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Technology Business Research, Inc. launches Telecom Edge Compute Market Forecast

Technology Business Research, Inc. is expanding its Telecom Edge Compute portfolio with the launch of the Telecom Edge Compute Market Forecast, an annual report scheduled to first publish in early 2020.

Edge computing has become a major area of interest and investment in the telecom industry, driven by CSPs’ need to improve user experiences as well as enable and support new business models. Communication service providers (CSPs) are also keen to invest in edge computing as a cost-efficiency solution, with 5G as well as the cloudification and virtualization of networks driving the build-out of edge compute environments.

Telecom Edge Compute Market Forecast, which is global in scope, will detail edge compute spending trends among CSPs, which include telecom operators, cable operators and webscales. TBR’s research will include current-year market sizing and a five-year forecast by multiple edge compute market segments and geographies.

Additionally, TBR will examine the following:

  • Spend by domain: hardware, software, services
  • Spend by hardware type: black box, gray box, white box
  • Spend by service type: deployment services, maintenance services, professional services, managed services
  • Spend by company type: telco, cableco, webscale
  • Spend by region: North America, CALA, EMEA, APAC

TBR’s Telecom Edge Compute portfolio also includes the Telecom Edge Compute Market Landscape, which launched earlier in 2019 and provides insights on use cases, business models, operator and vendor positioning and strategies, market size and adoption.

For additional information about this research or to arrange a one-on-one analyst briefing, please contact Dan Demers at +1 603.929.1166 or [email protected].

HPE’s CMS unit reemerges as a software-centric contender in the new network architecture

TBR perspective  

TBR believes HPE’s CMS unit has the potential to become a significant disruptor in the telecom space. CMS, which had been marginalized in prior years while Hewlett Packard Co. split into HP Inc. and HPE and as HPE executed divestitures, restructurings and developed a new strategy, has received new life after obtaining corporate sponsorship from HPE’s relatively new CEO, Antonio Neri, and CFO, Tarek Robbiati, who was formerly the CFO at Sprint (NYSE: S). CMS leadership reports directly to Robbiati. With the C-Suite and board of directors providing corporate support, the telecom vertical will become a key growth pillar for HPE going forward, given the technology transformation and business model transformation that is being prompted by 5G, edge computing, AI and automation. 

The CMS unit represents only a small percentage of HPE’s total revenue, but the unit is a key gateway into emerging opportunities that are impacting the telecom vertical. CMS is reestablishing itself in the market as a growth engine for HPE corporate and is receiving the funding and support required to drive its portfolio, particularly in the management and orchestration (MANO), 5G core, and digital identity spaces. TBR believes CMS is positioned to be a key vendor in the new network architecture, which will be microservices-based, cloud-native and distributed.

CMS faces some notable hurdles, including the negative perception of its capabilities that followed the bad press it received as a supplier and the prime systems integrator for Telefonica’s (NYSE: TEF) software-defined transformation initiative back in 2015. The company was eventually replaced by several other suppliers. TBR believes the lingering effects of this situation have hindered CMS’ growth over the past few years, but notes that CMS has put the incident in its rearview mirror and is making significant headway moving forward.

CMS’ mindshare and credibility are moving in a positive direction, and the unit is gaining significant traction in CSP accounts, particularly for its Service Orchestrator and NFV Director MANO offerings. CMS has an impressive roster of CSP customers and has played a behind-the-scenes role in several significant network transformation projects, including SK Telecom (NYSE: SKM) and Vodafone (Nasdaq: VOD). These reference wins will be critical to positioning HPE as a contender in new RFPs, particularly in disruptive areas such as MANO and 5G core.

CMS is challenged by OSS domain incumbents like Amdocs (Nasdaq: DOX) and Ericsson (Nasdaq: ERIC), which CSPs will be reluctant to move on from due to possible migration and integration issues. This hesitancy could also prohibit the majority of CSPs from altering their procurement models to adopt more modular solutions, as webscales have done. CMS’ portfolio is increasingly aligned to this trend. The most difficult challenge may be delivering on helping CSPs become more than the connectivity provider or “dumb pipe” in a 5G world. Vendors will be jockeying to deliver this dream, but HPE may be better served focusing on providing the solutions that will enable CSPs to run the most efficient, cost-effective networks possible.

HPE (NYSE: HPE) hosted its first ever North America Communications and Media Solutions (CMS) Analyst Summit in Boston, bringing along top leadership from the company’s CMS business, who delved into CMS’ strategy and portfolio as well as key customer wins and success stories. Following executive presentations, which were interactive in nature, with industry analysts able to pose questions to presenters, analysts received one-on-one time with CMS VP and General Manager Phil Mottram, CMS Chief Technology Officer Jeff Edlund, CMS VP of R&D and Delivery Mark Colaluca, and CMS VP of Product Strategy and Lifecycle Management Domenico Convertino.

With CMS recently emerging from the shadows of HPE’s Pointnext business and retooling its portfolio to align with demand from communications service providers (CSPs), executives were upbeat about CMS’ ability to take market share and compete with highly entrenched incumbent vendors and startups alike.

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

TBR estimates over 100,000 mini data center (edge) locations will be built out globally by CSPs through 2023. The primary driver of edge build-outs during the forecast period is CSPs’ network transformations, which entail migrating to a cloudified and virtualized network. In this new architecture, network functions will be virtualized and housed in NFVI, which is essentially data centers. Central office overhauls will be the primary edge compute location in the early years of the forecast period, with the build-out of the capillary system required to support revenue-generating low latency use cases expected to begin in the middle years of the forecast period.

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.

Leading CSPs pull forward 5G-related investments, driving CAGR increase in the North America TIS market

According to Technology Business Research, Inc.’s (TBR) Telecom Infrastructure Services North America Market Forecast 2018-2023, the CAGR of the TIS market in North America increased compared to last year’s forecast as leading communication service providers (CSPs) in the U.S. committed to accelerate and broaden the scope of their 5G-related initiatives.

In the past 12 months, the five largest mobile operators in the U.S. have made formal commitments to deploy 5G at scale across their U.S. footprints over the next few years. This acceleration in deployment timetables is primarily in response to competitive and government pressures. Spend pertaining to these overarching trends will be partly offset by cost savings from legacy infrastructure decommissioning, cloud, and NFV/SDN as well as synergies that are realized from M&A.

Though 5G will be the primary driver of the TIS market in North America over the next five years, digital transformation-related initiatives, which encompass network and business model transformation, will also support TIS market development. With the competitive landscape in the U.S. facing significant disruption from M&A events and new entrants, CSPs will be under pressure to respond by continuing their transformations. Digital transformation requires rearchitecting networks to become cloudified, virtualized and intelligent. AT&T (NYSE: AT&T), Verizon (NYSE: VZ), Comcast (Nasdaq: CMCSA) and T-Mobile (Nasdaq: TMUS) are expected to drive the bulk of digital transformation-related spend through the forecast period.

TBR’s Telecom Infrastructure Services North America Market Forecast provides annual analysis and forecasting of the deployment, maintenance, professional services and managed services markets for network and IT suppliers.

Cost of ‘intelligent connectivity’ must decline significantly for intelligent world to unfold

TBR perspective

Realizing the intelligent world presented by the mobile industry at Mobile World Congress Barcelona 2019 (MWC19) will require a fundamental change in how networks are architected, including a radical reduction in the cost of providing connectivity. It will also require business transformation for companies tied to the old world, namely communications service providers (CSPs) and their incumbent vendors.

It was readily apparent at the event that technology is advancing at a much faster pace than the establishment of business cases that economically justify deployment of the technology. The reality for the mobile industry is that the cost of building, owning and operating networks is too high and networks are too inflexible to support the business realities of the digital era, whereby connectivity is relegated to a commodity service and the value lies in the platforms and applications that run over the network. The industry has known this for years, but changes have been minimal, until maybe now.

The entrance of Rakuten to the mobile industry could be a game changer and provides a glimpse into what a digital service provider will look like. In what could arguably be the most important takeaway from the entire event, Rakuten’s approach to building and operating a network could signify a paradigm shift in the industry. Not only will Rakuten’s network be agile, flexible and dynamic to provide digital services, it will also enable a dramatic reduction in the cost of connectivity.

The theme of MWC19 was “intelligent connectivity” and centered on how 5G, IoT, AI and big data are coming together to enable the intelligent world. Against this backdrop, Rakuten stole the show with the evangelization of its end-to-end virtualized and cloud-native network, which is being deployed across Japan this year. Rakuten’s network provides a glimpse into what the intelligent network of the future will look like.

Technology Business Research, Inc. announces 2Q19 webinar schedule

HAMPTON, N.H. (March 4, 2019) — Technology Business Research, Inc. (TBR) announces the schedule for its 2Q19 webinar series.

April 10        Progress report: State of the NFV/SDN telecom market

April 17        Channel partner ecosystems will evolve to support digital adoption

April 24        Evolutionary IoT: Starting small and controlling costs

May 1           Obstacles and triumphs on the journey to cloud

May 8           Health IT converges around consumerization, value and ROI

May 15        30 minutes, 3 months, 3 years: Evolution of digital transformation

May 22        Bringing the best: Talent and technology in management consulting

June 12        The makings of the telecom edge compute market

June 26        Where will hyperconverged infrastructure fit in the modern data center?

TBR webinars are held typically each Wednesday 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 makings of the telecom edge compute market

Insights from TBR’s 2Q19 Telecom Edge Compute Market Landscape

Edge compute will be required to enable and support new use cases of the network, such as augmented reality (AR)/virtual reality (VR) and autonomous transportation, as well as will provide significant benefits, such as cost savings, for communication service providers (CSP). The build-out of these edge compute environments will create opportunities for the vendor ecosystem. Join Telecom Principal Analyst Chris Antlitz for an in-depth review of TBR’s first edition of the Telecom Edge Compute Market Landscape.

Don’t miss:

  • The key reasons CSPs will build out edge compute environments
  • How much CSPs will invest to build out edge compute environments
  • Which vendors are likely to outperform in this nascent market

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].

Evolutionary IoT: Starting small and controlling costs

Data must earn its keep

Internet of Things (IoT) projects range from small to huge, and the small end of the spectrum is where we find growth. TBR believes that organizations that successfully exploit the enormous transformative potential of IoT do it through widespread and continual execution of IoT projects, and through ongoing generation of insights from integration of IoT-generated data. While some of the projects are large, most are small, usually focusing on reducing costs. For these projects to succeed, and for IoT to proliferate, they must generate positive ROIs and costs must be contained. All parts of an IoT project generate costs, but stored data generates increasing costs throughout the life of the project. For this reason, managing data-driven costs is key to IoT success. Join Ezra Gottheil and Dan Callahan as they discuss evolutionary IoT and data cost containment.

Don’t miss:

  • The transformative power of evolutionary IoT
  • Vendor messaging in the age of evolutionary IoT
  • Edge computing and cost-effective IoT

 

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].

Telecom IoT and edge computing: Developing focus areas in the telecom industry

As we look to 2019, TBR’s Telecom team has completed some insightful brainstorming sessions where we discussed industry trends and topics. We identified two nascent areas about which we are receiving increased questions and will spend more time researching as we move into the new year: telecom IoT and telecom edge compute. We welcome input, ideas and discussion as we dive deeper into these focus areas in 2019.

Coverage of these markets will be global in nature and will include insights on both operator and vendor positioning and strategies. Additionally, TBR will examine where companies are making money and spending money in these markets. Research will focus on business models and how they are evolving for Internet of Things (IoT) and edge compute, operator and vendor sophistication, and traction of IoT and edge compute businesses. There will be particular emphasis on leading companies: how they are making money in the market and where they are investing to position for success. We will examine market use cases and verticals to identify areas of opportunity.

Telecom IoT

The IoT market will scale up over the next five years as module prices decrease, IoT-optimized networks are built, and businesses and consumers realize the benefits of connecting their “things.” Communications service providers (CSP) will play an integral role in the IoT ecosystem as it is built out, and their revenue from IoT will grow as they pursue traditional and new business models in this market.

Telecom edge compute

Edge computing has become a major area of interest and investment in the telecom industry, driven by the need to improve user experiences as well as enable and support new business models. CSPs are also keen to invest in edge computing as a cost-efficient solution, with 5G as well as the cloudification and virtualization of networks driving the build-out of edge compute environments.