The "core" of a mobile network essentially acts as its brain, handling critical processes like traffic management, subscriber authentication and data routing. In the 4G era, massive, established vendors like Huawei, Ericsson and Cisco dominated this space with products that tied together hardware and software elements.

In the 5G era, that's all beginning to change.

"Non-traditional telco vendors [are gaining] entry via the 5G core," wrote analyst Chris Nicoll at Omdia, a sister company to Light Reading, in a recent report. "Casa Systems, HPE, Mavenir, Microsoft/Affirmed and others join dominant core suppliers Cisco, Ericsson, Huawei, Nokia, Samsung and ZTE. Many of these new entrants are targeting smaller enterprise deployments."

Standalone 5G technology – based on a standard finalized last year that does not require a 4G anchor network – is a big part of this shift, according to Casa Systems founder and CEO Jerry Guo.

"That changes the whole game," he told Light Reading.

New names, new faces

Guo said that Casa, a longtime vendor in the cable industry, entered the mobile market roughly six years ago with 4G core network products and small cells. But he said it's the transition to 5G that's really starting to shake things loose.

"That's really the opportunity for disruptors like us to take market share," he said.

Casa reported in November that revenues driven by its wireless efforts for the first time eclipsed those from its cable business.

Casa is one of several new vendors in the core market. Dell'Oro analyst Dave Bolan said today's 5G core vendors range from massive providers like Cisco and Ericsson to smaller, newer vendors like Athonet and Parallel Wireless.

Mavenir is clearly the poster child for this group of upstarts, considering it became one of the world's five largest providers of mobile core network technology – for both 4G and 5G – last year. Bolan estimated Mavenir commands between 5% and 10% of the market, whereas Huawei continues to lead the market with between 30% and 35% share.

There's a good chance that smaller core vendors currently playing in the 4G sector could also migrate to 5G in the coming months and years. Bolan listed a wide range of vendors in that category including Baicells, Ethernity Networks, ExteNet Systems, Fujitsu, NEC, Radisys, Tecore Networks and Telrad.

Enterprises eye private wireless networks

Casa's Guo said the company is primarily seeing interest in its core network products from network operators with both fixed and mobile operations. However, he pointed to a potentially bigger opportunity for Casa in the private wireless networking market.

"We consider that a very significant part of the opportunity," he said.

Bolan, of Dell'Oro, agreed. He pointed to figures from Nokia showing that the global private wireless networking opportunity might ultimately double that of the standard, commercial wireless market. The private wireless networking market spans sectors ranging from manufacturing to hospitals to utilities to mining operations, and it allows enterprises to build their own wireless networks for their own internal uses.

According to Bolan, the enterprise market for private 5G core technology could potentially be more forgiving to new entrants, considering vendors don't necessarily need to build products to support millions of mobile customers. Instead, a "compact core" may work for many enterprise deployments.

That may be part of what has driven Microsoft – perhaps the most well-known supplier of technology to enterprises globally – into the 5G core space. The company acquired Affirmed Networks and Metaswitch Networks last year in its efforts to bulk up its telecom networking prowess. The company is now leveraging those acquisitions to sell core, edge and cloud computing services to both enterprises and network service providers.

"The advent of 5G technology offers network operators unprecedented opportunities to expand their scale and range of services to enterprise customers in particular," argued Microsoft's Yousef Khalidi, VP of Azure Networking and a leader in the company's telecom efforts, in a new post touting Microsoft's "Azure for Operators" product.

From hardware to software

Another big factor driving Microsoft and other upstarts into the 5G core market is the industry's overall embrace of specialized, virtualized software running on off-the-shelf hardware.

"The virtualization of the mobile core is well underway," Omdia's Nicoll wrote. Indeed, he noted that 40% of traditional cores' cost in the 4G era was due to the hardware involved. Dell'Oro, for its part, predicted that the mobile core market would be 100% dominated by network functions virtualization (NFV) software by 2025.

Nicoll explained that could ultimately depress core revenues as the market shifts from hardware to software. He predicts that the market's overall size could shrink from around $2.5 billion in 2021 to less than $2 billion in 2024 because of diminishing 4G core revenues and the all-software nature of 5G cores.

Partly as a result, the 5G core market is developing in a markedly different fashion. Nicoll wrote that the sector would be driven by applications rather than the bandwidth or connection concerns that drove the 4G core market.

Business models and complexities

Vendors are responding to this development with a variety of business models, Nicoll explained. Some offer to charge for their products based on the number of subscribers who connect to the core, while others are charging by the amount of data transmitted. Others still are offering their products for a one-time or ongoing fee.

"The adoption of different software licensing options has been reported by some operators as causing concerns including the difficulty in establishing budgeting requirements, shifting of capex to opex, and the resulting potential accounting impacts," Nicoll wrote. "The complexity of the pricing/administration models is driving some operators to create an internal function to manage the complexity of administering the myriad of network software licenses."

"It's hard to get your head around it. It's so complex," Bolan agreed.

So does the transition to 5G spell doom for the established core heavyweights of the 4G era, like Huawei and Cisco? Probably not, Bolan said.

"If any of these little guys start taking off, the big guys can buy them," he explained, predicting that new market entrants probably won't gain more than a 10% share.

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— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano