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Vodafone Meets IBM: 5G Dream Team or Culture Clash?Vodafone Meets IBM: 5G Dream Team or Culture Clash?

The telco and the IT giant could either give the 5G market a huge boost or demonstrate that partnerships between industry titans are not a good idea.

Iain Morris

January 24, 2019

7 Min Read
Vodafone Meets IBM: 5G Dream Team or Culture Clash?

Late last year, South Korea's SK Telecom (SKT) offered a possible glimpse of the 5G future in the industrial world. At an automotive factory in the country, cameras installed near conveyor belts were snapping super-high-resolution photos of car parts. The images were then sent over a 5G connection to the cloud, where artificially intelligent computers would scan them for defects. (See South Korea's 5G Lead May Bring Industrial Advantage.)

Such applications of 5G hold far more economic promise than super-charging a mobile-phone connection does. But if 5G is to flourish in this industrial setting, it will require more than just a new radio technology. Data centers will be needed to harvest and process a mountain of information. The applications that give 5G its industrial raison d'être may demand huge investments in artificial intelligence.

Step up Vodafone Group plc (NYSE: VOD) and IBM Corp. (NYSE: IBM). At its most aspirational, the partnership the telco recently announced with the US IT giant is all about combining network and IT capabilities to support a new wave of industrial applications. Watson, IBM's artificial intelligence, could search for glitches in an SKT-like example. IBM's data center technologies could store and process information much closer to the factory premises than was previously possible. That, in turn, could help to reduce the signaling delay on Vodafone's 5G network, allowing connected robots to function smoothly. (See IBM, Vodafone Strike $550M Cloud Deal.)

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This all potentially lies in the future, says Bill Lambertson, IBM's director of cloud industry solutions. "Vodafone recognizes that enterprise clients will want to leverage 5G and deploy workloads and applications closest to the data sources," he explains. "Some things can be delivered with existing technologies, but some will have additional benefits as 5G is rolled out."

So far, the telecom industry has done a bum job of coming up with viable 5G applications outside the usual smartphone-obsessed consumer market. IBM and Vodafone are hoping to change that. A next step for the companies will be to work on developing both industry-specific and more broadly applicable technology services. These would combine 5G and other network technologies with best-of-breed cloud services, according to Lambertson. "Watson, IBM Cloud and Blockchain from IBM may all be a part of that, but it would also use technology from Microsoft Azure, Alibaba and Amazon Web Services," he says, referencing several of the world's hyperscale cloud companies. (See 5G Stuck in Slow Lane Beyond Consumer Biz.)

Want to know more about 5G? Check out our dedicated 5G content channel here on
Light Reading. Under a strategy disclosed to Light Reading, IBM and Vodafone now plan to collaborate with a set of "lighthouse customers," or early adopters, on identifying possible services and figuring out if these can be scaled. Those efforts will entail a full assessment of the connectivity and cloud requirements in each case. "The network and the cloud really have to work together on performance monitoring to understand the behavior of applications and their impact," says Lambertson. "That's getting harder for customers as they use resources from many different entities." In the meantime, IBM has been trying to address some of the challenges involved in running IT applications at the "edge" of the network, much closer to the end user. In October, it took the wraps off a new platform it calls the Multicloud Manager, which is based on Kubernetes, an open source cloud technology, and designed to support applications in multiple cloud environments. "Enterprise clients can now develop cloud-native applications using a standard set of tools and deploy those applications anywhere -- in public and private clouds and at the edge," says Lambertson. Previously, running applications across these different environments would have thrown up various security and operational hurdles, according to IBM. (See Is IBM Late to the Multicloud Party?) Next page: Multicloud skills Multicloud skills
"Multicloud" is one of the main buzzwords that IBM has subsequently attached to its Vodafone tie-up. While the UK-headquartered operator already had a sizeable cloud and hosting business, with 800,000 square meters of data center space, it lacked the expertise to manage it and grow during a period when customers are dipping into services from numerous providers. "They've had skills challenges in helping European customers move to Alibaba quickly, for example," says Lambertson. "This partnership gives them access to IBM's professional services and industry skills, so they can make it easier for customers to move." At its most basic level, then, the partnership is an outsourcing agreement under which IBM will help Vodafone to manage its data centers. For that, Vodafone is paying IBM a tidy $550 million. It will also transfer some employees to IBM, says Lambertson, without disclosing details. Light Reading asked Vodafone for an indication of numbers but had not received information by the time this story was published. Besides being able to cut its operating costs, Vodafone will gain access to IBM's data center footprint in areas where it has lacked a presence. At the latest reckoning, that meant about 60 data centers in 19 countries. The expansion into each other's footprint should allow both companies to extend cloud-based service offerings. "Vodafone has been offering privately hosted cloud services based on VMware and we have a significant VMware offering based on IBM Cloud that is consistent with Vodafone's," says Lambertson. "We will be able to extend VMware around the world where IBM has public cloud facilities and into the private cloud if customers choose to have it on premises." IBM must have looked even more attractive to Vodafone after announcing its $34 billion takeover of Red Hat Inc. (NYSE: RHT) last October. While some commentators have voiced concern about a clash of the IBM and Red Hat cultures, the open source cloud specialist has been at the forefront of the latest telco cloud developments, including containerization, edge-computing architectures and cloud-native functionality. "Vodafone expressed to us that our announcement of the Red Hat takeover was viewed favorably by them and was a demonstration of IBM's multicloud capabilities," says Lambertson. (See How Red Hat Could Give IBM's Telco Strategy a New Lease of Life .) Banging heads
The hardest task for IBM and Vodafone will be on the development of new services. As in the case of IBM and Red Hat, the collaboration risks a damaging clash of different cultures. Keen to avoid any delays, IBM and Vodafone have steered clear of forming a legally distinct joint venture. Yet employees from each firm will sit together in a separate organization led by IBM's Michael Valoochi and Vodafone's Greg Hyttenrauch. "We will have a separate facility and it may be offsite from Vodafone and IBM," says Lambertson. The companies are to share revenues they generate from the sale of new services, but the details of the split are -- unsurprisingly -- not being made public. In the telecom sector, the example of Cisco Systems Inc. (Nasdaq: CSCO) and Ericsson AB (Nasdaq: ERIC), whose vaunted tie-up in 2015 has been a dismal failure, illustrates the pitfalls for any partnership between industry giants. Who takes the initiative in developing new products, and dealing with customers, is one issue that IBM and Vodafone may need to resolve. Whether the apparent lack of a single brand identity hinders the new venture is a further concern. (See Cisco Lands One on Ericsson With Open vRAN Initiative.) The IT giant and the telco are at least approaching this opportunity from very different backgrounds, and without too much overlap between their core capabilities. Both need a growth story to sell to investors, and one built around 5G and the cloud -- with all the attendant hype -- is bound to attract interest. If they can make their partnership more than just an outsourcing deal, it could point the way toward a new model of network-and-cloud collaboration. Lambertson already seems to have an eye on a bigger prize. "We're committed to the success of this venture with Vodafone, but it is not exclusive for either party," he says. — Iain Morris, International Editor, Light Reading

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About the Author(s)

Iain Morris

International Editor

Iain Morris joined Light Reading as News Editor at the start of 2015 -- and we mean, right at the start. His friends and family were still singing Auld Lang Syne as Iain started sourcing New Year's Eve UK mobile network congestion statistics. Prior to boosting Light Reading's UK-based editorial team numbers (he is based in London, south of the river), Iain was a successful freelance writer and editor who had been covering the telecoms sector for the past 15 years. His work has appeared in publications including The Economist (classy!) and The Observer, besides a variety of trade and business journals. He was previously the lead telecoms analyst for the Economist Intelligence Unit, and before that worked as a features editor at Telecommunications magazine. Iain started out in telecoms as an editor at consulting and market-research company Analysys (now Analysys Mason).

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