How the “Trial-Silo” NFV Strategy of Operators for 2016 Impacts Vendors

NFV trials are not exercises involving the same set of players, or reflecting the same issues or service goals.  I noted in a blog earlier this week that operators had decided (often by default) that they would pursue evolving PoCs toward services even though it would likely result in silos based on the large difference in players and focuses.  That dynamic could change the fortunes of some of the notable NFV players, and so I want to take a look at them.

First, as I’d noted, an uncoupled vision of NFV evolution would favor OSS/BSS vendors like Amdocs and Ericsson, who can couple silos together above the NFV level.  Neither of these two were “full service” NFV players, but the evolution of operator planning would validate their above-the-fray stance.  The problem for this group of players is that it’s a weak position to sell.  Do operators know, or want to admit, that their NFV trials aren’t likely to promote a common strategy?  Do you, as a vendor, want to cram that truth down their throat?

Pure-play OSS companies like Amdocs seem to understand that their best approach is to focus not specifically on silo integration but rather on operations efficiency and service agility.  Most NFV stories are way beyond being “weak” in reaping these benefits, yet they’re the ones operators say have to drive deployment of NFV in the long run.

Ericsson, on the other hand, is already the most-accepted integrator of the carrier space.  They see the disorder developing and know that eventually all NFV trials will have to converge on common operations and management practices or neither agility nor efficiency will be attained.  They know how to do it, not necessarily in an optimum way but certainly in a profitable way, so they can simply let things play out.

Some of the six vendors who can really do NFV (Alcatel-Lucent, Ciena, HPE, Huawei, Oracle, and Overture) have also taken positions (deliberately or by default) that the new silo model favors.  Huawei wins if NFV fails completely, because price concessions are the only other answer to the narrowing carrier profit margins that become critical in 2017.  Overture has always promoted a service-specific (Carrier Ethernet, MSP, and vCPE) vision of NFV but its technology could be used to spread a unifying ops layer down the line.  Oracle has taken an ops-centric position from the first, so if operations integration wins they get an automatic boost.

For the other vendors on the list, it’s more complicated, so let’s look at them in alphabetical order.

Alcatel-Lucent probably knows that its best approach is to accept silos because it could have the biggest one.  Mobile services and content delivery will be where most operator profit and cost focus will fall, because they’re the largest opportunity and largest capex target already.  Alcatel-Lucent can afford to lay back in other areas because they realize that on scale of deployment alone, they’d win.  It would be easier and cheaper to fit something like vCPE into an NFV infrastructure justified and deployed based on mobile/content than the other way around.

Ciena has an extremely interesting opportunity arising from the trial-diversity-and-silo-creating strategies of operators.  They are the only vendor of the six who have actively embraced silo consolidation and federation as capabilities.  You could put in Blue Planet above other NFV silo implementations of services and use it to harmonize management and operations, and Ciena says so.  That latter point is important because operators tell me they want to exercise vendor capabilities that the vendors own up to in public, not those that are pronounced in whispers in smoke-filled rooms.  Since Ciena also has an optics-up SDN/NFV story, that gives Ciena two shots at achieving a compelling NFV position.

HP (now HPE) has the strongest technical solution to NFV, but they’ve focused on a PoC-and-trial process that doesn’t let them demonstrate their scope effectively.  They may see the trial-and-PoC silo approach as a validation of their own strategy of standing tall in PoCs even if the PoCs don’t make a business case.  I know enough about their modeling and orchestration capability to know they could almost certainly orchestrate across diverse silo implementations, but they have not made that capability a fixture of their positioning.  That means they are at risk to being confined by their sales efforts into a mission far less capable and important than their software technology could obtain.  But marketing assertions have little inertia; all HP has to do to fix their problems is assemble a nice orchestra and sing their hearts out.

The big question, one raised yet again by the Light Reading interoperability test, is whether silo NFV can make enough of a business case even when confined to sweet-spot services.  How long will a service trial for a single service take before operators can say it will pay back?  Answer: We don’t know, nor do the operators.  Some, particularly if you talk to the CFOs, aren’t sure that any silo service will pay back and aren’t sure that anything can unite the silos.

Operators didn’t make a proactive decision to pick at NFV opportunity scraps, they were offered no alternative.  None of the vendors who could tell a full story were willing to do that, probably because such a story would have been complicated to sell both in objective business case terms and in terms of operator political engagement.  At this point, based on what operators have told me about their fall planning results, I think it’s too late to make a broad case for NFV.  A trial process comprehensive enough to do that could not now be initiated and completed in 2016.

It’s probably also too late for a new camel to stick its nose in.  I noted in a prior blog that IoT was potentially the killer carrier for NFV, and interestingly companies like GE Digital have already launched cloud-IoT services that to me clearly demonstrate NFV’s value to the “right” IoT story.  But again, IoT is complicated and operators have gotten off on the wrong track (as Verizon did), misled by opportunism.  I don’t think that IoT/NFV trials would make even as much progress in 2016 as a full-solution operations-driven NFV trial would.

In the midst of this, OPNFV says it’s ready to take on MANO and Light Reading says the same, for its next phase of testing.  Too late.  You can’t really test the underlayment of something without knowing its higher-level requirements.  The ISG, to define a proper operations/management framework, would have to obsolete much of the work it’s already done.  OPNFV has to have something to implement from, and anything they do right at the MANO level will expose limitations in their NFVI and VIM models.  So we are not going to get a unifying standard in time to drive market consensus.

Which takes us back to the silos.  Operators at this point will continue with their PoCs and trials because they have no other options that will mature in time.  Even though these trials will create silos, they are committed to hope these can be somehow unified.  That hope is now the opportunity for every NFV vendor to position for.