Approximately 100 industry analysts in addition to representatives from well-known telecom operators and vendors convened at the 2023 5G Americas Analyst Forum to discuss the state of the 5G market in North America and Latin America. The event featured keynotes from Ulf Ewaldsson, president of Technology at T-Mobile, and Scott Blake Harris, senior spectrum advisor at the National Telecommunications and Information Administration’s Office of the Assistant Secretary. The event also featured a series of roundtable discussions focused on key topics in areas including 5G network infrastructure and technologies, private cellular networks, multi-access edge computing, IoT, regulatory considerations, and enterprise and consumer 5G use cases.

TBR Perspective

The 2023 5G Americas Analyst Forum highlighted that 5G development in the U.S. is in its middle stages as operators are on track to complete the bulk of their midband 5G spectrum deployments in 2024. The return on investment for 5G remains unclear, especially for Verizon (NYSE: VZ) and AT&T (NYSE: T) due to their heavy investment to acquire C-Band spectrum licenses.
Operators remain challenged in monetizing 5G because use cases, with the exception of fixed wireless access (FWA), are still limited, especially within the consumer market as LTE remains sufficient to support current smartphone apps in most instances. Conversely, revenue generation for enterprise 5G use cases in areas including private cellular networks (PCNs) and multi-access edge computing (MEC) is taking longer than anticipated as many clients are postponing implementing these solutions until business cases and benefits become more certain.
 

Despite current challenges in monetizing 5G, investments in the technology remain necessary for U.S. operators to remain competitive with each other, to add network capacity to support rapidly growing data traffic, and to gain network efficiencies and cost savings as 5G is significantly better at handling network traffic compared to LTE. Additionally, new technology standards, including 3rd Generation Partnership Project (3GPP) Releases 16 and 17, are helping to unlock the potential of 5G solutions in areas including MEC, network slicing, industrial IoT and V2X (vehicle-to-everything) while the upcoming 3GPP Release 18 will debut 5G Advanced technology. Though the availability of these technologies will create 5G monetization opportunities, TBR expects hyperscalers, application developers, OEMs and other players within the technology industry to capture the majority of new revenue from 5G-related solutions, while operators will serve mainly as connectivity pipes to support these solutions.

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Impacts and Opportunities

5G Adoption Is Accelerating in North America, but Revenue Generation Remains Minimal

Though North America leads other regions in the adoption of 5G-compatible devices and enrollment in service plans, direct revenue generation for operators from smartphone customers is limited due to minimal use cases besides providing faster data speeds. TBR believes operators are monetizing 5G in indirect ways, however, including by helping to ensure strong quality of mobile broadband service to minimize churn and by leveraging enhanced network capacity to support features exclusive to higher-tier service plans such as increased high-speed mobile hotspot data limits before speeds are throttled as well as increased data tiers for mobile hotspot coverage. Certain operators, most notably Verizon, are also limiting access to midband 5G services to customers enrolled in premium service plans.
 

FWA currently provides the most significant 5G revenue opportunity for operators, as evidenced by T-Mobile’s (Nasdaq: TMUS) and Verizon’s FWA services outperforming cablecos and other broadband providers in broadband subscriber growth in recent quarters. Government initiatives will also help to further FWA customer adoption and service availability, including via broadband funding programs as well as through financial assistance programs, such as Metro by T-Mobile offering discounted FWA pricing via the government’s Affordable Connectivity Program. However, TBR believes FWA will hinder revenue generation long-term when considering the entirety of the broadband industry due to the lower price points of FWA as well as most FWA customer additions stemming from share shifting from other broadband providers. FWA will also result in “race to the bottom” pricing as cablecos and other broadband providers will likely become more competitive in their pricing in the long term to attract and retain customers.

A National Spectrum Strategy Is Vital to Support 5G Long-term While Creating a Foundation for 6G

Scott Blake Harris discussed the National Spectrum Strategy, an initiative headed by the U.S. Department of Commerce, NTIA and other federal agencies, including the Federal Communications Commission (FCC), to address the long-term spectrum requirements within both the public and the private sectors. The National Spectrum Strategy is expected to be finalized by the end of 2023 and is focused on creating a pipeline to enable the U.S. to maintain its leadership in spectrum-based technologies, ensure long-term spectrum planning in the U.S., and foster unprecedented spectrum access and management through technology development. A key priority of the National Spectrum Strategy is to improve communications between government agencies and the private sector and to identify and evaluate 1500MHz of spectrum in the U.S. that could be repurposed based on the requirements of both sectors over the next decade.
 

The clearance of additional spectrum will be essential for U.S. operators to support rising 5G traffic long-term while helping the U.S. to compete at the forefront of 5G development against other leading countries such as China. TBR believes the National Spectrum Strategy may be facing resistance, however, from federal entities hesitant to clear certain spectrum to the private sector as the CTIA reports the U.S. government controls 600% more midband spectrum than the commercial U.S. wireless industry. For instance, the Department of Defense has expressed reservations about clearing certain spectrum, such as within the 3.1GHz -3.45GHz range, due to national security concerns as the spectrum currently helps to support military infrastructure including defense systems.

Revenue Generation from Enterprise 5G Use Cases Will be Limited for Operators as Other Players Within the Technology Industry Position to Capitalize on These Solutions

Keynotes and roundtables throughout the event discussed the benefits 3GPP Releases 16-18 will provide to support 5G-related network capabilities and use cases.
The technology advancements provided by these releases will help to advance the development of 5G enterprise use cases in areas including MEC, PCN and IoT. However, hyperscalers, OEMs and other players in the telecom ecosystem are also making headway in these areas, which is causing operators to share revenue from these solutions in many cases and to be circumvented altogether in other instances.
 

For instance, AT&T’s, T-Mobile’s and Verizon’s go-to-market strategies for MEC have centered on leveraging hyperscalers’ partnerships to accommodate client demand for Amazon Web Services (AWS) (Nasdaq: AMZN), Google Cloud (Nasdaq: GOOGL) and Microsoft Azure Nasdaq: MSFT) solutions. In many cases, clients are opting to work directly with hyperscalers and OEMs in PCN, circumventing operators altogether.
 

Network slicing is another emerging 5G use case discussed throughout the event that is beginning to gain traction. T-Mobile is positioning to be an early leader in network slicing due to its time-to-market advantage in deploying 5G standalone nationwide. The operator recently launched its 5G networking slicing beta program nationwide, which is initially targeting developers seeking to leverage the technology to enhance video calling applications, and T-Mobile will expand the platform to support additional applications and use cases in the future.
 

Initial companies exploring the platform include Dialpad Ai, Google, Cisco and Zoom. TBR expects operators will monetize network slices by providing specialized pricing tiers to optimize coverage and service quality for certain use cases and applications, though in most instances developers and other players will be the entities that will generate the lion’s share of new revenue from these use cases. TBR expects the scenario will be similar to the LTE era, in which operators served mainly as the connectivity pipes for new applications in areas such as ride-hailing and video streaming but other players captured nearly all of the new revenue.
 

Leveraging satellite connectivity to support mobile customers was another emerging use case discussed at the event. Satellite connectivity is gaining headway through new 3GPP standards releases and recent partnerships such as T-Mobile teaming with SpaceX, Verizon partnering with Amazon’s Project Kuiper, and Apple (Nasdaq: AAPL) collaborating with Globalstar. Satellite connectivity is initially being leveraged by operators to support emergency SOS texting services in remote areas without cellular coverage, though satellites will be leveraged to support more advanced voice and data capabilities in the future. Though partnerships between operators and satellite providers are promoted as being mutually beneficial for both parties, opportunity exists for significant market disruption in the long term if satellite providers decide to target nationwide satellite-based smartphone service directly to consumers once technology capabilities advance and a sufficient number of satellites have been deployed.

Conclusion

The 2023 5G Americas Analyst Forum highlighted the progress operators have made in deploying their 5G networks, especially regarding deploying midband 5G services. This progress, coupled with advancing 3GPP technology standards, provides operators with a foundation to target emerging use cases, especially within the enterprise space. Operators will be challenged, however, in sufficiently monetizing these use cases to generate a viable return on investment that offsets heavy 5G spectrum acquisition and infrastructure deployment costs.

In a wide-ranging discussion with TBR, Dell Technologies’ Adam Miller, a marketing leader focused on cybersecurity, explained his company’s strategy in the security services space, including how Dell Technologies expects to stand out over the coming few years. The following analysis reflects both that discussion and TBR’s ongoing coverage of Dell Technologies.

20 years of experience and 1,000-plus customers

Dell Technologies (NYSE: DELL) is well known for its secure devices and infrastructure but is quickly catching up to peers in terms of name recognition around security services (see below for a description of the company’s security services portfolio). While brand can be improved through marketing, acquisitions, and sustained and successful partnerships that deliver security services value to clients as part of a multiparty engagement, Miller believes Dell Technologies will get a substantial boost based on its expanding Services portfolio and impactful Zero Trust security partnership with the U.S. Department of Defense (DOD).

 

As part of the initiative, named Project Fort Zero, Dell Technologies, in concert with 30-plus other technology partners, will deliver an “advanced maturity Zero Trust solution” — validated by the DOD — within the next 12 months. U.S. defense and intelligence agencies have long been viewed as leading edge organizations with respect to cybersecurity, and vendors have often sought to use credentials related to providing security solutions to the U.S. federal government as a testament to their expertise and reliability. Dell Technologies should see a substantial increase in its brand value around security services as the company expands the Project Fort Zero initiative across the wider U.S. federal government and enterprise organizations.

 

In addition to providing clients with some sense of authority and dependability, Dell Technologies should also benefit from leading a loose consortium of security-related technology solution providers. The cybersecurity space is far too vast for any single player to truly be “end to end,” so partnering well across the ecosystem frequently separates leaders from middle performers and laggards. Dell Technologies should be able to leverage Project Fort Zero to solidify its partnering capabilities and demonstrate leadership.

Proven and low-cost strategy: Going to market as part of larger Dell Technologies

Similar to peers’ offerings, Dell Security Services are offered as an add-on to technology and services engagements, almost always with existing clients. Miller did not anticipate any change in that approach, and TBR believes executing well on a proven and low-cost strategy trumps aggressive sales campaigns and marketing blitzes.

 

TBR recognizes that the add-on approach could limit Dell Technologies’ security services’ growth, but the company can lean into its trusted technology provider reputation and strong client relationships to ensure security services, at a minimum, keep pace with the larger company and are positioned to accelerate when market conditions permit.

 

As noted above, should Project Fort Zero significantly boost Dell Technologies’ security brand, the company may be able to use security services as a leading offering in its go-to-market strategies.

Dell Technologies streamlined its security portfolio following several divestments in recent years

Since the close of the massive $65 billion acquisition of EMC in 2016, Dell Technologies has been a seller in the M&A market, slowly refining its portfolio while also paying down debt. This has involved divesting parts of its security portfolio such as SonicWall and RSA. However, Dell Technologies very much remains a player in the cybersecurity arena, with recent divestments enabling it to narrow its focus on its overall security strategy. Several of the company’s security offerings are now tucked under the APEX umbrella, such as APEX Backup, APEX Cyber Recovery and APEX Data Storage.

Additionally, Dell Technologies has developed its security services strategy to focus on three fundamental areas that help customers reduce their attack surface, protect their assets and data, manage security proactively, and help build cybersecurity maturity. These families of offerings and services fit well with the company’s portfolio and overall strategy, aligning with its existing hardware products, and creating opportunities for attached sales to larger IT infrastructure engagements.

Steady, smart and sane, with a boost coming from Project Fort Zero

Miller made clear to TBR that Managed Detection and Response remains a target area for Dell Technologies’ investments, while noting his company understands that many peers in the security services space view Managed Detection and Response as a core offering. That understanding marks exceptional self-awareness on Dell Technologies’ part about where the company fits within the broader cybersecurity ecosystem. Dell Technologies has strengths it can play to and believes the security services market has long-term potential.

 

In TBR’s view, Dell Technologies has not been trying to differentiate where differentiation is impossible and is not betting the farm on security services growth. Instead, the company is taking an approach that is steady, smart and sane. Add to that strategic approach a potentially highly beneficial solution validation from the U.S. Department of Defense, and Dell Technologies has positioned itself well for steady, and possibly accelerated, security services growth.

 

TBR’s coverage of Dell Technologies includes individual vendor coverage by the IT Infrastructure, Devices and Professional Services teams, along with various benchmark and market forecast coverage across TBR.

 

In August 2023 HCLTech hosted its Financial Services Advisor and Analyst Day. The event emphasized the different ways cloud, data, and new and notable technologies like generative AI (GenAI) and sustainability solutions have influenced financial services clients’ business decisions. The following includes details from the event and TBR’s analysis.

IT Services’ ‘Best-kept Secret’

During the event at Hudson Yards, HCLTech leaders and clients discussed the evolution of each presenting company and how the influence of technology has shifted the required approach to develop business strategies that effectively preserve internal operations as well as engage with consumers in less complex methods than previously utilized.
 

To lead the event, HCLTech’s Chief Growth Officer and Global Head of Financial Services, Srinivasan Seshadri (Srini), described HCLTech as the industry’s “best-kept secret.” Despite its less well-known market presence outside financial services, HCLTech has been successful in building its reputation within the financial services industry, establishing relationships with five of 10 main banking institutions. This success is largely owed to the company’s ability to see beyond technology buzzwords and identify solutions that effectively and efficiently support clients’ technology strategies and end-user experiences.

 

Further, Srini emphasized HCLTech’s willingness to take risks on behalf of its clients in response to the increasing need for outcomes-based engagements. This willingness builds off of HCLTech’s acknowledgement of disruptive technologies, which include cloud, digital and AI, and the company’s ability to guide client discussions around these investments early, ahead of the disruption.
 

HCLTech’s client strategy is backed by its “Supercharging Progress” mindset, which seeks to ensure its clients’ needs are met and desired outcomes are achieved regardless of specific contract guidelines. This sentiment was echoed throughout the event with client stories and features. Srini discussed the company’s overall shift from infrastructure-led to business-led offerings, which better enabled its clients to embrace the technology solutions and avoid disruption. With HCLTech backing its technology investments, clients can execute major organizational and operational changes, transforming data strategies and benefiting from cloud and digital adoption.

 

HCLTech emphasized its cloud-first nature and the increasing shift to industry clouds, through its CloudSMART strategy, which provides enterprises with a complete, high-value cloud consulting and delivery platform. This helped the company expand its partner ecosystem and develop more composable platforms.
 

The focus on cloud has changed the nature of legacy work but aligns well with HCLTech’s comprehensive portfolio mix across digital, engineering, cloud, AI and software, which are powering the digital transformation journeys of global enterprises at scale and speed. As the needs emerging out of financial technology (fintech) continue to evolve, HCLTech’s strategy positions the company to enable business transformation for clients underpinned by automation and AI tools that generate cost savings that are applied to the overall transformation, setting the foundation for digital and cloud adoption.

 

Srini also discussed efficiency engineering, which for HCLTech involves allowing clients to reinvest savings into the right transformation projects. Creating cost savings through the adoption of AI and automation services to improve business operations provides the opportunity for clients to transform additional pieces of their business to gather additional insights and develop new touchpoints.

Case Studies

During the event, HCLTech featured three separate clients within the banking and financial services space: an American financial services and bank holding company, a large U.S.-based insurer, and a large U.S.-based credit union. Throughout each presentation, the clients discussed the natural collaboration with HCLTech and the ability to work through technical issues to deliver across technology and personnel needs.

Leading American Financial Services and Bank Holding Company

The first case study was about IT services and infrastructure. The engagement centered on generating efficiency across the company’s operations, integrating automation and supercharging processes. The client evolved its business from Modern Ops to Smart Ops to Lean Ops to create and deploy an AI strategy and leverage the right data. The engagement focused on outcomes and operations transformation over the processes, enabling the client to achieve a more efficient operating model through enhanced applications and infrastructure as well as support around managed services.

One of the Largest U.S. Insurers

The second client discussion was around hybrid cloud modernization and how HCLTech had enabled the infrastructure needed to support the client’s customer base and claims volume. Further, the client talked about three key ways in which HCLTech was supporting its cloud transformation. The first was HCLTech’s focus on critical technology efforts, including technology modernization, automation and hybrid cloud setup. The second was helping the client strengthen its customer agent and employee experience and to mature its process. Lastly, HCLTech is preparing the client’s culture and infrastructure for future talent. As HCLTech looks to help its clients innovate and avoid succumbing to the disruption from technology, these efforts help enhance culture and efficiency through common goals. HCLTech supported the client in setting goals, moving forward to support both its own clients and employees with automation, optimization, sanitation and innovation.

Case Study Conclusion

Throughout the case study sessions, the clients echoed the sentiment of partnership and collaboration with HCLTech. Setting common goals and outcomes creates accountability to drive additional value. Further, HCLTech’s technology expertise around partners —Microsoft (Nasdaq: MSFT), Amazon Web Services (AWS) (Nasdaq: AMZN) and Google Cloud (Nasdaq: GOOGL) — enables the company to work within its clients’ cloud and digital environments. The partnership mentality during its client engagements differentiates HCLTech, as the company creates longer-term relationships that build through different projects and technology adoption.
 

Digital Discussion

The head of HCLTech’s Digital Business, Ananth Subramanya, walked attendees through the company’s investments and business strategy around digital within the financial services space as well as the influence of disruptive technologies. Starting off his presentation, Ananth indicated roughly half of HCLTech’s Financial Services revenue was generated through digital. During FY23, Financial Services revenue was $2.6 billion or 20.7% of HCLTech’s total revenue. HCLTech’s digital portfolio and offerings combined with its delivery network provide opportunities for the company to generate new clients supported by its financial technology ecosystem.

 

While consulting is not a primary investment area for HCLTech, the company recognizes the need to lead certain engagements with consulting to guide platform implementation, enabling faster decision making. Ananth noted, “Strategy comes to life on a platform.” This is guiding the company’s investments in scale as well as its ability to derive insights. The focus on analytics and data strategies aligns closely with clients’ business and operational goals, enabling HCLTech to serve as a technology partner and guide their transformation projects.

 

To support its position and work across clients’ different environments, HCLTech maintains its partner ecosystem. Subramanya mentioned HCLTech’s key technology partners, including Google Cloud, Microsoft Azure and AWS, all of which the company has dedicated business units for, as well as partners like Pega, Snowflake and Avaloq.
 

As many of its clients work across multiple hyperscaler platforms and different technology providers, HCLTech’s relationships across the ecosystem enable the company to bring solutions that best fit with client goals. Bringing together its partners and clients not only facilitates innovation but also ensures that clients can reduce technical debt and improve operations while leveraging disruptive technologies.

Conclusion

Throughout the event, both partners and clients echoed the idea of partnership and how it was rooted throughout the duration of the engagements and beyond, leading into new project opportunities. With product loyalty dwindling, HCLTech’s ability to work across its partner ecosystem and implement and manage associated solutions enables it to provide frictionless experiences for clients and capture new engagements.
 

Additionally, HCLTech’s “Supercharging Progress” approach makes the company more accountable to its clients. HCLTech noted during the event that the contract exists if something goes wrong and that clients should want to work with HCLTech by choice, reflecting the strength of its portfolio and ability to align with emerging needs. This sentiment was further supported by the clients present at the event, which discussed their close relationships and ability to overcome business and technical challenges while generating cost savings.
 

Lastly, HCLTech not only acknowledged the buzzwords “GenAI” and “fintech” but also saw beyond the marketing, highlighting the company’s efforts to develop services and solutions that enable clients to stay ahead of market trends and strengthen their market positioning by finding ways to control disruptive technologies and the impact on their organizations before the disruption controls them.

AI took center stage at Google Cloud Next 2023, where Google Cloud CEO Thomas Kurian shared the company’s optimism and vision for a technology that will transform the way businesses work and operate over the next decade. A front-runner in AI innovation for nearly seven years, Google (Nasdaq: GOOGL) has cultivated a strong brand in the space by helping customers draft emails in Gmail, experience immersive locations in Google Maps and improve outcomes in Search, to name a few examples. Google Cloud — the highly strategic and now profitable division within the broader Alphabet corporation — has nurtured Google’s AI technology, brand and customer relationships to transition to an enterprise-grade cloud provider and position Google Cloud Platform (GCP) as the best place to run AI, machine learning (ML) and analytics workloads. Now with the latest subset of AI — generative AI (GenAI) — taking the tech market by storm, Google Cloud is prepared to advance this position, using internally developed large language models (LLMs) to bolster the GCP and Workspace portfolios and offer customers a “new way to cloud.”

TBR Perspective

For years, Google Cloud has distinguished itself from legacy peers as a born-in-the-cloud provider, allowing it to commit to the latest frameworks and tooling that help digitally native customers build cutting-edge applications. This core value proposition closely aligned with the central theme of Next, which focused on delivering customers a “new way to cloud.” If the old way is solving a technical challenge through labor-intensive manual processes, then the new way is leveraging highly automated AI-based solutions that allow customers to personalize, secure, predict and ultimately realize business outcomes. Google Cloud is striving to help customers do just that by embedding GenAI throughout its portfolio, which may not only encourage current customers to keep expanding their GCP investments but also attract the legacy enterprises that are ready to unlock the potential of cloud and GenAI.
 

Kurian prefaced the event with an overview of GenAI, and one piece of Google Cloud’s GenAI strategy quickly became clear: Google is striving to offer the broadest set of LLMs among peers. With Pathways Language Model (PaLM) 2, Codey, Imagen and Med-PaLM, Google offers its own set of generic and industry-specific models, but when combined with partners like Meta (Nasdaq: META) and Anthropic, as well as the open-source community, there are over 100 foundation models available from Google.
 
This approach reaffirms Google’s commitment to offering customers maximum choice when it comes to the models they use, including the ability to customize models based on internal data. Aside from supporting an array of models, Google will continue to refine PaLM 2, which has expanded from 4,000 to 32,000 tokens, or the equivalent of roughly 85 pages of text. These developments will be important as they power new products and features, including the new cognitive tool taking GCP by storm: Duet AI.

 

Announced in May, Google Cloud’s Duet AI is described as an “always-on AI collaborator” that works behind the scenes to complete productivity tasks in Workspace and perform developer functions, such as automated coding, in GCP. At Next, Google Cloud announced the general availability of Duet AI in Workspace, officially allowing customers to take advantage of GenAI features, such as describing an image you want with a few keywords and having it populate within Google Slides or automatically classifying rows of data in Google Sheets. These capabilities are all about improving the user experience and strategically helping Google Cloud cross-sell GCP services to the vast base of 10 million paying Workspace customers.

 

At the event, Google Cloud also announced it is expanding the capabilities of Duet AI on GCP in preview, with general availability slated for later this year. There are several new preview capabilities to unpack from context-aware code generation to automated API publishing within GCP’s Apigee API Management service. One of the capabilities we found most compelling, however, is support for Duet AI with Database Migration Service (DMS), as it speaks to Google Cloud’s strategy of using GenAI to attract more legacy workloads and become a competitive modernization partner for the traditional enterprise.

 

In the scenario that Brad Calder, VP and general manager of GCP, introduced at Next, customers can use Duet AI to migrate Oracle Database workloads to Google Cloud’s AlloyDB. Currently, much of the database schema and code is automatically converted to AlloyDB, but for functions specific to Oracle (NYSE: ORCL), it can be challenging for developers to make coding changes required for migration. With Duet AI, customers will be able to open the DMS console and to manually code just one Oracle function and have that coding change automatically applied to all other cases. While we do not believe Duet AI will be enough to sway invested, customized customers away from Oracle Database, it will help Google Cloud better compete with Amazon Web Services (AWS) (Nasdaq: AMZN) and Microsoft (Nasdaq: MSFT) for the subset of customers prepared to leave their legacy Oracle systems behind.

 

It is still early days for Duet AI, but with over 1 million users to date, the service is gaining acceptance throughout both Workspace and GCP. Complementing Google Cloud’s existing Vertex AI solution, which is for more advanced developers to help them better build with GCP IaaS and PaaS, Duet AI is about making AI easily accessible under the hood for line-of-business teams and novice coders. Targeting both these personas, Vertex AI and Duet AI will define Google Cloud’s AI portfolio going forward and potentially help the company attract both digitally native and traditional enterprise customers.
 

Workload-optimized Infrastructure Is Core to the GCP Strategy

The rise of data-intensive workloads with specific compute requirements has driven Google to re-evaluate its infrastructure architecture over the past couple of years. At Next, Google Cloud mentioned its under-the-radar Titanium architecture, which Google Cloud claims has been powering certain services for years. With the Titanium system, tasks such as block storage and virtual networks are offloaded to dedicated chips — infrastructure processing units (IPUs) codeveloped with Intel — to reduce reliance on the host CPU and help maximize performance. TBR notes this approach mirrors what AWS did over a decade ago with the Nitro System, the core architecture powering all its next-generation EC2 instances. Like AWS, Google Cloud is using its architecture to support customers beyond general-purpose workloads, and considering the compute requirements for GenAI workloads, we can expect Titanium to power all future generations of Google Cloud’s IaaS services.

 

Google Cloud also launched the v5e tensor processing unit (TPU), which is integrated with popular GCP services, including Vertex AI, and promises more than double the performance per dollar for both AI training and inference workloads compared to the v4 TPU. One other key attribute of the v5e TPU is its versatility, as customers can choose up to eight virtual machines (VMs) and 250 chips, allowing them to manually configure their hardware based on the size of the LLM.

The new TPUs come as Google Cloud competitors, namely AWS, leverage their custom chips to support the compute demands of LLMs and GenAI and offer the market an alternative to what seems to be an increasingly scarce supply of GPUs. Even so, customers clearly value NVIDIA’s AI hardware, and that is why Google Cloud continues to support GPUs and is bringing its A3 VMs, based on NVIDIA H100 GPUs, to the market next month.

Bringing GenAI to Security

In TBR’s own discussions with enterprise customers, we have uncovered several established GenAI use cases across customer service, administration and software development. Security, however, appears to be a budding area of interest, especially considering the current lack of trained security professionals in the market. At least for now, Google Cloud appears to be a front-runner in this space, as the company has its own LLM trained on security use cases (Sec-PaLM 2) to predict threats and help explain behavior surrounding malicious scripts.

 

Further, Google Cloud has integrated Duet AI with Mandiant Threat Intelligence, which applies GenAI to actually summarize what a hacker is trying to accomplish. Security remains the top concern for customers, and TBR findings reveal that customers generally expect their cloud service providers to do more to address security natively, so steps Google Cloud can take to make security easier for the customer will be well received. The Mandiant acquisition and other investments in security are also key to Google Cloud’s enterprise positioning and efforts to attract customers that do not use GCP beyond analytics and AI.

GenAI Presents New Opportunity in Google Cloud’s Consistent Partner Strategy

Two of Google Cloud’s biggest differentiators have been its partner-first strategy and data analytics capabilities, and the company converged and advanced both during the latest Next event. The rising interest and investment in GenAI capabilities is a ripe opportunity for Google to improve its standing in the cloud platform and infrastructure spaces, and the flurry of partner announcements indicated the company is looking to seize the moment.

 

The partner announcements reflected the breadth of Google’s ecosystems strategy, impacting programs spanning ISV to alliances to global systems integrator (GSI). Two of the biggest SaaS companies, SAP (NYSE: SAP) and Workday (Nasdaq: WDAY), were part of the new announcements during the event. Workday is now live on GCP, a major win for the platform. The relationship dates to 2021, when Workday named GCP as its preferred cloud partner of choice for specific verticals, including healthcare, financial services and retail.

 

Even more than just being hosted in GCP, Workday will eventually take advantage of Google of GenAI capabilities, including building new features into the flow of its core human capital management (HCM) and finance offerings. The packaging of core SaaS offerings with GenAI features is an emerging trend, as vendors including Microsoft and ServiceNow (NYSE: NOW) have already announced pricing for packages that will shortly be available. The relationship with Workday gives Google Cloud the opportunity to integrate its AI assets in a leading SaaS property, creating revenue growth opportunities but also awareness within a large customer base.

 

Google Cloud and SAP also had new joint announcements at the event, building on a long history between the two vendors. As Kurian noted when presenting at SAP’s Sapphire event earlier this year, “Google Cloud has had an amazing collaboration with SAP going back five years.” Google Cloud’s parent company, Alphabet, runs on SAP for core systems and is a vocal advocate for SAP S/4HANA. At the Google Next event, it was announced that their joint relationship would be extended yet again, as SAP will utilize Google foundation models via Vertex AI and SAP data to develop solutions for customers that advance sustainability initiatives and to improve safety and manufacturing processes within the automotive industry.

 

Beyond the big-name alliance announcements, Google Cloud is looking to become a hub of the AI ecosystem and cited progress in that regard. Google Cloud now has more than 100 foundation models from third-party and open-source contributors in its model garden. Google Cloud’s model garden includes open-source contributors like Confluent (Nasdaq: CFLT), DataRobot, Elastic (NYSE: ESTC) and MongoDB (Nasdaq: MDB) as well as more commercial participating organizations like Acxiom (Nasdaq: ACXM), Bloomberg, CoreLogic (NYSE: CLGX), Equifax (NYSE: EFX), NIQ and TransUnion (NYSE: TRU).

 

The announcements at Google Next advanced partner initiatives, following a consistent strategy to build the partner ecosystem. From a strategic perspective, Google Cloud is focused on profitability and sustainable growth, and partners are the key to achieving those goals. Heading into the event, Google Cloud sustained a profit for two consecutive quarters, with partners allowing the company to develop multifaceted relationships that maximize clients’ GCP consumption.

 

In the months leading up to the event, Google Cloud reinforced its commitment to partners through the updated Partner Advantage program, which offers product-specific tracks, financial incentives and new certifications to support partners as the opportunity around GCP expands, particularly in the area of GenAI. Additionally, Google Cloud promised to provide partners with greater access to its internal resources, training programs and best practices, suggesting the company is becoming more hands-on with its GSI partnerships, from presale to postsale, to ensure initial migrations and custom projects are successful.

Ericsson (Nasdaq: ERIC) hosted Ericsson Enterprise Industry Analyst Day in Boston to discuss strategy and portfolio updates in its Enterprise business unit (BU). The event kicked off with Ericsson’s Global CTO Erik Ekudden providing a strategy overview of Ericsson’s Enterprise BU, which includes the company’s Wireless WAN (Cradlepoint), Private Networks (which includes Ericsson Private 5G and Cradlepoint-provided NetCloud Private Networks), and Cloud Communications & Network APIs (Vonage) subunits. Following Ekudden’s overview, leaders from each of the subunits provided deeper dives into their respective business areas. Peter Linder, head of thought leadership in North America, also discussed key trends occurring in the U.S. and where the telecom industry is heading in the country.

TBR perspective

Ericsson’s Enterprise BU is exhibiting strong growth and serves as a bright spot amid the company’s broader challenge of operating in a post-peak RAN spend market environment. Ericsson has built a compelling 5G-related portfolio that builds solutions addressing the unique needs of enterprises ranging from small- and medium-sized businesses (SMBs) to large industrial entities. Ericsson also has a compelling story for Vonage and the global communications platform the company is building, though Vonage’s ability to achieve sustainable profitability remains uncertain.

 

Overall, TBR is confident that Ericsson will carve out and capitalize on a meaningful portion of the nascent private 5G opportunity but notes that the company needs to take disruptive peripheral trends more seriously. Specifically, TBR’s research indicates that hyperscalers are likely to move deeper into private networks and capitalize on the opportunity in network APIs as well as key growth areas such as Communications Platform as a Service (CPaaS). There is also a range of other disruptive players (e.g., Celona and Athonet, which is now owned by Hewlett Packard Enterprise [HPE] [NYSE: HPE]) that are vying to sell enterprises niche products and services pertaining to private networks. Additionally, the spectrum situation continues to evolve, and unlicensed and shared bands are likely to become a more disruptive force in the industry.

Impact and opportunities

Network application developer conundrum

Ericsson noted there is a worldwide dearth of application developers who understand the network enough to effectively leverage network APIs. This limitation needs to be addressed by vendors to unlock the value of the network. Ericsson aims to influence network-oriented app developers to address this issue via sponsorship programs in academia (e.g., hackathons, training programs) and by reskilling experienced workers.

Channel is critical for scaling adoption of private networks

Ericsson is almost exclusively leveraging partners to pursue enterprise opportunities, with communication service providers (CSPs) being one type of channel partner. Ericsson is focused on a multichannel approach, which includes consulting & system integrators (C&SIs), value-added resellers (VARs), and managed service providers (MSPs), in addition to CSPs. The channel partner route to market has become a necessity for vendors to profit from the private network opportunity. Though some vendors, like private cellular networks (PCN) market leader Nokia (NYSE: NOK), have achieved strong traction by selling directly to enterprises, this approach is unsustainable. Even Nokia is now trying to rely almost exclusively on the channel so that it can profitably scale.

 

With all of that said, TBR notes that Ericsson made little mention of C&SIs in its messaging about partners, with much more emphasis given to CSPs and other types of VARs. Given C&SI (aka global systems integrator [GSI]) firms are deeply entrenched with enterprises, this underemphasis or lack of strong focus is a limitation for Ericsson. Conversely, Nokia has established deep partnerships with a range of C&SI firms, such as Accenture (NYSE: ACN), Deloitte, EY and Kyndryl (NYSE: KD), for PCN opportunities, and these relationships are driving significant deal flow.

 

C&SI firms have been slowly moving away from vendor-agnostic strategies and more fully embracing joint go-to-market and sales efforts with their technology partners, in part because hyperscalers have demanded the change. Ericsson could ride that change wave and partner more closely with specific consultancies and SIs, using them as a gateway to enterprise buyers.

FWA in the U.S. remains underestimated and has huge potential

Though the U.S. government’s preference is to connect every premise across the nation with fiber, the financial reality is that the current round of stimulus programs (e.g., Broadband Equity, Access, and Deployment [BEAD]; Rural Digital Opportunity Fund [RDOF]; U.S. Department of Agriculture ReConnect; Tribal Broadband Connectivity Program) are not able to fully achieve this goal. TBR believes that 5G fixed wireless access (FWA) will ultimately be widely embraced as a viable alternative to fiber-to-the-premises (FTTP) as the technology can achieve the minimum speed requirements set forth by the U.S. government of 100Mbps download and 20Mbps upload.
 
5G FWA will be prioritized in more locations as a means to reduce lead time-to-market and cost-per-connected premise. When including unserved and underserved premises that would be excellent candidates for 5G FWA, TBR’s research suggests FWA has significant runway left in the U.S. market, greatly exceeding the modest subscriber targets put forth by incumbent CSPs like T-Mobile (Nasdaq: TMUS) and Verizon (NYSE: VZ). The spectrum problem will be mitigated over time by a mix of new technologies (e.g., carrier aggregation, massive MIMO, NR-U, extended range mmWave) and new or underutilized spectrum bands (especially unlicensed bands like 6GHz as well as mmWave, CBRS and the K-Band.
 

Cellular convergence with Wi-Fi needs to be taken more seriously in the industry

Most enterprises already use Wi-Fi and are unlikely to replace those systems with cellular technologies like 5G. Instead, swim lanes are forming whereby certain use cases and situations are best addressed by either Wi-Fi or cellular, but these access mediums must still coexist in an enterprise’s environment to bring the full benefit of IT-OT convergence and digital transformation. This convergence piece remains under-addressed by the ecosystem but represents a potentially massive opportunity. Ericsson, which has significant experience with Wi-Fi from past acquisitions (e.g., BelAir Networks) and R&D (e.g., Wi-Fi calling), can and should play a key role in convergence between cellular and Wi-Fi.

 

One of the biggest challenges to IT-OT convergence is not the technology but the people. At enterprises, IT and OT buyers are separate, with potentially divergent business priorities that sometimes compete for budget. Ericsson appears to understand that they need different selling motions for these buyers, even at the same enterprise — e.g., Wi-Fi-like experience and solutions for IT buyers; hardened network experience, and solutions for OT buyers. That understanding could be a successful way for Ericson to partner across the IT-OT ecosystem.

Vonage has interesting technology, strategy and vision but faces major threat from hyperscalers

TBR’s research indicates hyperscalers continue to encroach on the communication applications domain, the evolution of which will leverage network APIs. Examples of this are evident with the integration of Microsoft Teams (Nasdaq: MSFT) with Azure Communication Services, and hyperscaler development of super apps that blend social with commerce and other features into an integrated platform, similar to Tencent’s WeChat in China. Hyperscalers already have several billion users on their communication applications globally (e.g., WhatsApp, Instagram, Messenger [Nasdaq: META]; Teams; Google Meet and Google RCS [Nasdaq: GOOGL); iMessage [Nasdaq: AAPL]), which are all conduits to bring network API innovation to their install bases. Though Vonage currently has a compelling market position in the communication applications domain, the company could quickly be blindsided by hyperscaler moves, similar to what has occurred with Microsoft Teams taking significant market share from prior leader Cisco Webex (Nasdaq: CSCO) in the unified communications & collaboration (UC&C) domain.

Conclusion

Ericsson has compelling ideas and portfolio to address nascent opportunities in the private networks and network API domains, but TBR is skeptical the company will be able to build critical mass in these areas due to hyperscalers’ role, road maps and ambitions in the ecosystem. Ericsson’s primary customers, CSPs, also face this disruption, which has historical precedent in voice, text, linear TV, and other business areas that have been fundamentally disrupted by hyperscalers over the past two decades.

 

TBR believes further integration of the telecom industry into hyperscaler ecosystems is inevitable. Ericsson and its partners are encouraged to think more about focusing on niche areas where hyperscalers cannot or will not play and/or integrating deeper with hyperscalers to achieve joint critical mass in a cooperative framework. If it chose to take both approaches, Ericsson could make itself indispensable, which typically comes from being trusted, dependable and easy to work with. Any company can bring the technology; Ericsson needs to become the best possible ecosystem partner, so every player in the ecosystem wants to partner with it.