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Last week, LoRa chip company, Semtech, made several announcements that should accelerate the IoT market. First, it announced LoRa Basics Modem-E, which is a software modem. Second, it announced relationships with IoT companies, Actility and Tago.IO that surround services that can be offered to drive the IoT market. Third, the company announced the LoRa Edge Tracker Reference design, which is a "device to cloud" reference design for asset tracking applications. In our IoT research, we have forecasted a near-doubling each year over the next five years for LoRa and competing devices. We believe Semtech's recent announcements as driving the market because they make it easier, cheaper and faster to deploy IoT services.
The LoRa Basics Modem-E allows customers to use modem capabilities from Semtech, where previously the customer would have had to have developed this technology itself or commissioned a third-party software design house to develop it for them. We see it as a slight increase in the "footprint," or addressable market in each IoT device that benefits Semtech. However, Semtech's Director of LoRa Product Line Management in Semtech's Wireless and Sensing Product Group, Sree Durbha, explains, using the Modem-E can reduce the total cost of ownership of an IoT application by as much as 47% over three years for a deployment of ten thousand devices or more. The savings come from both up-front savings and ongoing savings. Upfront savings are from being able to use a smaller microcontroller unit (MCU) with a smaller footprint, reduced non-recurring engineering (NRE) spending to develop the modem, and reduced certification costs enabled by the LoRa Basics Modem-E. The ongoing savings come from maintenance and testins costs for future modem releases, which Semtech will make available to its customers and partners on a regular basis. We spent some time discussing the cloud service with Mr. Durbha, as well, and learned that Semtech's LoRa Cloud service can enable geolocation and LoRa device and application services like GNSS almanac updates. We tried to get a general sense for the prices involved on a per device basis and learned that for the asset tracking application, each device can be tracked for under $1/year. There are many variables that come into play like usage rates, for instance, that can change this number. All told, we think that by offering reference designs, tight relationships with service providers, developing more of the footprint of an IoT system, and reducing costs to customers, Semtech is working to accelerate the IoT market - and of course, its participation with LoRa technology.
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On October 14, 2020, Nokia and Google Cloud signed a strategic collaboration to transform Nokia’s digital infrastructure. We made inquiries to Nokia to learn more and had the opportunity to speak with Nokia’s Chief Digital Officer, Bhaskar Gorti, who is in charge of the relationship. Nokia’s move to Google Cloud is one of the first major policy decisions under new CEO Pekka Lundmark. In our interview with Gorti, we learned several things: * • Nokia expects the total transition time to the cloud to take about 18-24 months * • Nokia is moving as many of its internal IT systems to commercially available Software as a Service (SaaS) as possible, in a move that is also underway at most, if not all, of Nokia’s customers * • When a SaaS system is not available for Nokia’s needs, it will be moving those workloads to Google Cloud. * • For certain on-premises workloads where a move to SaaS is not available or it does not make sense to move towards Google Cloud, the company will “sunset” these applications and find other business processes as an alternative to the legacy applications. * • For internal R&D and manufacturing needs, the teams will make a decision whether move to computing, storage and related infrastructure on premises or move them to SaaS or cloud. Each of these functional teams have product and delivery timelines that could be disrupted by a move to cloud and therefore each is being given a high degree of autonomy on the decision. We learned that Nokia’s primary motivation in moving towards SaaS and to Google Cloud was to align its digital business practices to be more similar to those of its customers. Secondarily, over time, Nokia expects to realize some savings by moving to SaaS and to Google Cloud. Gorti explained: “We are very confident this [move to SaaS and Google Cloud] will be of beneficial long-term economical savings. This will allow us to redirect more investment to other areas.” Nokia is becoming more like a cloud company, and this is great for everyone as we transition to a 5G environment. Nokia is reshaping itself to be more nimble like cloud and SaaS companies in order to better serve its telecom and enterprise customers.  Juniper Enhances Enterprise Offering with Planned Acquisition of SD-WAN Company 128 Technology10/20/2020 Today, Juniper announced its plans to acquire 128 Technology for $450 M. The deal is expected to close in calendar 4Q20. 128 Technology executives have a strong technology heritage from Acme Packet (SBC company acquired by Oracle). 128 Technology’s unique session-smart networking enables enterprise customers and service providers to create a user experience-centric fabric for WAN connectivity. We see a strong synergy with Juniper's enterprise portfolio where combining 128 Technology’s software with Juniper SD-WAN, WAN Assurance and Marvis Virtual Network Assistant (driven by Mist AI) gives customers a path to full AI-driven WAN operations. A trend that is even more important s branch location adjust to COVID-19 and remote work becomes even more important to the enterprise. The market trends towards single-pane and single vendor in branch deployments continues. Our research has consistently shown a larger percentage of companies wanted to purchase from the same vendor and make the buying decision at the same time instead of stand-alone decisions or seeing portions of the decision as overlay networks. COVID-19 changed how many businesses operate, the WFH trend, and how enterprises reopen locations in the future is forever changed. Data, the network it relies on, and AI/ML automation are more critical than ever. 128 Technologies also feeds well into Juniper's existing customers and existing channels. With the significant difference in Europe vs. North America and Large vs. Small, the channel is playing an increasingly important role in supporting business buying decisions. The move also increases Juniper's exposure to subscription and software revenue, an area of focus for the company. While 2020 is a down year for networking because of COVID-19, the future is bright. Our projections for campus switching, WLAN, and SD-WAN all indicate positive CAGRs through at least 2025, with the branch making up approximately 33% of the switching and WLAN markets.  Today, Alan Weckel participated in Intel's webinar on how technology is changing from the edge to the cloud. It was clear working on this project that the data center is rapidly innovating to next-generation technologies to keep pace with data growth. How will networks for communication service providers (CoSPs), cloud service providers (CSPs), and enterprises evolve to handle the dramatically increasing data volumes expected in the coming years? Increasing data volumes are being driven today by smartphones, laptops, IoT, and, in the near future, by emerging 5G-enabled services. 650 Group's internal projections indicate that data entering/exiting the data center (north/south) is driven mostly by consumer content (e.g., video). In contrast, a wide range of use cases ranging from enterprise applications, consumer data, and cloud applications drive data between machines. As part of the webinar, we authored a white paper on how quickly technology is involving in the data center. As we did our end-user interviews during the last few months, we saw many advancements in technology to support the growth of data in the cloud. We are excited to see all the new announcements coming as we close out 2020 and enter 2021. Please download the white paper by clicking on the link below. 
Nokia reiterated its commitment to 25G PON in its two-day briefing with industry researchers this week. It also shared some interesting commentary about is progress with Fixed Wireless Access (FWA) and its consumer Wi-Fi devices. But, what makes Nokia’s 25G announcement so interesting is that there is significant controversy associated with the 25G standardization process; 50G PON is also in the race for standardization, too. It seems that the world will split into two purchasing groups: Chinese and Western. We think the fact that two purchasing groups will emerge is a material negative for the telecommunications industry and is a sign of things to come. Nokia has decided to chart its own path, find partners, and make the best of this controversy. Our view is that Nokia’s 25G PON offerings will see more demand than 50G PON in the upcoming years, and when 50G finally becomes necessary, Nokia can move to support it. For background, in May 2020, Huawei announced to analysts that it is backing a 50G standards process, in cooperation with the ETSI. Huawei calls its 50G development “F5G,” which stands for Fixed 5G. It demonstrated over a video presentation an FPGA-based prototype, and it and explained that it expects this technology to be adopted first by the mobile infrastructure market for connecting RAN radio systems to baseband systems and for backhaul. Then Huawei expects the market will develop for residential PON, and later for enterprise campus connectivity (to replace Ethernet switches). Huawei explained that in February 2020, it has the support of Chinese operators, ETSI members in Switzerland, a European operator, Altice Portugal, and Chinese operators. On the other hand, Nokia had developed a chipset that specifically supports both GPON and next generation PON technologies; it is called Quillion and has been available for nine months. Nokia had consistently explained on several occasions in the past several months that during a February 2020 ITU meeting relating to 25G PON, 18 members of the ITU were in favor of initiating the 25G standardization project (including ATT, BT, Korea Telecom, nbn Co, Telecom Italy, SK Telecom, Telus etc). However, there was a minority coalition led by operators and vendors from China that objected to the proposal on the grounds that 25G PON would pre-empt their futuristic vision of 50G PON. This in turn resulted in no consensus being met. In response, Nokia has worked with operators and suppliers interested in pursuing 25G PON in the near-term, which we interpret as the next 1-2 years. This MSA (multi-source agreement) strategy is used by various groups in the technology industry when there is sufficient buying power to move ahead of (or in this case, without) standards ratification; we see if used frequently by hyperscalers when building their bleeding-edge data center infrastructures. We understand that there are a handful of operators, including Chorus (New Zealand), Chungwa Telecom (Taiwan), and NBN (Australia) and several technology suppliers including AOI, MACOM, MaxLinear, Ciena, Tibit and others. The MSA has a website with more information.  Nokia explains that 25G PON shares the same optical technologies as those used in Ethernet Switches that are common and used by data centers and campus switching environments. Sharing common optical technologies with high volume data center deployments will reduce costs . Our view is that in a few years, data center switching demand for 25G optics will continue to rise, and this is perfect timing for Nokia and others who are going to use 25G for PON because the supply will be there and this technology will be mature and lower cost.
There’s one other thing to consider that pits Nokia against others. It decided to develop its own semiconductors to power its infrastructure PON systems (OLTs). Nokia’s chip system is called Quillion, and its introduction means it won’t be dependent upon OLT chip vendors. What’s even more interesting about this whole debate is just how future-looking it is. PON has moved through two main generations, GPON (2.5 Gbps), 10 GPON (XGS and XGPON), and now we are talking about two different generations, 25G and 50G. Huawei’s 50G “F5G” approach is a “if you can’t join ‘em, beat em” strategy, where Huawei will leverage its home market telecom operators’ volume and a few others to work outside its home territory. Huawei will leverage this technology to three markets over time: 5G backhaul, residential PON and enterprise networking. On the other hand, Nokia is taking matters into its own hands in that it has developed its own chips. What’s happening now is not uncharted waters, but it is rare for the telecommunications industry to splinter into multiple buying groups – usually standards are developed and followed for the benefit of the industry. This time, in the absence of standards, Nokia has forged on ahead on its own and its headstrong ways are likely to benefit it because many Western operators and now actively seeking to diversify away from Huawei in their procurement of fixed network equipment.  Juniper led the Market in 1H20 and 2019
DCI has a different meaning for different customers and vendors. Ethernet DCI is a critical technology and enabler for Cloud customers to build data centers and transport data between them with lower-cost high-density router/switch platforms with pluggable modules. While DCI has been around for a long time (The Optical Transport Market), Ethernet DCI is different. It uses Ethernet-based Routers and Switches for connectivity between data centers. As we look forward in time, Ethernet DCI will also embrace ZR/ZR+ optics to increase distances in the 400 Gbps and 800 Gbps upgrade cycles. Historically DCI meant routing traffic through Telco SPs. Today, the Cloud uses its own network and fiber for the majority of traffic until the last-mile to the consumer or enterprise. As an enabler technology, Ethernet DCI is not only the movement of Ethernet platforms into adjacent markets, like Metro Optical Transport, but also new greenfield installations. The ability to move into adjacent markets and new opportunities creates a multi-billion dollar opportunity. It is one of the main drivers for Ethernet-based Switch and Router revenue growth in the Cloud with the 400 and 800 Gbps upgrade cycle. Without this class of system and new optics, the Cloud could not scale, and edge-computing, IoT, and other more modern applications like AI and ML would not be possible. When we look at 1H20 and 2019 results for Ethernet DCI, Juniper held the number one position in the market with Cisco and Arista rounding out the top three vendors in this segment. Our reporting of Ethernet DCI looks at five different use cases, ranging from Cloud to Colocation to Telco SP. In addition to leading the overall market, our report indicates Juniper also leads in the Cloud/Metro, Colocation/Long Haul, and Telco Cloud use cases with the company’s MX, PTX, and QFX 10K platforms. In 650 Group's market projections, we expect both next-generation high-density routing platforms and Ethernet Switch platforms to have robust growth. Short-term growth will be driven by strong trends in Content Delivery Networks (CDN) and increased capacity to support Work-From-Home (WFH). As we get into 2021, ZR optics availability will drive additional capacity growth with entering the market in the later half of our forecast. ZR+ allowing Ethernet-based platforms breaking the 1000 km distance. ZR+, under the right conditions (data rate, modulation, and fiber), has the potential to fulfill most connections on each continent. As Telco SPs look towards Cloud architectures and machine-to-machine traffic rapidly goes from inside the data center to spanning multiple facilities, Ethernet DCI will remain a robust market for edge-computing connectivity and the transport of data sets for processing for AI. |
CHRIS DePUY
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