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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.

IBM makes major strides in quantum with Volume and AI

  • IBM Quantum Volume creates a new way to assess a quantum computer’s capabilities as a whole system, rather than just based on its number of qubits.
  • IBM unveils research into the intersection between quantum computing and machine learning.

IBM, ever present in the development of cutting-edge technology, is a leader in the quantum computing space and brought its IBM Q System One to market in January. This came after the company provided access to three of its quantum systems through the cloud. TBR notes that providing access to actual quantum systems, and not simply quantum simulators via the cloud, differentiates IBM’s capabilities from those of peers. Currently, a key purpose of providing access to these quantum systems through the cloud is education. IBM is learning from past challenges by getting out ahead of innovation and making internal and external learning and development a priority. This will ensure that trained internal personnel are in place once IBM Q achieves commercial application and research viability as well as help accelerate the rise of IBM Q by educating those outside IBM who might be involved in developing technological advancements, at least at the algorithmic level.

Quantum Volume assesses quantum capability of a whole quantum system

IBM unveiled Quantum Volume, which is a way to measure the capabilities of an entire quantum system, including qubits, software and overall functionality. IBM aptly demonstrated the value in measuring the functionality of a quantum system by more than just the number of qubits. Qubits are very complex, and factors including the quality of the qubit and the impact of unwelcome external stimuli need to be assessed as qubits are highly sensitive to environmental influences.

Aspects such as gates, connectivity, algorithm errors and compilers are all assessed by Quantum Volume. The capability of the computer is then determined, and it is categorized with a number, which serves as a rating of sorts. This rating is a key to the entire quantum computing market, TBR believes, because it provides a relatively unbiased way to measure the capability of a quantum computer. The current process, in which the number of qubits is used to measure capability, omits essential factors.

More significantly, IBM contends it has discovered a metric for quantum advancements comparable to Moore’s Law for classical computing advancements. Given quantum computing will be adopted essentially algorithm by algorithm, this new metric could help guide the broader user community about when a given algorithm will be ready to move to quantum computing based on the advancements in the technology and the complexities of the algorithm in question. This information can then be used to optimize the deployment layer based on mapping the algorithm to the known performance of the different qubits within the systems.

IBM evaluates the parallels between quantum computing and machine learning

IBM published some of its research, in which it evaluated the applications of quantum computing in conjunction with AI and machine learning to address additional emerging demands. Further details regarding this research can be found in an article published in Nature titled, Supervised learning with quantum—enhanced feature spaces. At its core, AI is simply the evaluation and analysis of massive data volumes that help train a system. In classical computing this process can be time-consuming, but when digital transformation is added to market offerings such as connected cars, time is of the essence and cannot be squandered performing these types of tasks. Quantum computing would not only reduce time to insight but also improve the accuracy of the insights gathered.

Quantum computers can analyze and evaluate data much faster than a classical computer and can also process more complex data sets. These increased levels of speed and complexity will enable machine learning to be more insightful and, therefore, more applicable to more complicated use cases. Key use cases that IBM highlighted for these capabilities initially are model training, pattern recognition and fraud detection. These use cases are fundamental to a connected world, where bad actors would have the potential to cause great harm if they tamper with systems, as would machine malfunctions. If data can be evaluated and extrapolated into real-time applications faster, the potential dangers of an increasingly connected world can be mitigated more quickly.

The market implications of quantum developments are vast and will be rapid

Although individually these announcements may seem small in the scheme of quantum computing, when combined with IBM’s existing breakthroughs in the technology, they demonstrate the breadth of the market IBM’s quantum capabilities will be able to impact once quantum advantage is achieved. Quantum Volume enables IBM to determine use-case efficiencies for quantum computers once commercial availability is attainable. The ability to combine the capabilities of quantum computing with AI will accelerate digital transformation dramatically and launch society into the next technological revolution much faster, as more rapid time to insight will open new avenues of exploration.

Customers care less, vendors buy more, and both sides become more intelligent

An exclusive review of TBR’s 2019 Cloud Predictions

The entire cloud market is becoming more defined, consolidated and focused on the business value being delivered. This increasing maturity is prompting acquisitions by leading vendors, which will intensify in 2019. Not only are big purchases being integrated, but more large purchases will be announced in the race to meet rising customer investment in cloud solutions. Even as customers spend more on cloud, they increasingly care less about the specific delivery method, resulting in widespread hybrid implementations. Lastly, the rise of integrated analytics, artificial intelligence (AI) and machine learning will move customers further along in their journeys to transform their processes and technology to become more intelligent businesses.

Join Allan Krans, Cassandra Mooshian, Meaghan McGrath and Jack McElwee as they dig into developments in the cloud market through 2018 and expectations for 2019.

Don’t miss:

  • The risk and reward for additional cloud acquisitions
  • How customer decision making is evolving to focus more on outcomes than delivery methods
  • How the integration of emerging analytics and AI technologies is helping customers implement more intelligent solutions and growing revenue streams for vendors

 

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 at anytime on TBR’s Webinar Portal.

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

2018 5G Americas Analyst Forum

5G will provide network efficiencies for telcos as they anticipate next-generation use cases

Given the introduction of Verizon’s (NYSE: VZ) 5G Home fixed wireless service in October, as well as the upcoming launch of AT&T’s and T-Mobile’s mobile 5G networks by the end of 2018, the 5G era is edging closer to reality after years of industry speculation regarding the technology’s capabilities. Similar to prior network eras, such as the transition from 3G to LTE, the 5G era will be a gradual evolution of existing network capabilities and will not immediately yield its full benefits or dramatically alter the global wireless market during its inception.

A resounding theme at the 2018 5G Americas Analyst Forum was that the 5G era will essentially be “more of the same” initially. LTE will remain the predominant source of connectivity for most wireless subscribers in the Americas over the next several years until 5G coverage becomes nationwide and customers transition to 5G-capable devices. The accelerated speeds offered by LTE-Advanced services, as well as the cost savings offered by IoT network technologies such as Narrowband IoT (NB-IoT) and LTE-M, are currently more than sufficient to support the demands of most consumers and enterprises.

The wireless industry is anticipating 5G will foster IoT innovations in areas including connected car, healthcare, smart cities and augmented reality (AR)/virtual reality (VR). Though advanced IoT use cases that require the precision promised by 5G, such as remote surgery, are being explored, many of these services will not become commercially available until the mid-2020s at the earliest. Additionally, solutions like remote surgery and V2X automotive services will be burdened by significant regulatory challenges as ensuring 100% network reliability and ultra-low latency will be essential to prevent hazardous outcomes.

Although the end-user benefits of 5G will initially be limited, investments in 5G will ultimately be viable due to the network efficiencies operators will gain from the technology. 5G, which is expected to provide between four- and 10-times greater efficiency on a cost-per-gigabyte basis compared to LTE, will enable operators to more cost-effectively add network capacity to support the prevalence of unlimited data plans as well as continued connected device additions. Offering 5G services will also be essential for operators to remain competitive against their rivals as the marketing of accelerated 5G speeds will help to attract subscribers. Lastly, the deployment of 5G networks will prepare operators to support 5G-dependent use cases when they do come to fruition and spur customer demand.

 

 

Around 70 representatives from well-known operators and vendors attended the annual 5G Americas event to talk with more than 70 industry analysts about the state of wireless communications in North America and Latin America as well as discuss challenges and opportunities presented by the rapid development of the mobile ecosystem.

The event kicked off with a presentation from T-Mobile (Nasdaq: TMUS) CTO Neville Ray regarding 5G leadership in the Americas. He discussed topics including projected use cases, the importance of 5G to the U.S. economy, the Americas’ position in the global 5G market, and the different initial approaches U.S. operators are taking to 5G. A panel of network and technology executives from operators including AT&T (NYSE: T), Sprint (NYSE: S), T-Mobile, Telefonica (NYSE: TEF), Cable & Wireless and Shaw (NYSE: SJR) provided additional insights into 5G evolution and activity around 5G by each respective operator.

Day 2 began with panel sessions featuring leaders from top telecom vendors, including Ericsson (Nasdaq: ERIC), Cisco (Nasdaq: CSCO), Nokia (NYSE: NOK), Samsung, Intel (Nasdaq: INTC), Qualcomm (Nasdaq: QCOM) and Commscope (Nasdaq: COMM), to discuss areas such as 5G regulatory challenges, 5G network and technology deployments, and potential 5G go-to-market strategies and use cases. Following these panel sessions, the reminder of the event offered analysts the opportunity to participate in a choice of 34 roundtable discussions focused on key 5G topics, including Internet of Things (IoT), edge computing, artificial intelligence (AI), 5G network infrastructure and technologies, regulatory considerations, and 5G in the automotive industry. 

Portfolio and network enhancements showcase Telefonica’s evolution to digital service provider

Telefonica’s (NYSE: TEF) progress in evolving from a traditional communication service provider to a digital service provider was highlighted at the company’s 2018 Industry Analyst & Customer Day. Telefonica’s digital transformation initiatives will yield internal cost savings and increased operational efficiency for the company while enhancing connectivity, scalability and customer experience for consumers and businesses. Telefonica is also expanding its portfolio in emerging technologies, including artificial intelligence (AI), machine learning (ML), big data and advanced Internet of Things (IoT) use cases that will increasingly become a part of businesses’ and consumers’ daily lives over the next decade. However, Telefonica will face difficulties in its journey, including balancing network and technology investments while managing the company’s high debt load, the challenging regulatory environment for telecom companies, and competitive threats from webscales and rival carriers that are also aggressively expanding their digital portfolios.