CSP spend on edge compute infrastructure will grow at a 76.5% CAGR to over $67B in 2023

According to TBR’s 2Q19 Telecom Edge Compute Market Landscape, cost optimization of the network is the primary initial justification for CSPs to build out edge compute infrastructure, with new revenue from low latency use cases expected to materialize in a few years. This initial edge build-out will lay a foundation for CSPs to support new business models as they emerge, particularly as it pertains to low latency services.

Cost savings from the use of edge sites stem from infrastructure virtualization and real estate footprint consolidation as well as bandwidth optimization. One of the key areas of cost savings for CSPs is the use of white-box hardware in their virtualized networks. According to TBR’s research, white-box hardware can cost up to 50% less than black-box hardware. This represents significant cost savings to CSPs that adopt white boxes at scale. Webscales already widely use white boxes in their central data centers, and leading CSPs such as Rakuten, AT&T, Verizon and Telefonica are beginning to build their edge sites using almost exclusively white boxes. The use of white boxes will make it economically feasible for the capillary network to be built out, as cost feasibility is one of the primary inhibitors to edge build-outs.

CSPs are in the experimentation phase of testing new business models that leverage edge compute, with low latency services being the focus area. Though there are myriad potential use cases that would require low latency connectivity, such as connected transportation and AR/VR gaming, the business case remains unclear and the theoretical investment to enable and support said use cases is high. TBR believes it will take a few more years before new revenue-generating use cases for the network that require edge compute become commercialized and begin to contribute to CSPs’ revenue.

 

TBR’s Quantum Computing Market Landscape details emerging uses cases, economic disruption and alliances

TBR’s first Quantum Computing Market Landscape focuses on multiple facets of the quantum computing market, exploring the vendor landscape of a variety of competing hardware vendors with differing quantum theories, as well as software services and security vendors playing in the quantum computing space. Emerging customer sentiments, as well as recent alliances, emerging use cases and economic disruption are all themes explored within this first iteration of the report. A previous TBR special report by Analyst Stephanie Long looked at the “economic advantage” of quantum computing, and our May Digital Transformation Insights Report: Emerging Technology put the consulting and services around quantum in the context of digital transformation. The new market landscape builds on all TBR’s research and analysis to date.

 And don’t forget to sign up for Stephanie’s July 24 webinar, Quantum computing leaps into customers’ transformation-centric conversations.

Additional assessments publishing this week from our analyst teams

TBR’s Hewlett Packard Enterprise’s (HPE) full report, scheduled to publish June 14, further explores the vendor’s quarterly performance and deep dives into HPE’s infrastructure strategy amid recent and ongoing changes. The report provides greater details on themes covered in the initial response, which published May 24, including how commoditization continues to take its toll on infrastructure vendors’ bottom lines, increasing competition and encouraging more nuanced strategies to get ahead. It also talks about competitive changes in the server landscape hindering HPE as well as its peers and touches on the various strategies playing out in the consumption-based pricing realm, which is a key strategic focus for HPE. Stephanie Long, Analyst

TBR’s Hosted Private Cloud Market Forecast, publishing Wednesday, details how growth will persist up and down the hosted private cloud stack despite the relative cost-effectiveness of public cloud options. IBM remained the vendor to beat overall in 2018, while Microsoft is expected to take on significant additional market share through 2023 as it expands its portfolio of hybrid delivery options and migrates its legacy Office and Dynamics customers to cloud-native versions. — Cassandra Mooshian, Senior Analyst

TBR is publishing the 1Q19 DXC Technology (DXC) report June 14. DXC reported revenue of $5.3 billion, a year-to-year decline of 5.4%, pressured by the completion of several large contracts without replacement and ongoing headwinds in legacy applications work. DXC continues to execute its aggressive cost-cutting initiatives including headcount reduction and facility rationalization, which are being reinvested into funding its active M&A strategy, optimizing service delivery, and developing standardized and automated service delivery capabilities.” Kevin Collupy, Analyst

HPE Pointnext report will publish June 14 and will discuss how HPE is beginning to reap the benefits of its Next initiative, reducing its global footprint to focus on profitable regions. Pointnext continues to act as a key profit generator for the company, enabling investments both internally and through acquisitions to generate new innovative solutions around its core infrastructure offerings.” — Kevin Collupy, Analyst

On June 13 TBR will publish its semiannual Alibaba Cloud report. This report discusses the current investments Alibaba is making to win share from public cloud leaders, namely Amazon Web Services (AWS), and the progress the business is making in doing so. TBR also discusses recent changes to Alibaba Cloud’s leadership structure and the growing importance to the broader Alibaba Group that these changes signify. Meaghan McGrath, Senior Analyst

TBR’s upcoming 1Q19 Booz Allen Hamilton (BAH) report details how BAH wrapped up its FY19 with robust top-line expansion and record revenues and solid earnings, which in turn enabled BAH to reward shareholders with the largest quarterly dividend increase in recent memory. BAH’s performance reflect a soundly differentiated market position and close alignment of its technology and consulting solutions with the missions of its federal customers. BAH is well positioned to sustain its FY19 performance in FY20 in a federal IT market burgeoning with opportunities for IT modernization and the integration of advanced technologies. John Caucis, Senior Analyst

Lastly, if you haven’t already, sign up now for the this week’s webinar, The Makings of the Telecom Edge Compute Market.

Lenovo Accelerate 2019 stresses vertical integration, process agility and people

Experience tells these Lenovo executives that the hard work of driving execution at scale and transforming channels lies ahead

While Lenovo has turned the corner on revenue, profits will come from driving scale through the retooled operation. Known challenges outlined during the event include:

  • Services: Lenovo DCG services at the time of the acquisition of the IBM x86 line consisted of holding the paper while IBM executed on the service. From there, Lenovo has built its own break-fix programs, added consulting and education, and aspired to build out vertical solutions through collaborative work with partners and customers. Tuck-in acquisitions to rapidly acquire repeatable frameworks and subject matter expertise will likely arise as Lenovo goes about the painstaking process of creating a people-centric business necessary for solution assembly and maintenance and management.
  • Direct go-to-market pivots: Lenovo will organize its selling functions around solution stacks in addition to general territory reps. To gain the hearts and minds of the traditional territory reps, the company has added monitoring of storage and services attach to quotes to break the existing sales mindset of thinking in terms of server units. Lenovo has multiple transformational initiatives occurring within its go-to-market motions, in some ways reminiscent of the old Hewlett-Packard Co. selling motions of the 1980s and 1990s. Lenovo plans to have more dedicated selling units with deeper domain expertise around:
    • Targeting the hyperscale market where the lead sales point of contact needs deep engineering expertise to engage in capturing the design requirements for custom-engineered systems.
    • Adding dedicated storage reps to push harder to scale out the storage product cross-sell opportunities from the NetApp alliance and China-based joint venture. This team will be led by Dave Mooney, who joined Lenovo shortly after the event as the VP of Worldwide Storage Sales. Motruney has over 25 years of storage experience, most recently as the VP of Worldwide OEM Sales for NetApp.
    • Taking a vertical approach to IoT. While not necessarily distinct from competitors, Lenovo will be taking specific multivendor collaborations built on a custom basis and hardening them to be delivered as solution bundles at scale.
    • Leveraging TruScale to entice channel partners to sell through a new business model — reinforced by arming its channel partners with the entire ThinkSystem and ThinkAgile stacks behind this push.
  • Channel first: Many a firm has made this claim before, and Lenovo is no different. Lenovo claims it has made the activity revenue neutral and has put teeth into the policy regarding noncompliance among its direct sales force. Time will tell in terms of its success.
  • “As a Service” monetizations: Lenovo’s established Device as a Service (DaaS) commercial offering is being replicated for the data center in what it calls its TruScale Infrastructure Services program. Lenovo makes great pains to assert TruScale is not just a new form of operating leases. For DaaS, Lenovo will take back underutilized devices and bring them back into service when the customer requires. For the data center, the service arguably provides true public cloud consumption opex provisioning by only charging for the amount of data storage used on premises. Future service innovations outlined under nondisclosure agreement (NDA) make this offering a service to watch from Lenovo over the next several years.

Interchangeably called Lenovo Transform 3.0 and Lenovo Accelerate, the three-day combined customer and analyst event made several things abundantly clear. Lenovo believes it has turned an operational corner, that it has the right people and processes in place, and now all Lenovo has to do to drive growth and lift margins is to execute on these hardening operational best practices at scale across an ever-expanding array of technology assets including a growing contribution of software and services to offset persistent macroeconomic pressures on hardware margins.

Informatica touts AI benefits with a caveat: Data cleanliness and management are critical

To be widely effective, AI needs clean data and cloud scale

Informatica World 2019’s focus was on customers of all backgrounds and sizes leveraging AI to accelerate digital transformation. While AI is not a new or novel discipline, cloud computing has supported its growing accessibility by enabling scalable, cost-effective data processing. In that spirit, Informatica has forged partnerships with the three most prominent public cloud brands, Amazon Web Services (AWS; Nasdaq: AMZN), Microsoft (Nasdaq: MSFT) and Google Cloud (Nasdaq: GOOGL), and put these three Platinum partners on stage throughout the event’s keynotes and breakout sessions.

Google Cloud

Google Cloud was represented on the keynote stage by new CEO Thomas Kurian, who harped on both data processing at scale and the idea of ensuring you’re informing AI and analytics with clean and comprehensive data sets. Informatica and Google jointly announced that as of the conference, Informatica’s Intelligent Cloud Services (IICS) and Master Data Management (MDM) solution were available on Google Cloud, better enabling customers to move their data warehouses to Google Cloud Platform, leverage Informatica’s products in the environment, and run analytics through BigQuery and Google’s AI capabilities.

AWS

Ariel Kelman, VP of Worldwide Marketing at AWS, joined Informatica CEO Anil Chakravarthy on stage to describe how AWS is innovating and enabling customers with AI, but more importantly to explain the relationship between Informatica and AWS in supporting their joint customers. Kelman admitted that “a lot of [AWS’] services need data and a lot of that data is still on premises.” Though AWS is bringing its services into customers’ environments through AWS Outposts, customers also want help bringing their data to the cloud. In addition to supporting integration between Informatica products such as Power Center and IICS with Amazon Redshift, the partners announced a joint offering with Cognizant (Nasdaq: CTSH) that enables customers to complete a free, self-service data migration assessment. The assessment service leverages Informatica Enterprise Data Catalog on AWS and Cognizant’s data-to-cloud migration assessment and strategy services to help customers begin planning and mapping their data migrations to cloud. The service is intended to accelerate customers’ data migrations to AWS infrastructure while ensuring enlistment of Informatica data management products and Cognizant consulting and systems integration services in the process.

Microsoft

While Microsoft and Informatica did not make a formal announcement on stage, Microsoft had a large presence in the final keynote of Informatica World and in breakout sessions, highlighting how Microsoft approaches AI innovation and use cases across various industries and customer roles. At the outset of the event, Informatica announced its support of the Microsoft Common Data Model (CDM), data frameworks meant to ultimately reduce data silos across workloads and applications through data model standardization on Microsoft Azure. Informatica’s support of the Microsoft CDM, which is a key aspect of the widely discussed Open Data Initiative between Microsoft, Adobe (Nasdaq: ADBE) and SAP (NYSE: SAP), enables customers to utilize Informatica’s portfolio of products and solutions to manage data across applications and enable analytics and business intelligence efforts across the data landscape. TBR believes there’s a clear opportunity for Informatica to similarly extend its Customer 360 and Customer 360 Intelligence solutions into the Open Data Initiative alliance, particularly to bring greater light to the capabilities brought with Informatica’s recent acquisition of AllSight, a storyline that was overshadowed at the event despite its deliberate inclusion in the narrative.

Disrupting, but not disrupted: Accenture pivoted to become a solutions broker through innovation

No single vendor can do it on its own, not even Accenture

While maintaining a workforce bench that can operate in hybrid IT environments remains key to Accenture’s long-term success, managing relationships with core technology partners also adds another building block to the company’s foundation. As seen with talent-based conversations, discussions around Accenture’s ecosystem were part of almost every single presentation during the two-day conference. While Accenture maintains relationships with over 200 technology partners, SAP (NYSE: SAP), Oracle (NYSE: ORCL), Microsoft (Nasdaq: MSFT), Salesforce (NYSE: CRM) and Workday (Nasdaq: WDAY) are the top five platforms that truly move the needle for the company, helping it generate approximately 40% of services revenue.

From codeveloping solutions to engaging in joint go-to-market and sales efforts, Accenture recognizes the need to prioritize solutions with specific partners to operate in a more agile way, as the company rapidly departs from being truly technology agnostic. TBR does not necessarily think this is a bad move considering that the majority of Accenture’s clients operate in one or more of these technology environments, which alleviates the pain points around migrating applications workloads from on-premises only to hybrid IT environments. Additionally, according to TBR’s digital transformation insights research, the majority of DT buyers are in the “extension” phase, which entails buyers adding disruptive technology that allows for significant improvements to an existing ecosystem.

While Accenture, like many of its consultancy peers, often approaches client discussions with business outcomes in mind, maintaining functional expertise around a particular technology usually tips the scale in Accenture’s favor, considering that the IT buyer still maintains an active role in the DT services purchasing cycle.

Accenture Industry Analyst Conference 2019 was held at Accenture’s Innovation Hub, located in the Salesforce Tower in San Francisco. Accenture’s relationship with Salesforce, one of the top five platforms contributing to Accenture’s sales, has evolved over the years, especially as Accenture has made eight Salesforce-centric acquisitions, enabled by the Accenture Salesforce Business Group, to reach its current status. The two partners are well intertwined, evidenced by the fact that Accenture is the only partner that works on product and service cocreation with Salesforce as well as the global scale and commitment to training Accenture resources on Salesforce technologies including over 16,500 Salesforce-skilled professionals, 17 global hubs and over 55,000 training hours last year, among other attributes.  

TBR does not discount the importance of SAP, Oracle, Microsoft, Workday or any other partners — the first three of which were highlighted heavily during the conference through myConcerto for SAP and Oracle and Accenture Microsoft Business Group as well as through client use cases. However, we think the opportunity around Salesforce is somewhat unique considering it is born-on-the-cloud technology delivered in an “as a Service” model, toward which Accenture is moving its legacy and new business.  

During the two-day Accenture Industry Analyst Conference 2019 in early May, Accenture (NYSE: ACN) hosted close to two dozen analysts at its recently opened flagship Innovation Hub, which is strategically located in Salesforce Tower in San Francisco. As part of the event’s “Leading the epic disruption” theme, key topics, including Accenture’s investments in the new “new,” its partner ecosystem and its talent, were widely discussed, solidifying TBR’s view of Accenture as a market leading vendor but also raising questions about what is next for the company and what kind of disruption Accenture is facing and anticipating.     

Integration challenges ahead for Perspecta and SAIC as federal sector IT services vendors position for the rest of 2019

Publishing this week from TBR’s federal IT research program are our initial assessments of SAIC’s and Perspecta’s 1Q19 earnings performances. Perspecta is wrapping up its first complete fiscal year as an independent business entity. Its inaugural year has been characterized by significant challenges integrating a trio of large-scale legacy federal IT competitors, and we expect this will be reflected in its fiscal performance for 1Q19 and its FY19. The company won major contract extensions and successful re-compete bids to close out its FY19, setting the stage for improved performance in an increasingly growth-friendly federal IT market in its FY20.

SAIC will fully integrate Engility and its nearly $1.9 billion in revenue and 7,500 employees during the year, finishing a process that started in 1Q19. SAIC will leverage Engility to further accelerate its expansion with a more balanced, diversified and de-risked portfolio and an enhanced competitive stance in markets (space and intelligence) adjacent to its core Department of Defense and federal civilian sectors.

Read more of Senior Analyst John Caucis’ assessment of federal IT services vendors through the quarter and the upcoming quarterly benchmark.

Additional assessments publishing this week from our analyst teams

Wednesday

  • Salesforce continues to expand its global reach with new infrastructure investments and local partnerships in key regions. These developments, alongside ongoing improvements to its core portfolio in recent quarters, will enable Salesforce to deliver $3.68 billion in revenue for CY1Q19, according to TBR estimates. — Jack McElwee, Analyst

Thursday

  • TBR’s 1Q19 Cisco report explores how Cisco sustained revenue growth momentum in 1Q19 despite a significant slowdown in its Service Provider customer segment, where communication service providers are focusing much of their investment on the RAN layer and software-defined networking is causing disruption. Outside the service provider segment, however, Cisco’s refreshed product lines and strong brand are resonating across SMBs, large enterprises and public sector organizations. Cisco completed the refresh of its enterprise switching lineup with the introduction of the latest Catalyst product in 1Q19, which will help drive continued growth across non-service provider segments. — Michael Soper, Senior Analyst
  • Cisco Customer Experience’s use of partners to develop its portfolio around analytics, IoT and security as well as supplement delivery enables the company to maintain profitability and generate growth, as highlighted in TBR’s 1Q19 coverage of the company. Its pursuit of partnerships with technology-led vendors, including Microsoft Azure, Amazon Web Services and Google Cloud, will help Cisco Customer Experience generate additional advisory, implementation, and software and solutions support engagements. — Kelly Lesiczka, Analyst

And sign up here for the next TBR webinar, The Makings of the Telecom Edge Compute Market.

IoT in 2019: New strategies, new ecosystems

IoT, a technique for applying technology to generate new outcomes, has been a focal point for a wide set of IT and operational technology vendors interested in being involved in the wave of digital transformation and driving new business. In 2019 vendors are starting to solidify unique go-to-market strategies, and construction of new ecosystems and channels is taking place.

Join Ezra Gottheil and Daniel Callahan for a benchmark on where IoT stands as well as a snapshot of the evolution of vendors’ go-to-market strategies.

Don’t miss:

  • A sampling of the differentiated stances vendors in the wider community have taken, including self-service Amazon Web Services, application-focused Oracle, embedded-driver Dell Technologies, and things-focused Bosch
  • An overview of new ecosystems that are forming around data pools and value-added services, such as cross-domain ecosystems, industry ecosystems and partner ecosystems
  • An explanation of new channels forming inside the IoT ecosystem, such as the increasing impact of distributors, VARs and small systems integrators in delivering vendor components to end customers

TBR webinars are held typically on Wednesdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous webinars can be viewed anytime on TBR’s Webinar Portal.

For additional information or to arrange a briefing with our analysts, please contact TBR at [email protected].

The evolving battleground for winning private cloud customers

Of the 200 enterprises surveyed in TBR’s 2H18 Cloud Infrastructure & Platforms Customer Research, 85% have adopted private cloud and TBR projects the hosted private cloud IaaS market will grow to $24 billion in 2022, from $18 billion in 2018. This growth creates opportunity for providers across the value chain and encourages the entry of new disruptive market players.

Join Angela Lambert, Cassandra Mooshian and Stephanie Long on Aug. 14 for a discussion on current market trends and opportunities in private cloud and supporting technologies as well as the questions providers should be asking to capitalize on those opportunities. Additionally, we’ll highlight strategies deployed by market disruptors. The team will dig into the evolving private cloud market, including:

  • Overarching customer adoption trends, vendor developments and market opportunities
  • How hyperconverged technologies are supporting private cloud expansion
  • Market impact of disruptors such as AWS Outposts
  • Key questions vendors should ask to assess their market position and capitalize on the private cloud market opportunity

TBR webinars are held typically on Wednesdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous webinars can be viewed anytime on TBR’s Webinar Portal.

For additional information or to arrange a briefing with our analysts, please contact TBR at [email protected].

Leading webscales tackle the connectivity problem; CSP business model under threat

After dominating the digital advertising and cloud services markets, leading webscales are moving deeper into the networking domain, aiming to leverage new technologies and business models that could threaten incumbent communications service providers’ (CSP) core business of providing connectivity services. Leading webscales aim to bring connectivity worldwide, which will extend their advertising and cloud empires and provide them with additional vectors to drive new digital businesses. The disruptive means by which these visionary webscales are planning to tackle ubiquitous connectivity poses a significant threat to incumbent stakeholders in the telecom ecosystem.

Join Principal Analyst Chris Antlitz and Senior Analyst Michael Soper on Sept. 11 for an in-depth and exclusive review of TBR’s most recent Webscale ICT Market Landscape.

Don’t miss:

  • How much leading webscales will spend on ICT capex over the next five years
  • How leading webscales are driving innovation in the ICT ecosystem, particularly as it pertains to connectivity-related initiatives
  • How webscale involvement in the ICT ecosystem will impact stakeholders in the telecom industry

TBR webinars are held typically on Wednesdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous webinars can be viewed anytime on TBR’s Webinar Portal.

For additional information or to arrange a briefing with our analysts, please contact TBR at [email protected].

Cloud pairs well with partners

In the cloud and software markets no one vendor touts everything every customer could need, making it increasingly important for vendors to team up to provide enterprises with value-added solutions and services. Join us Sept. 18 to hear the latest on vendor partnership activities and how we believe they will impact the market long term.

Join Allan Krans, Cassandra Mooshian, Jack McElwee and Catie Merrill as they dig into the evolving cloud and software vendor landscape, detailing how cloud marketplaces came to be and the role they play as well as the growing number of coopetive ISV and systems integrator (SI) partnerships at play.

Don’t miss:

TBR webinars are held typically on Wednesdays at 1 p.m. ET and include a 15-minute Q&A session following the main presentation. Previous webinars can be viewed anytime on TBR’s Webinar Portal.

For additional information or to arrange a briefing with our analysts, please contact TBR at [email protected].