In telecom, when there is a disruption to an established market it is often the case that the perturbation is quite dramatic to start with, but, over time, things settle down. The biggest vendors are still the biggest vendors, their customers are still buying from them and the structure of the supply side looks the same -- though some of the names of the mid-tier and smallest vendors have changed.
It's too early to say for certain that this will happen as NFV shakes the telecom IT/OSS/BSS market, but early signs are that the same pattern may be followed. One thing that prompted our latest pair of SPIT Insiders was Cisco Systems Inc. (Nasdaq: CSCO)'s acquisition of Tail-f, a small vendor with a product that fulfills the NFV orchestrator role that telcos are seeking. We were interested in what Tail-f had, and whether other small vendors had something similar. One of the companies we found as we began our research was NetSocket.
Based in Texas, NetSocket specialized in SDN and automated application delivery, and its vNetCommander product provided orchestration, management and delivery of applications running on virtualized infrastructure at the network edge -- something that products from Brocade Communications Systems Inc. (Nasdaq: BRCD), Overture Networks Inc. , Extreme Networks Inc. (Nasdaq: EXTR) and several others have also developed. NetSocket has been building an ecosystem partnership of vApps developers, offering its solution as a platform for the delivery of managed services for business customers. In other words, it is doing exactly what its peers are doing, at a time when there is huge attention being paid to this area of telecom technology. Yet we couldn't include NetSocket in our reports because at the time of our research, we were not at all sure that it was still in business. In fact, in March 2015, the NFV assets of the company were acquired by iPhotonix. (See Netsocket's NFV Assets Salvaged by FTTH Vendor .)
NetSocket's fate illustrates the difficulty of breaking into a telecom IT world dominated for many years by a few very large vendors, including the network equipment providers, who have come to dominate more of the value in the network as a whole. And in the emerging NFV orchestration space, it's tough for a small vendor with a niche product to get its foot in the door with potential customers, turn itself into a platform, adhere to emerging standards and build an ecosystem -- all things that it will have to do if it wants to succeed.
So what will the service provider world look like when the NFV dust settles? My view is that it will look substantially the same as it does now, but with a few changes around the edges and some OSS vendors losing ground. Change in this part of the telecom world is slow enough for many big vendors to adapt, to rearchitect their solutions if necessary, to get the marketing guys to reposition what the products are and, above all, to develop new solutions alongside their existing customers, as a "strategic partnership" with both parties finding their way together.
Tier 2 vendors with narrower portfolios, or those moving into the orchestration/IT space from a network appliance heritage may not be in this position: Along with the smaller and startup vendors, they need to explain very clearly -- and very soon -- what the future looks like, and convince operators to follow them. Some are doing this, and they will succeed.
The latest Heavy Reading Service Provider IT Insider, "Orchestration for NFV: Specialists Carve Out a Niche," examines how smaller and specialist vendors of network equipment and OSS/BSS are approaching the challenge of delivering solutions for NFV orchestration. It looks at the work that is being done to advance the technical and commercial cases for NFV among operators, and where smaller and specialist vendors fit in; it suggests how these vendors should compete against the network equipment providers and larger OSS/BSS players, and profiles eight leading specialist vendors.
— Danny Dicks, Contributing Analyst, Heavy Reading Service Provider IT Insider
Orchestration for NFV: Specialists Carve Out a Niche, a 19-page report in PDF format, is available as part of an annual subscription (six issues) to Heavy Reading Service Provider IT Insider, priced at $1,499. Individual reports are available for $595. To subscribe, please visit: www.heavyreading.com/servsoftware.