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.

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.

Ericsson has served the mobile service provider industry well over the years.  Most devices connected to its customers’ networks are mobile phones; this, however, is changing.  Internet of Things (IoT) devices are entering the fray and provide an avenue for growth, as is the enterprise market.  Additionally, Ericsson’s channels have mostly been to operators, at a time when enterprise growth is expected to provide additional cellular industry growth.  Ericsson’s portfolio, until the Cradlepoint acquisition, was not particularly well-positioned to benefit from IoT and enterprise growth vectors. 
 
IoT devices come in all shapes and sizes, and they use a number of different connectivity methods, from cellular to Wi-Fi to Bluetooth to LoRa and many others.  In 2020, we expect only 16% of IoT and wirelessly connected devices will connect to cellular systems; the rest connect to more popular (and mostly free) connectivity types.   We see cellular connections growing in the future, but as a percentage of all IoT and wirelessly connected devices, we expect it will drop to 13% of all such devices five years from now.  The reduction in the fraction of IoT and wireless devices connected to cellular is why the “cellular to other” gateway market (Cradlepoint’s main market) makes sense.  There are some use cases where cellular backhaul connections to connect Wi-Fi, Bluetooth, Zigbee and others are vital.
 
With US-based CBRS and European nations’ private enterprise spectrum opening up the opportunity that enterprises will build their own networks – without needing a mobile operator’s help with sub-leasing licensed spectrum – the folks at Ericsson had a choice to make.  The choice was to continue selling to and through mobile operators and hope that mobile operators keep their share of enterprise and IoT growth, or to acquire products and distribution channels to access enterprise growth. 
 
Ericsson’s competitors were partnering with Cradlepoint with some success.  Recently, Nokia’s enterprise revenues hit about 10% of revenues, in part because it was selling LTE gear to customers in verticals such as utilities, mining & exploration, and logistics & shipping.  Many of these customers were using devices such as Cradlepoint’s.  Ericsson is now invited to these ongoing dialogues as these networks expand and change.
 
We would be remiss if we didn’t mention 5G in relation to Cradlepoint.  Some enterprises seek a secondary wireless connection to supplement their primary wired broadband connection.  Gear such as Cradlepoint routers can serve this need well.  In this sense, we can see why Ericsson uses messages such as “Ericsson accelerates 5G for Enterprise with the Cradlepoint acquisition.” 
 
This acquisition is not without controversy, in our view.  The Swedes are acquiring a company located in Boise, Idaho, and as such, managing from afar may present challenges.  Cradlepoint sells its devices differently (mainly through channels) from how Ericsson sells its gear (mainly direct); these two distribution methods may conflict.  Ericsson sold its cell phone business many years ago because it conflicted with its mobile infrastructure business.  Similarly, Cradlepoint gear is focused mainly on enterprises, we see a similar conflict because Cradlepoint’s customer base liked its independence from cellular gear-makers.  If Ericsson can manage through these challenges, it may enjoy exposure to IoT, enterprise and 5G gateway growth opportunities.

Microsoft acquired Israeli startup, CyberX Labs today in a move that gets Microsoft Azure into the IoT security market.  We have been tracking CyberX for a couple years and have generally categorized it as an emerging player in the Operational Technology Access Control (OTAC) market.  More recently, it has smartly repositioned itself as an IoT network discovery, posture assessment and management company.  We see OTAC as an adjacent market to an existing, more IT-oriented security market called Enhanced Network Access Control (ENAC).  Microsoft explains that CyberX will extend its Azure IoT security capabilities towards devices used in industrial IoT, Operational Technology and infrastructure scenarios, and that, it will allow customers to discover their existing IoT assets, manage and improve security posture of these devices. 

We see this move by Microsoft as encroaching into the network security space a bit further than it had before.  And, it is using IoT and industrial operations as a means to enter.  We sill see the CyberX portfolio as an OTAC company, but since many IoT devices are just Internet Protocol (IP) connected devices, the CyberX portfolio can perform many of the tasks of that of an ENAC system.  And so, this puts Microsoft quite closely in competition with the existing leaders in the much-larger ENAC market, namely, Cisco, HPE Aruba, Forescout and Fortinet (listed as a partner on the CyberX Labs website).  Cisco and Forescout have announced OTAC products recently, as well.  HPE Aruba, a big player in ENAC, had integrated CyberX into its Clearpass ENAC product in 2019 and featured CyberX at its user conference in 2019.

So, given Microsoft is acquisitive these days and clearly has an interest in beefing up its Azure IoT capabilities, and given that Forescout is in the midst of a failed merger bid from investor Advent, perhaps it is time for Microsoft to take a closer look at Forescout.

Throughout the years, I’ve attended Aruba’s Atmosphere conferences.  This year, I missed the in-person connections of the previous years, but Aruba did a great job transitioning over to a virtual event with engaging content…and some green screens.  At Aruba’s user conference, Atmosphere, the company informed attendees of its new single-pane, cloud-native platform called ESP.  We were impressed not only with ESP but how well it delivered the message under tough circumstances, using Zoom webinar.  We want to highlight the ESP launch because it launches the company into a new category, that of single-pane management.  We expect that customers value the capability to manage Wi-Fi, Switching, SD-WAN, 5G and IoT using the same system, without “swivel-chairing” between multiple software interfaces.  And, by combining all these different “edge” systems to a single manager, this allows for a unified policy, security and insights system.
 
ESP.  What we learned about Edge Services Platform (ESP) at the Atmosphere show.  ESP is an automated, all-in-one platform that operates in the cloud or on-premises, and is designed to deliver a cloud experience at the edge.  Large or small companies can use ESP, and it is also available on its controller-less APs, and can be used across large campuses down to branches and to remote worker locations.  Now, with the launch of ESP, data gathered from APs, switches, IoT devices, user devices and SD-WAN connections are retained in a single location, and thus this data can be analyzed together.  Since all the telemetry data is in one place, the company can now use Artificial Intelligence (AI) to improve insights into how the network is performing, to improve the throughput (the company claims 15%), and reduce to the time to resolve issues (the company claims a 90% improvement).  Aruba shared with attendees that it has 10M APs at customer sites – we see this large installed base, spinning off a lot of telemetry, as being a key advantage to Aruba, because AI systems get better with more data.  

Greenlake.  Aruba ESP can be consumed either as a service in the cloud or on-premise, as a managed service delivered through Aruba partner. Customers can also consume it as a network as a service through GreenLake. Greenlake is a Network as a Service offering recently introduced by Aruba that allows customers to pay for equipment and services monthly, as opposed to as an up-front expenditure.

Other new product announcements.  UXI-6 sensor - the company announced a new sensor for gathering information from IoT and user systems.  This data can be leveraged by software and services to enable asset tracking, contract tracing and other systems.  Additionally, the company announced a new Ethernet Switch, the CX 6200 Switch Series.  The new switch can run on enterprise campuses, branch access and data centers.  
 
Contact Tracing.  The company is also innovating for the future hybrid work environment. They are releasing a new set of contact and location tracing tools, and are working with a partner, Plexus.  It uses a variety of data sets: Wi-Fi, BLE/Bluetooth, location-capabilities inherent in the infrastructure, wrist-bands, keycards, or Aruba asset tags.  Wi-Fi-only is the base case and is the minimum data set that gets customers started immediately.  As additional data sources, primarily those leveraging Bluetooth to improve tracking and capabilities of the contact tracing system. For expanded capabilities, Aruba Technology Partners integrate with Aruba infrastructures to monitor social distancing and group sizes, and generate contract tracing trees of potentially exposed individuals. 

ORAN and CBRS were the main themes at Mobile World Congress Americas, held in Los Angeles. I have to say, though, that unlicensed was the third most important theme, though it will emerge to the main stage in future years.

ORAN encompasses several topics woven together. ORAN is a set of common interfaces that describe how various devices in mobile RAN work together. ORAN may also represent a new way of building radio networks. Recently, new vendors are being invited to bid on major mobile network projects, including Mavenir, Altiostar, Parallel and others. And, the major market share players in mobile RAN, which include Ericsson, Nokia, Huawei, Samsung, and ZTE are being asked by operators to support ORAN. The incumbent vendors are responding in various ways: Samsung, a challenger in the market, has whole-heartedly embraced ORAN, while Huawei has only recently acknowledged the existence of ORAN. Ericsson and Nokia have embraced ORAN with the view to embrace and extend - in the sense that Microsoft used this term in the 1990s. Based on presentations made by Ericsson, Nokia, and Samsung, we expect that the incumbents, Ericsson and Nokia,will embrace ORAN but will establish a path to continue serving customers with the same vertically integrated business models of today. We are eager to see the results of mobile network operator bidding to observe how many startups win projects for wide scale deployment.
 
CBRS. Today, CBRS is available in the US market and has been so for about a month. We had an interesting opportunity to moderate three panels on the stage at MWCa and found some very interesting indoor/campus uses for CBRS, including WiFi backhaul, secure/critical communications, surveillance, IoT/sensor monitoring. Since CBRS indoor spectrum generally allows for more output power than for WiFi, the range is better. We see this as a key advantage for CBRS users, though enterprises who take advantage of the so-called OnGo service must pay various monthly fees such as those for the SAS and potentially other ongoing services. We expect that CBRS will be successful in certain verticals.
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Unlicensed.  We believe the existence of CBRS could uncork the value of unlicensed spectrum at 900 MHz, 5 GHz, 2.4 GHz, and 6 GHz. We are conducting significant research into each of these and other spectrums.

​We attended the CBRS Alliance event in Washington DC today, and by our rough estimate, about 350-400 people were in attendance representing groups such as regulators, legislators, lawyers, technology vendors, property owners, service providers, investors, media and analysts.  We were impressed with the widespread interest in the new shared spectrum technology and services running in the 3.5 GHz band that is now called “OnGo.”  We have researched CBRS for many years and found several acronyms and CBRS-specific terminology to be blossoming.  We found several themes at the CBRS Alliance event and a follow-on event at Federated Wireless, a SAS service provider, of special note: a) the OnGo experience will serve as a mold for regulators, operators and other interested parties not just in the US, but also the rest of the world, b) Tier 1 operators and WISPs appear focused on Fixed Wireless Access (FWA) deployments in CBRS spectrum, at least initially, c) many presenters focused on the “OnGo backhaul to gateways” use-case, at least as an initial opportunity, d) interested parties have a concern that PAL licenses may become very expensive when the auctions occur, and e) there were a very large number of devices supporting OnGo at this event.

Acronym soup.  The CBRS Alliance did its best to explain the various acronyms and how the various players work together.  It would take at least six pages to cover just the top-level details.  The idea here is that the 150 MHz of spectrum in the 3.5 GHz range was previously used exclusively by the US Department of Defense and is now going to be shared using a three-tier process, where the military (the incumbent) will have use of it when it needs, then private license holders will get next dibs (PAL), followed by general users (GAA).  Starting today, GAA users will begin use of the spectrum in the Initial Commercial Deployment (ICD) that was announced today, starting at 9 AM Eastern.  A group of service providers called Spectrum Access System (SAS) providers have been authorized to install radios on the US coastline that sense when the military is using the spectrum and send channel-use information to equipment that is operating in the CBRS spectrum.  These SAS providers will, therefore, coordinate the frequencies between incumbent, PAL, and GAA users.
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Our view on why OnGo and “Shared spectrum” matters.  We expect that by sharing spectrum amongst various parties, more traffic can move across a smaller range of frequency than by using the more common method of auctioning off frequency bands to be used exclusively by one entity.  We estimate that shared frequency will carry ten-times more traffic than frequency bands licensed for the exclusive use of single entities.  Thus, it is for the greater good that this OnGo / CBRS experience go the distance and allow a public demonstration of whether multi-tiered shared spectrum can succeed or not.  Already, we have the experience of shared spectrum in the 2.4 GHz and 5 GHz bands used by WiFi – there is no doubt this has been successful; in fact, most public estimates show about 80% of smartphone traffic is carried by WiFi rather than cellular systems, all of which as of yesterday was carried on licensed spectrum.  At the CBRS Alliance event, guest speaker, US FCC Commissioner Michael P. O’Reilly said that based on the success of OnGo, he expects similar models could be applied to additional spectrum (and he implied this might the sequential order of launch): C-band (3.7-4.2 GHz), 3.45-3.55 GHz, 3.1-3.45 GHz and 7 GHz (which we understand is meant to be the same thing as what is being discussed at 6 GHz by the WiFi community).

FWA opportunity is front and center.  Charter and AT&T focused their comments on their plans to deploy fixed broadband systems.  AT&T shared some impressive statistics about the performance of recent trials using Massive MIMO cell sites using distributed RAN over CBRS spectrum, which is connected to indoor baseband over fiber optics to the radio sites and then connects wirelessly to customer premises equipment mounted at the roofline: it said it achieved 140x12 Mbps at slightly over one mile over line of sight using 20 Mhz channels. Charter discussed it had deployed its first commercial FWA in Davidson City, NC to rural locations.  It also discussed how it uses dual SIM systems to allow customer coverage to Verizon’s cellular network. Charter also discussed private LTE, neutral host, and Industrial IoT use cases.  The Wireless Internet Service Provider’s Association (WISPA) President spoke about its members’ enthusiasm for OnGo and explained that 100’s of WISPs used the 3.65 GHz spectrum and expects more will use the 3.5 GHz / CBRS spectrum.  Currently, WISPA says WISPS in the US have 6 million customers.

OnGo as a backhaul.  We detected a theme that seems durable: CBRS spectrum can be used by enterprises with far-flung operations to save costs by reducing the installation of wired / optical cables and associated infrastructure.  There was an impressive list of vendors who had equipment at the show, a number of which were gateway devices that made connections between CBRS and other well-known protocols such as Ethernet and WiFi, to name a couple.  While OnGo/CBRS support is not as widespread on devices today, IoT devices supporting other wired and wireless systems certainly are, the list of which includes WiFi, Zigbee, Bluetooth, Ethernet and more.  We were taken by how compelling some presenters made a case for using CBRS simply assuming a reduction in new cabling to enable new systems such as kiosks, surveillance, digital signage, farming, and so on.  Many of these examples would increase the deployment of existing protocols like WiFi, Zigbee, Bluetooth, and Ethernet, instead of reducing their demand.  The idea that OnGo/CBRS competes with existing systems may be incorrect.

PAL auctions.  Commissioner O’Reilly said PAL auctions are scheduled for June 25, 2020.  In our formal and informal interviews, we understand there is a growing concern that CBRS spectrum auctions could be aggressively pursued not only by existing Tier 1 mobile operators but also by other players, not least of which could include MSOs and maybe even “Big Tech” companies.  Since the 3.5 GHz spectrum is where many countries besides the US have begun deploying 5G services, making equipment in these frequency bands commonplace, there is ample reason to want to use this spectrum in the US.  Bidders may raise the price high enough that enterprises will choose not to compete, and won’t view the CBRS spectrum as attractive as they had hoped.  In this case, PAL would look quite a bit more like a typical licensed spectrum, similar to other auctions.

OnGo devices abound.  At the show, the following vendors had devices on show (see pictures):  Sercomm, MultiTech, Sierra WIreless, Zyxel, Encore, Cradlepoint, AMIT Wireless, Commscope / Ruckus, Accelleran, Bai Cells, Cambium, Samsung, Google, LG Electronics, Sequans, Telit, JMA Wireless, Motorola Solutions, Cisco, BEC Technologies, Ericsson, ip access, BLINQ, Comba Telecom, and Westell.

We attended the Aruba Atmosphere 2019 user conference in Las Vegas.  What we learned was that Aruba had made solid progress since last year’s Atmosphere conference.  It has delivered on 802.11ax, SD-Branch (and SD-WAN), AI/ML, and Zigbee/Bluetooth 5.0, and elements of the IoT market.  The company also introduced a new access point that was not hinted at last year, an 802.11ad outdoor access point.  If we were to sum up the company’s main message for the show, it’s all about SD-Branch.  The company took great efforts to emphasize that its portfolio has greater breadth than ever and is among the few vendors that can deliver all the networking a company may desire.

802.11ax.  At last year’s event, the company told customers to expect 802.11ax products by Nov/Dec of 2018.  Our market share tables show the company shipped 802.11ax for revenue in 4Q18.  At the show, the company also announced some new, full-featured 802.11ax Access Points, the 530 and 550 series.  These new Access Points support Bluetooth 5 and Zigbee, to allow support of IoT devices.  These new 802.11ax Access Points will be available this month, April 2019.​

802.11ad.  The company also introduced a point to point outdoor access point.  The new AP387 allows 1 Gbps at 400 meters using 802.11ad and has a backup of 5 GHz 802.11ac in case of inclement weather.  This device has been shipping for a “couple months” according to the stage presentation (personnel at the show booth said since January 2019).

Machine Learning.  Using Machine Learning for Client Steering and for managing Transient clients. At last year’s Atmosphere event, the company was just rolling out AI/ML to customers to improve networking capabilities for wireless users. 

SD-Branch.  The company disclosed that it has 25,000 SD-Branch “wins,” which means that it has many contracts to sell “at some point in the future” SD-WAN and other branch equipment systems such as WLAN and switching.  At last year’s event, the company had not sold any SD-WAN, so this is a big accomplishment and signifies Aruba’s progress in delivering what it calls a Single Pane of Glass approach that includes four parts:  SD-WAN orchestration, Dynamic Path Steering, Secure Connectivity, and Dynamic Segmentation.

Clearpass Device Insight.  The company introduced its device recognition system, intended to simplify the discovery of IoT devices on the network.  Clearpass Device Insight is available in April 2019.  This cloud service uses a fingerprint database, as well as AI/ML, to find devices on the network, and then presents them by category on a single screen.

During the day-2 presentations, the company had some fun and CTO, Partha Narasimhan, showed a picture of him pretending to be an IT executive of a fictitious university.

Today I attended the Extreme Analyst day at the NASDAQ in New York. 

Extreme’s 4Q18 switch revenue grew over 10% and in our preliminary view of 4Q18, it took  share.  The company highlighted over 30,000 customers and over 6,000 partners in a one-Extreme approach that has integrated the acquisitions of Avaya and Brocade.

The company also highlighted that in 4Q18 it saw nearly 20 deals over $1M which is indicative of a rebound in its' business from large enterprises.  We believe  the company is  maintaining a good portion of its' Extreme and Avaya installed based.

Extreme  emphasized software as a driver for higher margin sales. We agree, software is the general direction of where campus switching is going with vendors looking to get incremental revenue from software instead of hardware.  We have maintained for over two years now that campus switching would be a positive growth market led by software to help manage a more converged (Unified Access) market.  We also see IoT and the inclusion of securing and monitoring IoT traffic as an additional growth drive for the campus market.