The hottest acronym in cloud infrastructure right now isn’t new, or obscure, or lengthy, yet it has the potential to absolutely upend everything we know about the industry we work in.
It's “GA.”
It stands for “general availability,” a term that was part of just about every major announcement at last week’s GSMA Mobile World Congress show in Barcelona.
Turns out that 2023 is the year that a whole raft of tech that only a decade ago would have been considered science-fiction is now available to buy, deploy and monetize — including artificial intelligence-driven automation, cloud-native standalone (SA) 5G and, of course, multi-cloud.
This played out at MWC with a torrent of announcements from Tier 1 service providers, including AT&T, Deutsche Telekom, NTT, Orange, T-Mobile and Verizon, all of which detailed how they’re deploying these technologies at scale.
The mood amongst these companies was giddy — not surprising given that they finally found themselves with the tools they need to create new and diverse revenue streams, rather than having to constantly upgrade networks to faster speeds in a failing attempt to push up ARPU.
Curiouser and curiouser
These mega telco deals were matched by an equally big story that emerged in Barcelona: incumbent telco vendors taking aim at enterprise companies and industry verticals — markets that have traditionally fallen outside their bailiwicks.
The two companies that made the biggest headlines unveiling their enterprise intentions were Ericsson and Nokia.
This is survival of the species stuff for both of the Nordic behemoths. Ericsson laid off about 10% of its workforce two weeks ago, and Nokia is still trying to row back from having its entire cellphone business defenestrated by the iPhone back in 2007.
It’s a big ask. Both companies will have to restructure and re-culture to support the enterprise, and in some cases will end up competing against their own service provider customers for enterprise business (awkward).
Still, there are also reasons for optimism. Culture is one: Ericsson and Nokia have both been around for a century and a half, during which they have persisted through multiple “do or die” communications transformations.
Another is the nature of cloud infrastructure itself.
Cloud grew out of enterprise IT know-how, but that loosey goosey, best-effort enterprise network DNA isn’t a great fit with the starched-collar world of ultra-reliable, predictable, business-class networks and their largest customers.
What’s really needed is an amalgam of the two. It’s still too early in the evolution of cloud to say exactly what that particular cloud concoction will end up looking like, but the cloud of the future will certainly encompass more of the carrier-class characteristics that today we associate with telco networks. (In fact, this trend is already evident at the network edge where cloud radio access network (C-RAN) and cloud-native 5G are combining the benefits of cloud with carrier QoS and network slicing).
Telco incumbents, including Ericsson and Nokia, are experts in this stuff, and their hereditary telco wisdom will earn them agency in the cloud, whether competitors want them there or not.
More than just a pretty face
Nokia celebrated its new plan with a massive rebranding effort at MWC, but there’s a lot more to its strategy than just its spiffy new logo.
In September it made a significant executive level hire when it brought in Shaun McCarthy to be president of North America Sales at Nokia. McCarthy was previously Cisco’s vice president of worldwide sales for its Mass Scale Infrastructure Group (MIG), the division responsible selling cloud solutions to hyperscalers. (Before he left, MIG was merged with Cisco’s enterprise division. Sound familiar?).
McCarthy told me last week that while the communications service provider (CSP) market is growing at about 1% CAGR, Nokia increased its sales to enterprises by a whopping 49% in Q4 2020, possibly explaining a large part of why he took the job.
Strategic hiring is one way to strengthen a new strategy. Acquisitions are another. That’s the path Ericsson took with its purchase of Vonage last year for $6 billion, a record for the vendor.
At the time, industry analysts had a huge tantrum over the price, but it’s now starting to look like money well-spent. The rationale for the deal was to position Ericsson as a broker of API integration services (from Vonage) that would allow telcos to finally participate in monetizing services over cloud.
Talk about timing the market; API integration was one of the hottest topics amongst the 85,000 attendees at MWC last week.
It doesn’t hurt, also, that at a time when its new förälder is looking to move into enterprise, Vonage brought 100,000 of those organizations into the Ericsson fold through its existing customer base.
To be sure, Ericsson and Nokia will encounter familiar faces where they are going because other telco players have already made the move to the enterprise:
- Juniper made the prescient decision to aggressively go after enterprise business a few years ago, a move that paid of bigly last year when its enterprise sales exceeded those to telcos for the first time in its history.
- Cisco has obviously always had its roots in both telecom and enterprise.
- Huawei has been invested in the enterprise market since 2011, via its Enterprise Business Group (EBG), which maintains its competitive edge through prodigious, industry-leading investment in R&D.
- IBM’s enterprise lineage is undisputed. What’s new is a cunning plan developed by Andrew Coward general manager of IBM’s software networking division. (Stay tuned to Silverlinings for my article about IBM).
- Coming at cloud from the opposite end of the spectrum is Dell, an enterprise bellwether, which told Silverlinings last week that its goal is to increase the share of its revenues that it derives from telecom sales from 3% this year to 25% - 30% by the end of the decade.
What happens next?
Looming “over the top” of all of this activity like an angry thunderhead on the horizon are Amazon Web Services, Microsoft Azure and Google Cloud – the current masters of the cloud universe.
For now, they watch and wait, brooding — possibly sulking — pondering the rapid changes within the kingdom they conquered in the space of a few short years.
It is unlikely that all the activity in Barcelona won’t provoke a response from the big three cloud operators, though whether it will be via R&D, acquisition, or “other” remains to be seen. In spite of all of the cloud chaos, the future is clear. And yet, also, cloudy! And here at Silverlinings, that’s the way (uh-huh, uh-huh) we like it.
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