Cloud Components Market: Acquisitions, AI and Hybrid Solutions Shape 2024

The cloud components market is undergoing transformations driven by acquisitions, the rise of AI and the growing demand for AI-optimized infrastructure. Acquisitions by both software- and hardware-centric vendors are shaping the market landscape, with Dell Technologies, Cisco and Hewlett Packard Enterprise making strategic moves to strengthen their positions. Download your free copy of TBR’s Cloud Components Spotlight Report to read more vendor analysis from our recently published research.


Average cloud components revenue among vendors covered in TBR’s Cloud Components Benchmark was flat year-to-year in 3Q23. Market leaders continued to grapple with sluggish demand in certain hardware markets, namely storage, but reported strong interest in AI servers, which will flow through vendor financials in 2024. On the software side, acquisitions, including Cisco’s pending purchase of Splunk, will shape the market. Cisco will rise on the cloud software components leaderboards once the deal closes.

Cloud Components Market Update

Acquisitions by Software- and Hardware-centric Vendors Are Shaping the Cloud Components Market

Acquisition activity among TBR-benchmarked leaders accelerated in 2023, and recently closed deals will drive vendor growth through 2024. As evidenced by Dell Technologies’ acquisition of Moogsoft, hardware-centric vendors continue to buy niche software IP that can be bundled with their trusted infrastructure and sold “as a Service.”


Meanwhile, software vendors are acquiring to push into high-growth markets, such as observability and security, while shifting their revenue mixes in favor of subscriptions. For example, Broadcom suspended all VMware perpetual license sales in December, while Cisco’s pending acquisition of Splunk is expected to add $4 billion in annualized recurring revenue. Hewlett Packard Enterprise’s (HPE) proposed acquisition of Juniper Networks will also shape the cloud components market, helping HPE extend its lead in networking “as a Service.”

Cloud Repatriation Activity Could Pick Up Amid AI Boom

According to TBR’s 2H23 Cloud Infrastructure & Platforms Customer Research, many customers that have migrated to the cloud are surprised by the cost of their monthly cloud bills. While we do not believe this dynamic is driving customers to move their workloads back to the traditional data center — at least not in significant numbers — the rise of AI could accelerate the shift away from the cloud.


Due to the vast complexity of AI solutions, particularly generative AI (GenAI) due to the tech’s use of large language models, customers prefer the simplicity and breadth of tools the cloud providers offer, but some customers may not view the public cloud as a sustainable deployment method for their AI workloads from a cost and performance perspective. We suspect this trend will draw awareness to hybrid cloud alternatives and lead customers to explore AI-rich on-premises solutions.

Demand for AI-optimized Infrastructure Is Poised to Drive Vendor Performance in 2024

Demand for cloud server and storage infrastructure has trended downward in parallel with the enterprise market, primarily due to customers’ ongoing digestion of inventory. However, the rise of GenAI is shifting paradigms in the cloud hardware market as adoption of accelerated computing continues to rapidly gain momentum.


As evidenced by 15% aggregate year-to-year growth in network components revenue for 3Q23, performance in this segment is improving, and TBR predicts cloud server and storage demand will rebound later in 2024.


The cloud components market is undergoing transformations driven by acquisitions, the rise of AI and the growing demand for AI-optimized infrastructure. Acquisitions by both software- and hardware-centric vendors are shaping the market landscape, with Dell Technologies, Cisco and HPE making strategic moves to strengthen their positions.


The cloud repatriation trend, while not yet significant, could gain momentum, especially with the increasing complexity and cost of AI workloads. This could lead to renewed interest in hybrid cloud solutions and on-premises AI-rich infrastructure. Despite a recent decline in demand for cloud server and storage infrastructure, the rise of GenAI and accelerated computing is expected to drive a rebound in demand later in 2024.



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Fast Growth or Fading Fast: GenAI Opportunities for Legacy Global Systems Integrators

Not all global systems integrators (GSIs) are the same and not all benefited from the 2023 hype cycle around generative AI (GenAI). 2024 could be a regrouping year for some GSIs — a chance to close the gap on market leaders and re-establish their positions in the broader IT ecosystem. For others, though, new headwinds combined with old weaknesses will stymie growth and limit strategic choices.


Join Principal Analyst Patrick M. Heffernan and Senior Analyst Kevin Collupy Thursday, April 11, 2024, for a live discussion on the 2023 and early 2024 performances of some of the market’s more hardware-centric, legacy GSIs and what you can expect from these vendors in the coming years.


In This FREE TBR Insights Live Session on GenAI Opportunities for Legacy GSIs You’ll Learn:

  • How leading GSIs have positioned themselves for growth in an uncertain market
  • What obstacles and chaos GSIs can expect throughout 2024
  • How GenAI will disrupt the market, providing opportunities for ecosystem-enabled growth and exposing GSIs that are not prepared or well positioned for growth


TBR webinars are held typically on Thursdays 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 Potential of AI and GenAI in Telecom: Key Opportunities and Challenges for CSPs

There are myriad use cases for AI and generative AI (GenAI) spanning all aspects of a communication service provider (CSP). TBR’s research indicates use cases related to call centers and customer lifecycle management (e.g., OSS/BSS) present the biggest opportunities to move the needle in cost savings for CSPs. The bigger issues surrounding AI and GenAI pertain to governance, privacy and societal considerations, any of which could stifle market development.


Join Principal Analyst Chris Antlitz Thursday, April 25, 2024, for an exclusive review of TBR’s inaugural Telecom AI Market Landscape, which looks at how CSPs and vendors that supply CSPs are adopting AI in their internal operations and in their products and services. Don’t miss this opportunity to learn the ways in which AI and GenAI are expected to transform the telecom industry!


In This FREE TBR Insights Live Session on AI and GenAI Opportunities and Challenges for CSPs You’ll Learn:

  • Key use cases for AI and GenAI for CSPs
  • The vendors being proactive with AI and GenAI
  • The kind of business outcomes the telecom industry can expect from AI and GenAI


TBR webinars are held typically on Thursdays 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].

Unlocking Business Success: Competitive Intelligence

What is competitive intelligence, and why is it important. In this blog, we highlight three reasons why CI is crucial to business success and how best to leverage CI I your strategy.

Understanding Competitive Intelligence for Business Success

Competitive intelligence is a broad concept: Think of it as any intelligence that improves your business’s performance in the market. Insight on what, how and where competitors are operating is one aspect of competitive intelligence, but it is also important to include the role of partners and the perspective of end customers to establish an all-encompassing view of the overall market.


Most markets are imperfect, with complexity across regions and verticals as well as the need for a myriad of vendors to work together to create solutions. Due to that market complexity, information on what is occurring in the space and why can be difficult to ascertain. Competitive intelligence is one method to extract points of clarity that can serve as guideposts as you set objectives for your business.

Click the image below to hear more about competitive intelligence for business success from TBR Principal Analyst Allan Krans

Why Is Competitive Intelligence Important?

Competitive intelligence can be the best proxy for your own business decisions. Gaining a deeper understanding of individual vendors and the broader set of competitors in the market landscape can inform your decision making in a powerful way.


  1. Competitors as a proxy

Anticipating where the market opportunity is moving and how to capitalize on that is a challenging proposition, especially in dynamic, quickly evolving markets like IT. It is difficult to make complicated and/or significant investments, and the risks are always high. In quickly evolving markets, one of the best ways to reduce risk and increase the confidence of the overall organization in making business decisions is to look at how your competitors are handling the same situations. Understanding how and in which markets your peers and competitors are investing can provide a number of benefits.

First, this information validates strategic directions your own business is considering. It may not guarantee the success of an investment but at least it can provide reassurance that competitors are weighing the risk-reward ratio in a similar manner. Second, understanding the intent and strategy behind different decisions can be even more important for competitive intelligence. No two businesses are the same, so this context can allow your business to translate the intent of different competitor strategies into something that works for your business. The third benefit is gaining information about the outcomes of competitor strategies in real financial terms — one of TBR’s specialties. Revenue, expenses and profit margins are concrete metrics that can help you gauge the effectiveness of competitor strategies and understand whether the outcomes align with your business’s overall financial goals.

  1. Markets inform opportunity

Looking holistically at markets and how different peers and competitors operate within them can provide value competitive intelligence. This broad view can help you gain insights into where and how a group of key competitors operate within a market and with what results. TBR’s benchmark and market forecast reports are examples of this type of competitive analysis, illustrating the size, growth and strategies of a given group of peers within a market segment.

  1. Competitive intelligence can guide business strategies

A combination of competitive intelligence activities, including deep dives into segment leader strategies, broad coverage of other peers in the space and an analysis of the different objectives for those peers, can be used as a powerful tool for business strategy road mapping. These combined activities can illustrate the objectives, investments, outcomes and landscape against which your business will be competing across different endeavors. Just because your peers are going in a certain direction does not mean that is the best path for your business. Likewise, just because competitors are not making certain decisions does not mean your business should not consider them. However, an awareness of what is occurring can be an important source of intelligence.


There is no perfect customer, no perfectly aligned competitor, and no clear market opportunity, especially in IT. In a world where no perfect decision exists, competitive intelligence can be an informative window into how businesses in similar markets are operating their businesses.


Having market perspectives to consider, strategies to evaluate, and approaches to both emulate and avoid can be valuable. Competitive intelligence can provide these benefits and more, helping organizations plan future investments and reduce overall risk.



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CGI Leverages AI Expertise for GenAI Success

In early March, TBR met with CGI’s Diane Gutiw and Frederic Miskawi, both VPs of Global AI Enablement, for a discussion about CGI’s evolving generative AI (GenAI) capabilities and offerings, as well as the executives’ views of the changing market around digital transformation, IT services and consulting, and AI overall. The following reflects both that discussion and TBR’s ongoing research into CGI and peers across the IT services and broader technology ecosystem.

What CGI Brings to the GenAI Game: Innovation and Experience in AI

In describing the current market for IT services and technology-enabled solutions, Gutiw and Miskawi noted that clients emerged from 2023’s GenAI hype cycle feeling overwhelmed by proofs of concept (PoCs). Many emerging technology-centric engagements stalled at the PoC and pilot stages, stymied by challenges around data, change management and uncertain (or slow) ROI.


As a result, enterprise IT leadership, already saddled with a vested interest in maintaining relationships with current vendors (think: Amazon Web Services [Nasdaq: AMZN], Microsoft [Nasdaq: MSFT] and others), relies on current vendors and partners for guidance, even in an emerging area like GenAI. This echoes TBR’s findings in our December 2023 AI & GenAI Market Landscape.


Gutiw and Miskawi pointed out that in the current market, CGI (NYSE: GIB) can lean on two long-standing strengths: its culture of innovation rooted in governance and methodology, and its expertise and experience with AI, which predates the emergence of GenAI and the subsequent hype cycle. Bringing specificity to assertions about innovation, Gutiw and Miskawi described CGI’s thinking around “digital triplets.”


As Gutiw explained, CGI is “taking our digital twins that already exist and extending it by adding the generative AI and explainable AI as the third sibling.” In TBR’s view, this approach to harnessing technology in which clients have already invested — and in which CGI has proven expertise — and multiplying the benefits by leveraging GenAI and explainable AI should be a successful strategy for CGI to expand its footprint at existing clients and solidify its reputation as an innovative leader in the AI market.


Reinforcing CGI’s strength around established AI capabilities and scale, Miskawi added that CGI is seeing a multi-model ecosystem where, depending on the nature of the industry that you’re in, the nature of even the group within the enterprise that you’re working with, you have different types of needs, different types of fine-tuning that CGI is doing, mixing specialized AI models, which are more the legacy AI models, with the generative AI models where we’re seeing LLMs [large language models] interacting with the data inside categorization models … that ecosystem is evolving in front of our eyes and accelerating.”


Gutiw and Miskawi explained that while CGI’s GenAI practice resides within the company’s Data practice, CGI is undertaking GenAI efforts globally. This is in contrast to the proximity model that differentiates CGI from other IT services vendors. Gutiw said CGI understood that GenAI could not be stuck in one silo or isolated by client and that the technology would bring the most value internally and to clients only through a global approach to accelerating processes and disseminating knowledge around AI.


Bolstering this approach, CGI is focused on more than simply GenAI and is innovating on and delivering Frontier AI, according to Gutiw and Miskawi. In TBR’s view, 2023’s relentless hype around GenAI probably makes IT services and technology buyers more likely to look beyond the exciting new trends and instead find credibility in an approach that leverages established AI expertise.

TBR principal analysts discuss how the GenAI disruption is similar to prior disruptions, as well as how it is different, and which technology vendors are best positioned to win and why. Watch now by clicking the image below.

Customer Zero and Partnering in a Complex Ecosystem

The CGI GenAI leaders also touched on two aspects of the current IT services and technology ecosystem that TBR believes are critical to vendors’ success: customer zero and technology agnosticism. TBR’s research has shown that the most resonant GenAI use cases start with the vendor testing the solution itself, serving as customer zero for the services or products before bringing them to clients.


Gutiw described CGI’s take on this idea, noting that the company innovates, develops and tests GenAI-enabled solutions internally, like other vendors, but ensures clients understand that CGI views this investment as a way to save clients’ money: “We always talk about fail fast. We’re doing that on our dime because we would not fail fast on your dime.” Gutiw described a solution CGI developed for responding to RFPs, called BidGenAI, which pulls from the company’s own database of wins and losses, shortening the time needed to pull together a (hopefully winning) response.


While requiring customizations to fit a client’s specific data environment, industry needs and compliance requirements, the BidGenAI tool undoubtedly can be applied across a wide range of enterprises. While not the first or only IT services vendor using the customer-zero approach (think: Accenture [NYSE: ACN] and IBM [NYSE: IBM]), CGI was explicit about the financial benefits clients will realize when CGI foots the innovation — the fail fast — bill.


The second aspect, technology agnosticism, has long been a feature of the consulting and IT services market, in which vendors shy away from aligning too closely with any one technology supplier for fear of alienating clients looking for the best-fit solution, not just the tech solution that most benefits the IT services vendor’s or consultancy’s bottom line.


Post-pandemic, TBR has seen a pronounced shift among some leading IT services vendors and consultancies toward much closer and more publicly embraced partnerships. Exclusivity remains rare, but something akin to most favored nation status or first among equals has permeated the IT services ecosystem. In this evolving landscape, CGI’s AI leaders described the company’s approach as “technology flexible” and noted strategic partners in the AI space include IBM, Microsoft, Google (Nasdaq: GOOG), SAP (NYSE: SAP), Oracle (NYSE: ORCL) and Amazon Web Services, as well as a slew of smaller technology players.


In TBR’s view, CGI’s emphasis on flexibility addresses the need to work with a range of technology partners to meet clients where they are while assuring clients CGI has invested fully in the training and capacity-building necessary for a robust AI practice.

Embracing Transformation While Rooted in Solving Business Problems

Two aspects of CGI’s approach to GenAI struck TBR as significant in understanding the company’s likely path forward and potentially its position within the IT services and GenAI market.


First, Miskawi, speaking about GenAI as understood and deployed within CGI itself, said simply, “It is transformative.” One could understand that to be obvious after more than a year of relentless hype. Or one could hear echoes of the famous “Mad Men” line, “It is toasted,” and consider CGI is embracing how much change will be necessitated by adopting GenAI across its own enterprise. Every other IT services vendor could do the same, but it remains to be seen if they can do it with the same welcoming embrace as CGI.


Second, TBR noted that during the entire discussion, Gutiw and Miskawi remained focused on business outcomes — for CGI and for its clients — a mindset and approach frequently ascribed to but rarely done. At one point, Gutiw noted that “it’s really understanding how we can use [CGI’s own capabilities and partner technologies] safely and how we can help solve business problems leveraging the technology.”


CGI’s challenge, of course, is ensuring that leaders across the company understand how to stay focused on clients’ business problems and how to recognize when a business challenge could be addressed through a GenAI-enabled solution.

CGI and GenAI: Investments, Approaches and Designs

In addition to the wide-ranging discussion, CGI’s GenAI leaders shared specifics about the company’s GenAI practice, including:


  • Over 10,000 professionals globally engaged on Data Analytics and Data Engineering projects with clients
  • CGI’s AI Advisory Services include AI Enterprise Governance OCM, Data and AI journey design and implementation, AI Business Consulting services with AI strategy road maps, and Responsible Use of AI frameworks.
  • CGI’s enterprise AI investments have focused on operational excellence; training and teaming; foundational capabilities around data, platforms and processes; and solution/use-case development.
  • CGI has invested in a Responsible AI Framework and an AI Strategy Framework to guide itself and its clients through the complexities of AI governance and risk.


In TBR’s 1H24 CGI Federal Vendor Profile, we noted that “CGI Federal’s parent company announced in July 2023 it would invest $1 billion over the next three years to fuel AI-based growth. CGI’s forthcoming outlays will fund the expansion of its AI-based advisory capabilities — particularly around the company’s Responsible Use of AI framework, which would resonate well with federal agencies. CGI Federal is facing a shifting competitive landscape in federal digital consulting, as General Dynamics Information Technology (GDIT) (NYSE: GD) is standing up a new advisory practice that will push adoption of its AI-related digital accelerators and ManTech is leveraging its 3Q23 acquisition of Definitive Logic Corp. to launch an AI-focused Data Analytics and Artificial Intelligence Solutions Practice.”


In addition, TBR notes that CGI Federal won a deal with the U.S. Department of State in October 2023 to provide on-site processing functions for consular services in Australia, Fiji, Japan, New Zealand and South Korea, leveraging the CGI Atlas360 solution’s AI capabilities to help enhance the visa application process.


The Telecom Industry Faces a Reckoning

Overarching Takeaways from Mobile World Congress 2024

Mobile World Congress 2024 (MWC24) brought together more than 2,700 exhibitors and 101,000 attendees from across the global ICT sector, including representatives from many other industries that are pursuing digital transformation. TBR notes that MWC Barcelona is closing in on the pre-pandemic high-water mark for attendance and exhibitors set in 2019.


The MWC ecosystem has proved resilient, confirming MWC Barcelona’s role as the most important, must-attend event in the world for all things related to mobile technology. The most popular topics discussed at MWC24 included generative AI (GenAI), traditional AI, network APIs, private networks, satellite connectivity, sustainability and cloud transformation.


TBR notes that hyperscalers (particularly Amazon Web Services [AWS] [Nasdaq: AMZN], Microsoft [Nasdaq: MSFT] and Google [Nasdaq: GOOGL]) kept a lower profile at MWC this year, a marked change from the loud and flashy presence they had at MWC23. Hyperscalers also continued to double down on positioning themselves as partners with communication service providers (CSPs).


Additionally, TBR notes that the AI/GenAI hype feels tangible and is unlikely to fall by the wayside like the metaverse, crypto, blockchain, and other hyped-up concepts and technologies that have come and gone in years past. Many use cases and business cases for AI and GenAI in the telecom industry make logical sense and have the potential to produce profoundly significant business outcomes, especially related to cost efficiency. Technological readiness for and commercialization of AI and GenAI are in process, and much more innovation is in store.


One of the most interesting takeaways TBR analysts observed from MWC24 was how little 5G, 5G-Advanced and 6G were discussed. While AI/GenAI, network APIs and private networks dominated mindshare at the event, as was widely expected, the lack of content about cellular technology market development was striking and underscores the challenges the telecom industry continues to face with revenue growth and ROI. This lack of discussion also underscores how CSPs are loathe to make further investments in 5G, especially 5G-Advanced, pending measurable ROI, and that vendors see this and are concerned 5G-Advanced will not generate significant revenue.


Though CSPs continue to talk a big game about B2B use cases, network slicing, private networks, cloud-native transformation, AI/GenAI and network APIs as key enablers of the digital economy and new revenue for themselves, their loud, echoing chorus rings hollow and is losing credibility as they do not have anything of significant, sustainable value to show for their efforts in these areas. This is forcing the vendor community, hyperscalers and some enterprises to hedge their bets and seek alternative routes to meet their business objectives.


TBR notes that the situation CSPs find themselves in is becoming increasingly dire, and as an industry CSPs are reaching a point where they will have to reckon with two decades of underachieving on transformation initiatives and weakening business metrics. Additionally, with the cost of capital now at levels last reached nearly 20 years ago in most major markets, CSPs’ financial pictures are worsening, and this will likely prompt a new wave of M&A as well as bankruptcies and structural reorganizations. CSPs also have a people problem, which is arguably the primary reason CSPs have been unable to realize their objectives of shifting from telcos to techcos.


TBR’s research indicates that the telecom industry has entered a period of rationalization and that the operator and vendor landscape, as well as the telecom business model, will fundamentally change over the next decade. The anti-pragmatic, restrictive and often hostile regulatory environment, coupled with macroeconomic headwinds (especially the relatively high cost of capital), and the inability for CSPs to truly transform into cloud-native digital service providers have brought the industry to this precipice.


By the end of this decade, TBR expects the telecom industry to look much different than it looks now, with fewer, but larger and stronger, CSPs and vendors remaining and new business models for network connectivity and related technology enablers disrupting the status quo enjoyed by the industry for decades.

Click the image below to join TBR live for an in-depth recap of Mobile World Congress 2024
TBR Insights Live - MWC Debrief: AI, Private Networks, Cloud, Network APIs and More

Impact and Opportunities

AI Will Help CSPs Significantly Reduce Costs

Myriad use cases for AI and GenAI were discussed at MWC, spanning all aspects of a CSP. Use cases related to call centers and customer lifecycle management present the biggest opportunity to move the cost savings needle. OSS and BSS, which underpin customer lifecycle management, will be key domains through which AI/GenAI evangelization will take place within CSPs. Network-oriented use cases for AI/GenAI are also numerous but will take a bit longer to materialize compared to call center and customer lifecycle management use cases. The bigger issues surrounding AI/GenAI pertain to governance, privacy and societal considerations, any of which could stifle market development.


Labor will ultimately be significantly impacted by AI/GenAI, but TBR expects gradual attrition, with vacated positions not being filled, rather than abrupt, large-scale layoffs at CSPs. Importantly, the AI and GenAI outputs shown in use cases demonstrated at MWC24 essentially all required vetting by human resources, at least at this stage of market development.

CSPs Have a People Problem

Shifting from a telco to a techco requires cultural, talent and mindset changes at CSPs. For example, to become a techco, CSPs would need to think and behave like a techco and have a workforce that understands techco concepts such as CI/CD (continuous integration, continuous delivery) pipelines, agile workflow methodology, cloud, APIs, software engineering, computer programming languages like Python, as well as containers and microservices.


Change management initiatives, including at the senior management level, are likely to become more prevalent as leading CSPs attempt to cross this chasm, and management consultancies are poised to play a key role in facilitating this change. Though the presence of unions among some CSPs could stifle this shift, CSPs have had more than a decade to make progress toward this human resource transition.


Upskilling and reskilling are viable, partial solutions to address these issues, but these types of initiatives need more formalized structure, investment, and executive sponsorship and oversight to deliver relevant and meaningful results. TBR also expects more CSPs to adopt “cap and fizzle” or “captive” strategies to make this shift from telco to techco, whereby the legacy is wound down and separate entities are stood up in a more techco-oriented structure.

Still No “New Deal” or “Digital Single Market” for Europe’s Telecom Industry

Europe-based operators continued to use MWC as a mouthpiece to plead with governments and related institutions on the continent for regulatory reform (especially regarding consolidation, spectrum policy and evolving outdated regulations, some of which date back many decades). However, while some additional M&A is likely to be approved that may not have been allowed pre-pandemic (such as the Vodafone-3 U.K. and MasMovil-Orange Spain deals), no significant changes are visible on the horizon.


Using history as a guide, structural changes at the level hoped for by the telecom industry will likely only occur when macroeconomic deterioration forces governments into action and drives broader restructuring and change management at organizations. Said differently, the only way Europe’s telecom industry (and quite frankly, the global telecom industry) will see broad regulatory and structural changes is amid a catalyst moment, which tends to occur during periods of unprecedented economic stress.


For example, the last significant, large-magnitude industrial changes across major societies occurred during the Great Depression of the 1930s, which reshaped labor and industrial dynamics, and the Great Recession of 2007-2009, which reshaped the financial services industry. Telecom will, unfortunately, need a similar economically driven crisis to bring about the structural changes that the industry seeks.

Telco-led Initiatives Are Unlikely to Have Staying Power

CSPs continue to attempt to band together in key areas, such as network APIs via CAMARA and the Open Gateway API program, and on telco-specific large language models (LLMs) via the Telco AI Alliance, a recently created consortium spearheaded by SK Telecom and joined by several other major CSPs.


Using history again as a guide, initiatives such as these are unlikely to gain critical mass due to competitive, cultural and resourcing reasons, both between CSPs and within CSPs. For example, the recent past has seen AT&T’s (NYSE: T) Enhanced Control, Orchestration, Management & Policy (ECOMP)/ONAP (Open Network Automation Platform) and Deutsche Telekom’s (DT) MobiledgeX initiatives falter, with both being taken over by hyperscalers (Microsoft took over ONAP via its strategic arrangement with AT&T, and Google acquired MobiledgeX). The last major telco-led initiative to gain broad, global traction and yield significant benefits across the industry was the SMS initiative over 20 years ago.


TBR continues to believe that the best-suited players to make network APIs and LLMs relevant and outcome producing at scale are the hyperscalers, with CSPs likely to partner with hyperscalers for their boundarized portion of the overall market opportunity. Most CSPs are likely to remain technology consumers instead of technology producers, keeping them confined to connectivity providers and dependent on the vendor community and other players like hyperscalers for innovation.

CSPs Continue to Put the Cart Before the Horse with Enterprise Use Cases and Lack Focus on More Promising Consumer Opportunities, such as FWA

Most CSPs still have not deployed 5G standalone (SA) at scale, and those that have are not running truly cloud-native, microservices-based 5G cores. New enabling technologies, such as network slicing, are dependent on the adoption of cloud-native 5G core in a 5G SA architecture. This means that most CSPs globally are still not prepared to deliver on the promises of 5G for enterprise or to capitalize on the technology’s benefits.


CSPs can and should focus more on consumers, where fixed wireless access (FWA) is a proven, ROI-positive and scalable use case that is broadly relevant in most countries worldwide. CSPs’ current 5G non-SA networks and noncloud-native 5G SA networks are capable of supporting 5G FWA at scale, and this use case should be garnering more investment to drive more immediate revenue growth.

FWA Remains the Largest Revenue-generating Use Case for 5G and has Room to Scale

Though CSP deployment of 5G FWA is growing, most CSPs continue to underestimate the potential of the technology, likely because FWA ties up a lot of spectrum resources for relatively low average revenue per user (ARPU). TBR continues to believe that FWA represents one of the biggest opportunities for mobile network operators to monetize their 5G investments and drive scalable revenue growth.


Technological innovations currently available (e.g., multiband carrier aggregation, beamforming, extended range millimeter wave) and coming in the not-too-distant future (e.g., New Radio Unlicensed [NR-U], integrated access backhaul, silicon advancements) are likely to bring dramatic improvements in network performance, energy efficiency, and the usability of spectrum to support services such as FWA at large scale.


TBR maintains that 5G FWA should be thought of as wireless fiber and that the notion of having to deploy fiber to every business and residential premise globally is not only economically unfeasible but also unrealistic from a pure time-to-market standpoint to meet digital equity initiatives. 5G FWA can address these challenges and is a far more realistic and economically feasible technology to help the world bridge the digital divide, bring more competition in the global broadband market and support new use cases.

Finance Industry Indirectly Drives Investment in Private Cellular Networks

TBR analysts learned at MWC24 that the financial services industry is indirectly driving investment in private cellular networks. For example, the ability to track and obtain information from disparately located assets using IoT connectivity, such as heavy machinery and automobiles, is enabling businesses such as agriculture companies, fleet operators, mining companies, logistics companies and auto manufacturers to become eligible for various financial products, such as asset insurance and extended warranties, as well as lower premiums on existing insurance policies. Situations such as these are incentivizing the aforementioned types of businesses to invest in their own private cellular networks or pull CSPs into hybrid network situations.


The telecom industry is entering a new, more precarious phase of uncertainty. What CSPs and their vendors should be doing, they have been unable to do (or are moving far too slow), and what they should not be doing, they continue to cling to and do. If structural changes do not occur in the telecom industry in the next couple of years, the probability grows that other players (e.g., hyperscalers, software-centric vendors) will increasingly circumvent CSPs to pursue their own digital transformation-related interests.


The only players TBR has seen that have the financial and talent wherewithal, ability and credibility to deliver digital transformation and technological innovation at scale in the industrial internet era are hyperscalers and is likely to remain exclusively hyperscalers.