussed trends in data center flash: • NVMe over Fabrics • Storage-class memory as cache • Persistent memory in server • Quad level cell NAND Reich made some interesting comments:
Brad Anderson, SVP and GM, Cloud Infrastructure BU, said that NetApp’s “Converged” (selling NetApp storage with non-NetApp servers) FlexPod business is now at a $2B run rate and >4,000+PB shipped. The company recently initiated a Fujitsu partnership on March 26, 2018. Anderson also said that NetApp’s Hyperconverged product, which has only been selling for the past 4-5 months, hit its financial targets in the first full quarter of shipments. He also said that the HCI product is based upon on recently-acquired SolidFire technology and conceded that the company is hiring people with virtualization capabilities to further augment the product line. HCI customers that were discussed during this presentation were: ConsultelCloud (Austrialian SaaS company) and Imperva (security company). Anthony Lye, SVP Cloud Data services BU, joined a year ago and is responsible for the company’s efforts to build software that runs on and with public cloud services. He describes this software as one that operates above the storage layer, to allow customers to manage their data, whether in cloud, SaaS applications or on premises. It offers backup, disaster recovery, and for securing data, and then binds those services and data in context of applications and business policy using the orchestration Engine. OnCommand is product name. The underlying technology NetApp uses is called ONTAP Data Management, which Mr Lye explained was separated from its engineered systems (hardware) and port it to public clouds five years ago. We remember when NetApp announced its plans to separate ONTAP as a software for the cloud at its analyst meeting a few years ago when Kurian took over as CEO. Lye explained that “later this year,” NetApp will release cloud-based OnCommand performance management/monitoring tool to manage workloads in hybrid cloud environment.
Henri Richard, EVP Worldwide Field and Customer Operations said "Cloud is soon to be GA.” Richard explains this as its “Cloud Volume” product. Richard explained that what is new this year is the hyperscaler relationships, starts a demand creation engine for the sales organization. Jean English, SVP Chief Marketing Officer said the company will focus on “cloud first” to reach new “global” buyers (e.g. multinational organizations), will lead with HCI and Cloud to enterprises. Ron Pasek, EVP and CFO explains that FY18 is almost over and the company is beating FY18 plans (low-single digits growth), driven by flash. The CFO said that the new accounting rule, ASC 606 impact to guidance will be immaterial to the P&L , though will result in slightly higher product revenue recognition. Additionally, Pasek said that a year ago, he said revenue growth will be “low-single digit growth” (FY18-20) and now he is saying “mid-single digit growth,” driven by Flash, HCI, cloud data services. Pasek said that in FY19 cloud data services will represents one point of growth. (As an aside, we calculate FY19 cloud data services revenue, using the “one point of growth” metric at $60M, based on the latest quarter of total revenues, F3Q18 which was $1.52B, multiplied by 4, then multiplied by 1%). So, cloud services revenue is expected to grow to FY19 of $60M and reach FY21 targets of $400-600M. The company declined to state its FY18 cloud data services revenue when asked by the audience, so we take it that it is small.  Mavenir held a 'virtual' analyst meeting - essentially a webinar - that conveyed the company's efforts on several new initiatives: (a) SMB UCaaS - small business unified communications, (b) Messaging as a Platform (MaaP), (c) Monetization of messaging, (d) Security Solutions (relating to toll fraud, for instance), and (d) xRAN/Open RAN/Cloud RAN. Pardeep Kohli, CEO of Mavenir explained that the company is at a $450M revenue rate.
Small Business Unified Communications - its mobile UCC service can be deployed as a service or on premise. The company sells through its service provider partners. Messaging as a Platform - the company sees its capabilities in RCS messaging as a means to enabling branding, chatbots, sale of digital goods, and enriched calling. A month ago, at Mobile World Congress in Barcelona, we saw the Mavenir MaaP system in work - it looks nothing like what is available from traditional telecom equipment vendors. Mavenir, it its re-imagined MaaP offering, looks more like an "OTT" company than a traditional telecom supplier. We hear the refrain from service providers - show us new sources of revenue; well, this system from Mavenir looks to us like a new source of revenue. On a secondary basis, to the extent Mavenir is successful in getting its MaaP system deployed at service providers, we think this can help the company grow its presence with other products. Mavenir recently acquired Acuto, a monetization specialist company for messaging. Susie Kim Riley, Aquto's founder and CEO, now part of Mavenir, presented the company's offerings. Riley showed off the Sponsored Data system of enabling brands to provide mobile data connectivity to smartphone consumers. She explained how Facebook, Google, Alibaba and Baidu offers free access to consumers in various countries to consumers who don't pay for cellular data. The company discussed that its customers typically pay for data using Zero-Rating (where a marketer can enable users to download/use apps or browse specific sites without using any of their data plan) or Data Rewards (where a marketer can reward users with additional data buckets for taking a specific action like downloading an app). Mavenir showed how Banko Azteca offered both Zero-Rating and Data Rewards to engage with customers and had strong results. We asked the company how long it takes to get a SP up and running and Mavenir said it takes a couple months, depending on the billing system integration. The company discussed its Radio Access Network and Telecom Core products, too. Mavenir is making "Whitebox LTE" available by integrating its Cloud RAN technology with a Universal Customer Premises Equipment (uCPE) offering, which allows enterprise-deployment of CBRS and LTE Licensed frequencies. We asked the company after the analyst meeting whether its 5G Core (5GC) is available today, and management said, in fact, it is. We think this means a pre-standard version of its 5G Core is ready for customers to take delivery of today, and architecturally, it is similar to its control user plane separated system that performs EPC for customers. Additionally, the company highlighted a new capability that it has made available to the market that is calling its breakout gateway - the goal of this product (technically, a vSAEGW) is to allow mobile operators who carry lots of video traffic for mobile customers to offload this traffic to other operators, thereby reducing carrying costs. I'm not sure how this impacts the quality of video traffic and what is effect on churn might be, but the company claims that by using this breakout gateway, it calculates that it can reduce spending on EPC/5GC by as much as two years.  Arris held its annual investor day late last week on March 28, 2018. It was interesting: the company said "Everything is going wireless," which is an interesting admission for a company that, until about a year ago, was essentially a pureplay on wired broadband. To be sure, the company has diversified into wireless with its acquisition of Ruckus and has benefitted from the inclusion of Wi-Fi capabilities to its broadband CPE. The company sees this wireless future - and is pivoting towards it.
Arris management highlighted that it expect its future to include the following growth avenues:
Additionally, the company discussed its expectations for each division, which using its 2017 mix and various projections, calculates to a 4.7% CAGR from '17 to '21. Enterprise Networking (Ruckus). Overall, the company's Enterprise Networking division, also known as Ruckus Networking, includes its Enterprise WLAN business (formerly Ruckus Wireless), the Brocade ICX Ethernet Switch product line (referred to by the company as Campus Switching), and other revenue streams such as CBRS 3.5 Ghz LTE Small Cells, as well as IoT radio modules that plug into the Ruckus Access Points like Bluetooth, LoRa and Zigbee. The company is targeting 20%+ growth for the Ruckus Networking group, which is far above the industry growth rates we expect for Enterprise plus Outdoor WLAN and Campus switching. This aggressive growth rate either implies share-taking, or growth in other products such as CBRS, Bluetooth, LoRa and Zigbee, or the the non-WLAN parts of what used to be Ruckus Wireless, such as Cloud-managed Wireless LAN services (that, for instance compete with Cisco's Meraki, Aerohive services and Mojo Networks). The company cited an expected Enterprise WLAN revenue growth projection slightly above our projection for the period '17 to '21, even if cloud-managed WiFi services were included. Network and Cloud Segment. The company said this market is growing 5% annually, and described the market generally as the Cable Modem Infrastructure, optical nodes and cable video networks market. The company generally expects to take share, compared to this market viewpoint, projecting a 4-7% long-term annual growth expectation for this business segment. It was interesting that the company said that the "mobile device explosion [is] driving offload demand," because it has been several years since "Wi-Fi offload" was a growth driver, but dissecting the comment a bit more, the company is pointing to cable operators as being "well positioned to handle [the] offload." We think Arris' strong supplier position with the major Cable MSOs in the US, especially, may indicate that there should be a strong build up of WiFi and cable infrastructure coming in the future. And, this corroborates with our own research and statements from MSOs such as Comcast. In fact, the company showed a "future" network diagram that indicates it expects its MSO customers will be delivering 5G radio, Remote OLTs (PON) and Fixed Wireless Access instead the of cable modem (DOCSIS) equipment that was indicated in the "now" chart. This implied shift from DOCSIS to PON/5G/FWA would be a dramatic shift in the company's product portfolio. Very interesting, indeed. Customer Premises Equipment (CPE) Segment. The company claims a #1 Set Top Box (STB) market share, and #2 Broadband CPE market share, with a mix of 60% video CPE and 40% broadband revenues in 2017. The company expects to grow broadband CPE to a mix of 50%+ by the year 2021, consistent with the market growth rates it cites - 4% CAGR for broadband and -.8% for video. Generally, the company is projecting long term sales trend of -5% to +1%, indicating that it lacks the direct to market exposure that would get it to a growth expectation in this segment. The company confirmed it is using NBASE-T (Multi-Gigabit Ethernet) interfaces on its home networking devices and it is planning to release 802.11ax capabilities on its portfolio, as well. Arris CPE will also include Extenders / Adapters to, at least partially, address the growth now occurring in the Consumer Mesh market. |
CHRIS DePUY
|
RSS Feed