& cplSiteName &

Telecoms Sideswiped by the Digital Market Transition

Ray Le Maistre
12/8/2016
50%
50%

"The number one reason a company fails is that they don't get market transitions." -- John Chambers, then CEO of Cisco Systems, March 2015.

That quote from Chambers, in his last full media interview before stepping down as the CEO of Cisco, should be etched on every quarterly statement of every company in the communications networking and services sector, because it turns out to have been a very prescient statement. (See CEO Chat With John Chambers, Cisco.)

There is a massive market transition underway, as global industry transforms towards a digital, always-connected, data-driven state. That should represent one of the biggest opportunities ever for the communications networking sector. But companies have failed to transform themselves to take advantage: The transition has begun and the telecoms sector is largely watching it from a distance: Enterprises worldwide have transitioned to cloud and digital operations. But telcos, and many of their key partners, haven't.

Communications service providers and their technology suppliers have missed out by failing to fully embrace the market opportunities:

Service providers: They haven't really become digital service providers and still haven't properly addressed the modern needs of enterprise markets (particularly SMEs). Virtualization plans have mostly stalled and most haven't really got to grips with the role they might play in an IoT world.

Vendors: They have, for the most part, failed to grasp what virtualization truly means for their businesses (revenues are way off). And they've failed to grasp what virtualization means for their customers, from a technology, business relationship and pricing model standpoint. This is why major operators such as Vodafone are still making pleas to the market to deliver what the service providers need and not what the vendors think they ought to have. (See Vodafone: Desperately Seeking Cloud-Centric Tech and NFV/SDN Not Floating Vendor Boats Analysts.)

In addition, despite some talk, the vendors haven't fully addressed the market potential outside of the traditional telecoms/cable/mobile market -- that is, in all the other verticals now dependent on communications and networking for their futures.

And despite great hopes for the transformative impact of virtualization for the entire ecosystem, NFV has failed to live up to expectations, as the results of the most recent Heavy Reading Virtualization Index survey, which is part of the Virtuapedia research project, show. (See Virtualization Confidence Takes Hit in Latest HR Survey.)

Add to all of this increasing competition from beyond the traditional comms sector (from the web-scale giants and IT services firms), constrained budgets, macro economic pressures and political upheaval and get these sorts of headlines:

You also get a consolidation rush as companies attempt to buy their way into a transformation or make desperate bids to bulk up and gain scale in an effort to survive. There have been many such moves this year but here are a few choice headlines:

Of course there are exceptions: NTT DoCoMo, for example, has developed and is driving revenues from a range of digital services and its sales are now rising again after years of decline. There are virtualization pioneers, and some with defined IoT strategies and goals (Orange springs to mind). And there are vendors that have been aggressive in targeting multiple new vertical markets and shifting towards new business models, though for some this is only happening now. (See Nokia: A Global Network Operator for the Enterprise?.)

The market is in something of a slump. It won't last forever, but it'll be painful and some companies won't come out the other side. Those that do, and which come out strongest, will be the ones that quickly shift their mindset, change their culture and "get" this market transition.

Not for the first time, Chambers was right.

Ray Le Maistre, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editor-in-Chief, Light Reading


CALLING ALL CLOUD, NFV AND SDN COMPANIES:
Make sure your company and services are listed free of charge at Virtuapedia, the comprehensive set of searchable databases covering the companies, products, industry organizations and people that are directly involved in defining and shaping the virtualization industry.


(8)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Charliedavis
50%
50%
Charliedavis,
User Rank: Light Beer
4/21/2017 | 6:15:02 AM
Electric griddles
Thanks for share this video. click here for getting more information regarding my business.

 
kq4ym
50%
50%
kq4ym,
User Rank: Light Sabre
12/23/2016 | 3:25:59 PM
Re: Some real innovators out there
That is interesting to see how some are partnering with real estate developments and others going into areas where large scale apartments and business complexes allow for mass scaling relatively quickly. The big guys certainly have had an interesting last few years with all the buying and selling of vertical and horizontal assets but what matters may be seeing the "transition underway, as global industry transforms towards a digital, always-connected, data-driven state," and getting aboard appropriately.
brooks7
50%
50%
brooks7,
User Rank: Light Sabre
12/12/2016 | 10:01:19 AM
Passed by
Ray,

I think the ultimate way to understand how virtualization in the Telco has been made irrelevant from a revenue perspective is to look at Amazon.  They run their business and it is highly virtualized and Telco virtualization essentially does not exist.  Telcos lost this battle years ago, Enterprises don't wait for them to show up with optimized solutions.  Enterprises do what they need.  And there are many that have built entire businesses on setup and teardown of virtual instances and reallocation of computing.  They have done so by using the Internet as a transport and turning bandwidth into a complete commodity.  Go into a major data center and find the dozen+ vendors vying to sell you bandwidth.  This goose is cooked....time to move on to the next one (from a revenue standpoint...cost standpoint maybe different).

seven

 
danjoe
50%
50%
danjoe,
User Rank: Blogger
12/12/2016 | 7:58:58 AM
Re: He who dares wins!
Hi Gabriel

Yes, I knew the Elop reference might strike some as odd given that we now know what happened, but whether he was the direct cause of the demise or just unlucky enough to be at the helm at that time, I will leave up to the historians! The point is that he felt that he had to use the burning platform metaphor just to get people's attention. Still didn't work, which shows the depths of the challenges he was facing! 

Great reply by microcaptechninvestor - we need to hear some of the success stories too, otherwise we won't know what is gaining traction and what is not. 
Gabriel Brown
50%
50%
Gabriel Brown,
User Rank: Light Sabre
12/12/2016 | 7:08:08 AM
Re: He who dares wins!
Elop's famous memo might not be the best reference. What an immense destruction of value he's overseen. Tragic.
microcaptechinvestor
100%
0%
microcaptechinvestor,
User Rank: Lightning
12/9/2016 | 7:25:57 PM
What about small software players winning?
Ray, I hate to inject RADCOM and Radisys into the discussion again here. But it seems like these guys are emerging as early leaders in NFV while large incumbents struggle. RSYS fulfilled $70m DCEngine with Verizon, and RDCM has a $50m multi-year service assurance deal with AT&T.

I'm curious how/why there isn't any coverage of these stories on Light Reading? Clearly incumbents are struggling, that appears to be because CSPs are starting to redirect investment to NFV or will be when budgets open up for 2017.

By the way, RDCM has 9 trials underway with Tier-1 CSPs, four of which are accelerating and there is zero competition! It's a cloud-native service assurance VNF -- both huge issue for CSPs as covered by Light Reading.

RSYS is talking with a dozen or more CSPs, cable operators, etc for its COTS solution, DCEngine.

Can we get some coverage here?? There are some good stories to tell in NFV, just not at the incumbents.

Thanks.

 
danjoe
50%
50%
danjoe,
User Rank: Blogger
12/9/2016 | 7:24:39 PM
He who dares wins!
Thanks Ray Timely article. The trough of disillusionment is firmly established and it is unfortunately implanting itself in both carrier and vendor plans for spending just at the time when when this investment is needed. One is reminded of Stephen Elop's famous "burning platform" metaphor at Nokia in a desperate attempt to bring that organization to its senses to no subsequent avail. Do we really need to paint the burning platform picture for everyone to realize that there is no return? Those who share daringness now and a willingness to learn as you go will be the ultimate winners. Amazon, Facebook and Google all started from nothing to create billion dollar industries while inventing while new ways to design, develop and deliver IT services and with a fraction of the capital and resources available to the Telco industry. The issues of NFV are not technical but psychological.
Alison_ Diana
50%
50%
Alison_ Diana,
User Rank: Light Sabre
12/9/2016 | 4:07:53 PM
Some real innovators out there
As you point out, Ray, there are some real opportunities here and it's really interesting to see some of the partnerships and investments springing up. ISP Frog, for example, is partnering with a real estate development company which is building communities. This development company selects X number of contractors to build housing developments, constructs streets, stores, etc., and Frog won the contract to provide broadband Internet and phone for the entire 7200 acre town in Texas. But it's not just about cable service. The developer - Republic Property - is creating an entire IoT community; that's part of the added value it's bringing. So you have Frog and its partners like Adtran and the construction industry teaming up with local government, retail, etc. A pretty interesting combo.

Apparently Republic Property was behind Lake Nona here in Florida which I've visited. I didn't know about the IoT invesetment when I was there (someone was in hospital and I spent about a week around there), but the traffic light system was incredible - you never waited for a light to change if there were no other cars on the road because the sensor system was impecable! 
More Blogs from Shades of Ray
Time is running out to get your entries in for the industry's most prestigious awards.
The Light Reading group is now much more than the mothership website and the Heavy Reading analyst group -- the family has grown to include the Telecoms.com news site, dedicated communities and wiki-style databases.
I'm prepared for the worst that Barcelona can throw at me.
Ahead of MWC in Barcelona, talk has started to circulate that nuptials may be in line for Cisco and Ericsson.
A new analysis of the cost of taking fiber connections to each home across Europe presents a total cost that just keeps getting smaller – that's great, right?
From The Founder
Either we perform a complete 'factory reset' on the way the telecom industry creates and deploys virtualization, or we face the consequences.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Custom TV
The Urgency of Commercial 5G Services

4|26|17   |     |   (0) comments


The progress of 5G has been closely monitored in the industry. At the 2017 Brooklyn 5G Summit, the sense of urgency for a commercial 5G launch had started to surface among operators.
Women in Comms Introduction Videos
How Diversity Helps Comcast Mirror Its Customer Base

4|26|17   |   2:55   |   (0) comments


Diversity brings innovation, creative ideas and a way to reflect the broad spectrum of your customer base, Comcast Director of Customer Experience Jenelle Champlin says.
LRTV Huawei Video Resource Center
Mobile Operators & Video

4|25|17   |     |   (0) comments


Ovum's Ed Barton discusses the latest mobile operator strategies for mobile video.
LRTV Custom TV
Infinera Introduces Instant Network

4|20|17   |     |   (1) comment


Mike Capuano, vice president of marketing at Infinera, discusses the advancement from Instant Bandwidth to new Instant Network capabilities, which include Bandwidth License Pools, Moveable Licenses and Automated Capacity Engineering (ACE).
Women in Comms Introduction Videos
Vodafone's Eubank on Sponsors, Mentors & Moving On Up

4|19|17   |   4:25   |   (0) comments


Vodafone America's Head of Operations Kimberly Eubank breaks down the difference between a sponsor and a mentor and shares why both made a big difference in her career.
LRTV Custom TV
NYC Auto Show: Are We Smart Yet?

4|18|17   |     |   (0) comments


The auto industry is facing some big transformations as electric vehicles, autonomous technology and connected cars are seen as the future of the industry. During the much-anticipated NY international auto show, there was an emergence of new technology and mobility service on the show floor. Aside from performance, brands like Lincoln, Hyundai, Honda, Mercedes and ...
LRTV Huawei Video Resource Center
The Impact of Video

4|18|17   |     |   (0) comments


David Mercer from Strategy Analytics discusses the impact of video on current strategies.
LRTV Custom TV
Pardeep Kohli Discusses Network Transformation & the Market Opportunity for the 'New' Mavenir Systems

4|13|17   |     |   (0) comments


In a brief discussion at MWC 2017, Heavy Reading analyst Adi Kishore talks to Pardeep Kohli, CEO, Mavenir Systems about the creation of the 'new Mavenir' and some of the key challenges facing operators in today's market. A key theme of the discussion centers around operator need for software-only, virtualized solutions and how they will need to adapt to ...
Women in Comms Introduction Videos
Tech Maverick Shares Her Tips for Gender Inclusivity

4|12|17   |   7:28   |   (0) comments


Wendy Hall Bohling, a corporate escapee, author and gender exclusivity consultant, tells her story of sexism, bias and progress along the road to gender equality in the workforce.
LRTV Huawei Video Resource Center
Huawei at MWC 2017

4|11|17   |     |   (0) comments


At Mobile World Congress 2017, the biggest mobile industry gathering of the year, Huawei showcased its new innovations and solutions with the theme "Open Road," which focuses on cloud, 5G, operation transformation, videos and consumer-oriented products. Its campaign has been recognized by three awards given by GSMA.
LRTV Custom TV
China Telecom NFV Infrastructure on RSD

4|6|17   |     |   (0) comments


Lynn Comp, senior director of market development of Intel, is joined by Chong Zhang, storage engineer at Inspur and Ou Li Yan, architect for technology strategies of China Telecom, for a discussion of what NFV brings.
LRTV Custom TV
Nokia's IMPACT Software Demo

4|6|17   |     |   (0) comments


Khamis Abulgubein of IoT market development at Nokia demonstrates IMPACT (intelligent management platform for all connected things), a software solution with a horizontal approach to managing any device on any application.
Upcoming Live Events
May 15-17, 2017, Austin Convention Center, Austin, TX
May 15, 2017, Brazos Hall - Austin, TX
May 15, 2017, Austin Convention Center - Austin, TX
June 6, 2017, The Joule Hotel, Dallas, TX
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
Surprise! AT&T Markets 4G Advances as '5G Evolution'
Dan Jones, Mobile Editor, 4/25/2017
Did Verizon Outbid AT&T for Straight Path?
Dan Jones, Mobile Editor, 4/25/2017
Netflix Set to Enter China
Mari Silbey, Senior Editor, Cable/Video, 4/25/2017
First Year TIPs the Scale Toward Success
Denise Culver, 4/24/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
One of the nice bits of my job (other than the teeny tiny salary, obviously) is that I get to pick and choose who I interview for this slot on the Light Reading home ...
TEOCO Founder and CEO Atul Jain talks to Light Reading Founder and CEO Steve Saunders about the challenges around cost control and service monetization in the mobile and IoT sectors.
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. Well cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.