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Webscales in the digital ecosystem: Insights from TBR’s Telecom team

Webscales encroach on telecom sector to realize value of digital economy

Trillions of dollars in economic value will be created globally from 5G, edge computing, AI and other new technologies during this decade, and TBR believes the world’s largest webscales (aka hyperscalers) will capture an outsized portion of this opportunity.

Webscales are building end-to-end digital ecosystems that transcend all aspects of people’s lives and deliver business transformation. As part of this overarching strategy, webscales are increasingly encroaching on the telecom domain so they can unlock value from the nexus of distributed computing and intelligent connectivity. This trend has significant, disruptive implications for telcos and ICT vendors.

Join Principal Analyst Chris Antlitz Wednesday, Sept. 22, 2021, at 1 p.m. EDT/10 a.m. PDT for an in-depth, exclusive review of TBR’s most recent Webscale Digital Ecosystem Market Landscape,during which he will discuss how and why webscales are disrupting the telecom industry and what this means for incumbent operators and vendors.

TBR’s Webscale Digital Ecosystem Market Landscape tracks how and why the world’s largest webscales are disrupting industries to unlock economic value in the digital era, with specific focus on the disruption of the telecom industry. The report focuses on the nine largest webscales: Alibaba, Alphabet (Google), Amazon, Apple, Baidu, Facebook, Microsoft, Rakuten and Tencent.

Don’t miss:

  • The overarching growth strategy of webscales
  • Why webscales need to disrupt the telecom industry
  • How webscales are disrupting the telecom industry
  • What this means for incumbent operators and vendors that play in the telecom sector

Register today to reserve your space

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].

WEBINAR FAQS

Connectivity will be ‘free’

The connectivity business model is poised to fundamentally change during the 5G era, and the telecom industry might see and will need to be prepared for a world where selling metered data access is no longer viable. New models have emerged, driven by the webscales, that portend a world where consumer network access could become “free” or close to free. Historical precedence and future context will be provided demonstrating that this radical change could indeed be feasible and that the market has a high probability of ultimately going in this direction during this decade.

Join Principal Analyst Chris Antlitz for an in-depth, exclusive review of TBR’s most recent Webscale ICT Market Landscape where he will discuss how webscales’ digital-first, platform-centric model can create a fundamentally new industrial framework for providing “free” connectivity in an economically feasible manner.

TBR’s Webscale ICT Market Landscape focuses on the nine webscales (aka the Big Nine) that TBR believes will own the largest, most comprehensive end-to-end digital ecosystems in the digital era. Specifically, this list includes Alibaba, Alphabet, Amazon, Apple, Baidu, Facebook, Microsoft, Rakuten and Tencent. The report includes key findings, market size, customer adoption, webscale positioning and strategies, geographic adoption, vendor positioning and strategies, and acquisition and alliance strategies and opportunities.

Don’t miss:

  • Which webscales are likely to drive this move toward “free” connectivity
  • How webscales will make money from “free” connectivity
  • What will happen to traditional operators amid this coming market disruption

Big Nine are building digital ecosystems; cloud, connectivity, platforms and other initiatives all point to this end state

Big Nine build digital ecosystems; cloud, connectivity, platforms and other initiatives all point to this end state

Big Nine aim to own the foundational, intelligent innovation platforms of the digital economy

The Big Nine — Alibaba (NYSE: BABA), Alphabet (Nasdaq: GOOGL), Amazon (Nasdaq: AMZN), Apple (Nasdaq: AAPL), Baidu (Nasdaq: BIDU), Facebook (Nasdaq: FB), Microsoft (Nasdaq: MSFT), Rakuten and Tencent — view 5G and distributed computing as innovation platforms on top of which value will be created in the digital economy. The Big Nine are building “brains” in their central cloud environments that will autonomously orchestrate and manage the fundamental platforms upon which the digital economy will be built.

A recent example of this trend by the Big Nine to own the intelligence layer and build these platforms is seen in Microsoft’s recent actions, whereby the company acquired Affirmed Networks and Metaswitch (pending) and struck partnerships with ecosystem providers such as Federated Wireless to build out digital marketplaces that enable end users to consume network resources directly from the cloud.

The Webscale ICT Market Landscape includes key findings, market size, customer adoption, operator positioning and strategies, geographic adoption, vendor positioning and strategies, and acquisition and alliance strategies and opportunities.

The Big Nine are trailblazing paths to economic value of the digital era; incumbent players need to determine their roles

Big Nine aim to own the foundational, intelligent innovation platforms of the digital economy

The Big Nine — Alibaba (NYSE: BABA), Alphabet (Nasdaq: GOOGL), Amazon (Nasdaq: AMZN), Apple (Nasdaq: AAPL), Baidu (Nasdaq: BIDU), Facebook (Nasdaq: FB), Microsoft (Nasdaq: MSFT), Rakuten  and Tencent — view 5G and distributed computing as innovation platforms on top of which value will be created in the digital economy. The Big Nine are building “brains” in their central cloud environments that will autonomously orchestrate and manage the fundamental platforms upon which the digital economy will be built.

A recent example of this trend by the Big Nine to own the intelligence layer and build these platforms is seen in Microsoft’s recent actions, whereby the company acquired Affirmed Networks and Metaswitch (pending) and struck partnerships with ecosystem providers such as Federated Wireless to build out digital marketplaces that enable end users to consume network resources directly from the cloud.

Over time, webscales will become the centerpieces and backbones of the global digital economy and will enable the ecosystem, which includes communication service providers, to innovate and participate in the value creation of the digital economy.

The Webscale ICT Market Landscape includes key findings, market size, customer adoption, operator positioning and strategies, geographic adoption, vendor positioning and strategies, and acquisition and alliance strategies and opportunities.

TBR predicts total enterprise spend on edge infrastructure will grow at a 41% CAGR through 2024 to almost $120B

Webscale drives projected forecast for enterprise edge

On Feb. 26, TBR senior analysts Nicki Catchpole and Stephanie Long were joined by hundreds of professionals across multiple vendors and verticals for TBR’s first webinar on the enterprise edge. The session, The emerging and evolving landscape of enterprise edge computing, focused on the components of the enterprise edge market — as defined by TBR — and projected market growth, in addition to touching on use cases in retail and agriculture that demonstrate the real-life applicability of edge computing across verticals.

In TBR’s definition, the enterprise edge market encompasses enterprises in all verticals, including communication service providers (CSPs). We explores CSP spend on edge infrastructure in depth in our Telecom Edge Compute Market Forecast (2019-2024).

Although edge technology is not new, it is still considered to be emerging, and growth rates are projected to increase significantly through 2024. The spending increase will occur to support connected devices, emerging workloads such as IoT, and faster time to insight on existing use cases and predictive analytics, with the ultimate goal of facilitating the adoption of digital transformation. The most notable driver of edge spend through 2024 will be the complex dynamics within the webscale space in support of digital transformation projects that were historically captured by OEMs.

Use cases in the agriculture and retail verticals demonstrate the value of edge computing across disparate industries

There are hundreds of individually documented and proven use cases for edge computing across many different verticals. A common theme is that edge computing across verticals makes it easier to process data at the source to refine and send it to an edge or cloud network for further analysis, AI applications and storage. During the webinar, TBR analysts covered use cases that touch consumers and vendors alike, focusing on examples in smart farming as well as retail.

Agribots enhance farm management while edge computing introduces benefits for brick-and-mortar retailers

Smart farming technologies mark a notable shift in how farms can be managed by introducing automation and predictive intelligence at scale. Even within this one industry, the examples are vast and varied. Agribots in the form of machinery, like autonomous tractors, interact with the surrounding environment, collecting data and communicating back to the cloud for longer-term analysis. Crop management and production life cycles are optimized through the automation and analytics enabled by edge at scale.

The examples in retail are as equally as diverse, ranging from in-store robots that can create a customized shopping experience to the implementation of AR/VR in fitting rooms. Benefits include improved customer experience as well as workforce and operational optimization.

Questions from attendees prompted a deeper dive

One attendee asked for more detail about what components TBR included in its market sizing estimates. There are many components of edge computing, with varying opinions around what should and should not be included. TBR’s enterprise edge market sizing includes hardware — server and storage networking — as well as close-to-the-box software and services.

Another attendee asked about the “vendor soup” among hyperscalers and whether there are online marketplaces such as Azure that facilitate the decision-making process or if it is largely left to systems integrators. TBR has seen offers from hyperscalers trying to sell more solutioning and recommending combinations of solutions to their customers. This type of approach, but with a more vertical focus in the marketplace, may promote market expansion to include solution advisory services. Implementation of edge computing is a multifaceted and dynamic process, and hyperscalers are well positioned to help customers through the process of selecting and integrating multiple different services.

Click here to listen to this webinar, The emerging and evolving landscape of enterprise edge computing, in its entirety

TBR projects CSP spend on edge compute infrastructure will exceed $82B by 2025

TBR estimates over 1.2 million network sites and cell sites will become mini data center (edge) locations globally by 2025, up from nearly 9,000 sites globally at the end of 2019. The primary driver of edge build-outs during the forecast period is CSPs’ network transformations, which entail migrating to a cloudified and virtualized network, and webscales’ edge initiatives to support their cloud businesses and digital lifestyle endeavors. In this new architecture, network functions will be virtualized and housed in NFVI, which is essentially a data center. Network sites, such as central offices, have been the primary edge compute location to date, with cell site builds expected to ramp up significantly in 2021 and become the primary location for the CSP edge by 2025.

Webscales and disruptive startups are positioning early to capture new value created by edge computing, threatening to limit telco and cableco opportunity

In 2H19 several of the largest telcos in the world, namely AT&T, Verizon, Vodafone, SK Telecom, KDDI and Telecom Italia, established strategic partnerships with key webscales pertaining to edge computing. In each of these situations, the webscale provides the extension of its public cloud via a physical compute stack, which is being housed in the telco’s site at an edge location and integrated with the telco’s network. TBR views these partnerships as necessary for both parties but is wary that telcos will be largely confined to providing connectivity while webscales get point position at the edge to accrue most of the new value created from new use cases of the cloudified network.

Telcos and cablecos could generate significant edge-related revenue by opening their network sites to colocation opportunities. Existing network sites could be repurposed to house a telco’s or cableco’s equipment and the edge stacks of other companies, which would pay rent to the site owner. CenturyLink and Frontier are both all-in on colocating their existing sites, and TBR expects more telcos and cablecos to follow in their footsteps over time.

TBR’s Telecom Edge Compute Market Landscape, which is global in scope, deep dives into the edge compute-related initiatives of stakeholders in the telecom market including telecom operators, cable operators, and vendors that supply the telecom market. The report also covers leading webscales’ edge computing-related initiatives. The research includes key findings, market size, regional summary, technology trends, use cases, business models, operator and vendor positioning and strategies, and acquisitions and alliances.

Technology Business Research, Inc. announces 1Q20 webinar schedule

Technology Business Research, Inc. (TBR) announces the schedule for its 1Q20 webinar series. The quarter’s webinars include TBR’s research predictions for 2020.

Jan. 8            A decade in, cloud’s real work begins

Jan. 15         Hardware commoditization pushes vendors into new ventures        

Jan. 22         The end of ‘digital’

Feb. 5           IoT settles in for the long haul

Feb. 12         Leading CSPs and webscales implement new ICT architecture to fully capitalize on digital era

Feb. 26         The emerging and evolving landscape of enterprise edge computing

March 11     Are digital transformation buyers ready for AI?

March 18     Enterprise adoption of private cellular networks poses opportunities and threats for telecom industry

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

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

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

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

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

Don’t miss:

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

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

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

Technological complexity could become a major impediment to realizing the promise and potential of 5G

TBR perspective

The 5G ecosystem remains in a pressure cooker. There is pressure on standards bodies and their constituencies, including vendors, operators, enterprises and governments, to rush forward with technology development and hurry infrastructure into the field. There is also pressure on these same stakeholders to figure out how to not only get that gear into the field at scale but how to monetize this new infrastructure.

Though the 5G bandwagon has remained cohesive thus far, increasing technological complexity could become a major impediment to realizing the promise and potential of 5G. Additionally, increased influence by enterprises and governments is adding more complexity to the fold.

It will likely take another year for the dust to settle on the specifications for 5G NR and the 5G core, two foundational technologies for 5G networks. A key takeaway from the 5G Summit is that, despite complexity challenges, incremental progress continues to be made in the development of 5G, and the 3GPP’s Release 16 remains on track to be completed by the end of this year, fulfilling the initial promise of 5G by providing a fully stand-alone system. Release 16 will also address some of the feature limitations in the Release 15 specifications.

The sixth annual 5G Summit, which was hosted by Nokia and New York University Tandon School of Engineering in Brooklyn, provided an overview of what happened in the 5G ecosystem over the past 12 months and delivered a forward-looking view into where companies and academia think the ecosystem is headed, even out to 6G.

TIS market returns to positive growth as key operators accelerate and broaden 5G build-out plans

TIS market returns to growth …

According to Technology Business Research, Inc.’s (TBR) Telecom Infrastructure Services Global Market Forecast 2018-2023, the telecom infrastructure services (TIS) market has returned to a positive growth trajectory through the forecast period after several years of declines, now that the 5G cycle is underway and webscales continue to increase their spend on network technologies to drive their strategic initiatives. Leading operators globally have accelerated their 5G timelines by up to two years, and this has correspondingly pulled forward the TIS market growth curve by two years. 2018 was a key year where leading operators invested to prepare their networks for 5G and, in some cases, began deploying 5G technology. This trend will play out over at least the next five years as operators build out their 5G networks and continue their transformational journeys toward becoming digital service providers.

… but growth rate suppressed by offsetting factors

Offsetting factors that will constrain the rate of TIS market growth include the shift to more efficient network architectures (NFV/SDN and cloud); the decommissioning of legacy infrastructure; the increasing use of network resource pooling, such as network sharing; and operator consolidation.

Graph showing TIS market forecast and growth 2018-2023

Professional services will be the fastest-growing services segment through the forecast period

Increasing technology and business model complexity will drive demand for a broad range of professional services through the forecast period. Leading operators will continue their journeys toward evolving into digital service providers, and this will require the full spectrum of professional services, from consulting to systems integration. Operators will increasingly rely on the vendor community for assistance, requiring expertise, staff augmentation and access to intellectual property, or a combination off all three, as they pursue digital transformation.

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