We participated in the Huawei Analyst Summit 2022 (#HAS22) for three days this week. The conference started with a keynote featuring Rotating Chairman, Ken Hu and then there were many executives and managers in charge of various operating groups at Huawei. To summarize, Hu said there will be challenges ahead and emphasized software, services and partnerships instead of asserting leadership in hardware as it did last year. Additionally, other speakers discussed the progress Huawei is making in F5G, introduced its latest Massive MIMO 64T64R radio system, discussed its progress with both indoor cellular and Fixed Wireless Access markets. At the keynote, Ken Hu, and his other colleagues on stage made no mention of hardware systems, semiconductor, nor optical component plans, in sharp contrast to the year-ago HAS keynote made by last year's Rotating Chairman, Eric Xu. Instead Ken and his colleagues focused on the importance of software development (re-engineering software compliers to boost performance, for instance), the opportunity to work with the Huawei cloud service, entry to new markets (automobiles, the metaverse), and of course, the company's green initiatives. Mr. Hu also addressed supply chain challenges, saying that "it is true that we face a chip shortage," and that "we have no plans to build chip factories ourselves." Hu also said that the shortage will be "fixed in a few years." Hu also said that the company is organizing itself to allow for the shutdown of divisions or product areas more easily than could have been done in the past, which we think could mean it is planning for what might happen if Huawei cannot obtain chips, for instance, for its smartphone business. The last of Hu's prepared remarks was to remark that "Huawei has quite a few challenges ahead." In the Telecom Core meetings that were held, there were several interesting points raised by the presenters. The team says that container based systems are not as mature as that of systems based on Open Stack and that Containers are not standards based. Regarding Mobile Edge Computing (MEC) market, Huawei said that its experience is that "almost all" of its customers are using MEC for network connectivity and though it had offered a marketplace for third party applications, they haven't been adopted much as of yet. Huawei sees Slicing as an emerging opportunity that will allow its operator customers to monetize their networks and to offer differentiated experiences.
Huawei spent a lot of time conveying that participation in the F5G (Fixed 5G) market is shared with other participants. Among those who shared the stage with Huawei were standards body ETSI, China Telecom, China Mobile, China Unicom, Globe Telecom (Phillipines), MTN Group (South Africa). Besides its product managers discussing F5G, Ken Hu also highlighted its importance during his aforementioned keynote. Huawei's Radio Access Network (RAN) team highlighted a new 64T64R Massive MIMO system that has 384 antennae elements. Through multiple presentations, various managers highlighted how the new M-MIMO system enhances throughput and range, reduces power and other advantages of using its new product. The company also highlighted its Digital Indoor System (DIS) as a means of enabling enterprises across various vertical markets including manufacturing, coal mines, the steel industry, the petrochemical industry, shipping ports, healthcare, power-grid companies and others. Huawei said that in 2H22, it will bring to market a low-power chip-based system, as well. The company also highlighted a customer, Schneider Electric, who expects to enter its deployment phase of Huawei DIS systems later in 2022. We found that Huawei's participating in the Fixed Wireless Access (FWA) market is interesting. Similar to Ericsson, Huawei isn't participating meaningfully in the Customer Premises Equipment (CPE) part of the FWA market and instead is selling just the RAN equipment. It has a certification program where it endorses other manufacturers, including greenpacket, who made a presentation at the Huawei conference. greenpacket explained that it is seeing a lot of demand lately for "hybrid" FWA CPE systems, which we took to mean that these were battery-based devices that users can travel around with. It is the experience of the presenters (both Huawei and greenpacket) that their customers in places like Kuwait and South Africa consume about 2-3 times more data using FWA than do average mobile (eMBB) customers. The presenters contrasted this with the T-Mobile experience in the US market where 10% of its FWA customers consume 1 TB per month. We found this contrast very interesting and feel that the screen sizes of customers in the US market (probably lots of high-end TVs) dramatically exceed that of the South African market (predominantly smart phones). In our own FWA report, we have seen significant ramp-ups in volume in the 3GPP FWA market.
0 Comments
Mavenir held its annual analyst event this week and highlighted some important information highlighting its progress in transitioning to a maturing ecosystem player in the telecom equipment industry. The company highlighted its recent Koch Brothers $500M investment; existing investors include Intel/Nvidia and Siris Capital, who remain majority equity holders. The company highlighted that it grew revenues and bookings in the mid 20’s percent year-over-year in its Fiscal 2020, an impressive figure. Two main themes came from the show. First, the company’s RAN portfolio is picking up steam. Second, the company’s portfolio now spans very wide, from telecom core to RAN.
The RAN portfolio has made significant progress. The company claims over 20 deployments in 14 countries. And, Mavenir has demonstrated the capability to deploy on AWS, IBM Cloud, Microsoft Azure, Oracle Cloud, Google Cloud, and VMWare. The company spent a great deal of time reviewing definitions of various Open RAN terminology, to address confusion, spanning from vRAN, O-RAN, C-RAN, Cloud-RAN, and Open vRAN. We’ve seen many public statements from Mavenir, its competitors, operators and pundits, alike, espousing the various benefits of some or all of these systems. We think the point Mavenir was making at its conference is that Open vRAN is the most open, interoperable system. When operators enable open systems, of course, it allows Mavenir and other vendors to bid on deals for networks that have existing equipment from traditional vendors like Ericsson, Nokia, Huawei, and ZTE. We see Mavenir’s efforts to work with various infrastructure companies and systems like AWS and VMWare as a means of gaining a foothold with operators who are trialing or in the early stages of deploying these various infrastructure systems. Speaking of partners, the company claims it has relationships with nearly 15 Remote Radio Unit (RRU) players. The company says it can deliver Massive MIMO capabilities to customers, which means that its RAN systems can satisfy what would be considered mainstream 5G use-cases; this represents very significant progress over last year’s RAN capabilities. Mavenir’s portfolio is extensive. The company made separate presentations about the following topics: RAN, OSS, Radio, Packet Core, Mobile Core, BSS/Digital Enablement, Security, Private Networks, and Enterprise over three days. With over 5,000 employees spanning the globe, exposure to the most relevant parts of the mobile infrastructure industry, Mavenir is a serious contender for deals. The company also highlighted that its telecom core technology uses modern programming techniques that enable it to operate on cloud infrastructure; among these are fully containerized micro-services design. The company shared that most microservices file sizes are under 25 Mbytes, evidence that the systems are designed as microservices (and can load fast). The fact that in April 2021, well-known Koch Bros made a $500M “strategic minority” equity investment in the company is an important validation of Mavenir’s place in the telecommunications industry. We see the investment as a reinforcement of the company’s balance sheet and an opening to new customers. Activity surrounding Open RAN is hitting a fever pitch. We have been seeing accelerating operator and vendor announcements supporting Open RAN, and now the Open Networking Foundation has announced that it is launching SD-RAN to complement Open RAN. The plan for SD RAN is to open up critical portions of the RAN architecture, allowing both open source and vendor based microservices, called xApps, software connect to the SD RAN architecture’s Radio Ixxx Controller (RIC).
To date, we’ve seen vendors like Parallel Wireless, Mavenir, Altiostar, Samsung and Nokia throw their weight behind Open RAN. Japanese operator Rakuten has been very vocal about its successful commercial launch in April 2020 that uses Open RAN and a virtual computing system to support various RAN functions such as baseband. ONF’s SD RAN project takes things another step, though, by allowing operators and vendors to to leverage open source in the RAN environment. Getting there presents a challenge. With its announcement, the ONF will support a nRT-RIC and xApps, this is the intelligence that needs to be opened up, according to Timon Sloane, VP for ecosystems and marketing for the ONF based in Menlo Park. He says that functionality from a powerful RIC and xApps can finally deliver the integration and benefits needed for an open approach to work. Adding some muscle, the open RAN development community, and associated carriers globally, have shown their support for this latest project, a software defined RAN that will put a focus on open systems for 5G and the deeper integration. The ONF’s SD-RAN project specifically is backed by a coterie of industry players: The O-RAN Alliance, Telecom Infrastructure Project (TIP), and Facebook. Also, global carriers and cloud providers like AT&T, Google, China Mobile, China Unicom, DT and NTT. Lastly, system/chip companies like Intel, Sercomm and Radisys. The ONF’s proposed µONOS-RIC, is a microservices SDN controller based on ONF’s ONOS platform. 650 Group is bullish on this effort as previous attempts have not come to fruition and the ONF has already had lots of success with its CORD/cloud edge data centers and broadband access with the likes of AT&T DT and Comcast. 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. 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. According to news reports and press and social media announcements by high-ranking members of US government, the US government has put Huawei on its so-called "Entity List" of the Bureau of Industry and Security (BIS). Our read on this is it similar to what happened with ZTE during C2Q18 last year, a move that severely curtailed ZTE's shipments and revenue until ZTE made concessions and was removed from the list. Many, but not all, Huawei products use technology only available from US suppliers. US-made semiconductors are the most significant Entity List target that Huawei needs to ship its products. Significant US semiconductor suppliers to Huawei include Intel, Xilinx, and Broadcom.
Huawei is such a significant vendor in many of our coverage areas, including Mobile Radio Access Networks (RAN), Ethernet Switching, and Servers, for instance, that we feel it is a good time to point out that 2019 market-level estimates may be at risk. Additionally, since Chinese cloud services players, like Baidu, Alibaba and Tencent cannot delay their capital infrastructure build-outs, alternate suppliers may benefit. We think it comes as no surprise to Huawei that the US is putting it under pressure. Just over a year ago, we attended the Huawei analyst summit (April 16, 2018) and its then-chairman said in response to the question "Will Huawei find alternate suppliers for data center products, "Today, Intel is the dominant player. Our point of view, we look forward to a more diversified landscape; but we work with Intel mainly now." Additionally, at Huawei's most recent analyst summit (mid-April 2019), the three main keynote speakers, all high-ranking executives of the company spoke about how much progress Huawei has made in developing in-house semiconductors and what its plans are to continue developing more. We do, however, think that despite Huawei's diversification efforts that it still has significant reliance upon key US chip companies. At Mavenir’s analyst meeting in Dallas today, the company stated that it expects to grow its revenues about 10% Y/Y in 2018. In arriving at this revenue, it is pursuing a price-aggressor strategy to some extent and has a surprisingly broad portfolio of telecom-focused products. Its product line is software-oriented, though the company does still have hardware development on an ongoing basis. Using 5G as its ‘insertion point,’ the company is working on a strategy to get 10-15 large, Tier 1 mobile network operators at the tens-of-millions per year level. The company’s portfolio encompasses voice core, messaging core, mobile packet core and radio access networks. What is really interesting is that Mavenir expects to expand past its traditional revenue stream (telecom core and messaging) into the radio market, with revenues coming in 2019.
In its traditional telecom core market, the company suggested that some of its customer wins are with Tier 1 mobile network operators across its product portfolio, including IMS/VoLTE, EPC/5GCore, Security and advertising messaging. To illustrate its success in selling a differentiated Telecom Core portfolio, it shared subscriber statistics that its operator customers who use Mavenir core system such as IMS TAS, CSCF and RCS application servers (mostly supporting VoLTE, and secondarily RCS):
In its new market, RAN, this is exciting – Mavenir is a new entrant to the RAN market, and it is US-based. The company expects that it will have Radio Access Network (RAN) revenue in 2019 after successful completion of trials now underway. For reference, the company’s RAN systems generally follow open standards such as xRAN and can be considered “cloud RAN.” |
CHRIS DePUY
|