In yet another sign that NFV is evolving, ADVA has purchased Overture Networks, one of the six vendors who I believe have the tools needed to make a business case for NFV deployment. ADVA joins optical rival Ciena (who purchased Cyan and its Blue Planet platform for SDN/NFV) in the ranks of network equipment vendors who hope to capitalize on an NFV transition from lab to field trials and deployment. But it’s not clear whether this M&A is really a sign of hope, because it’s not clear that ADVA has any profound NFV strategy.
Overture is a carrier Ethernet company with a long history, but one that never took it to prominence. A small fish in a big pond, they never really made it big in their core carrier Ethernet device market space. In 2013, Overture planned to introduce service automation features in a product family called “Ensemble”, and in the spring of 2013 when I was looking for CloudNFV partners, Overture was one of the first firms to step up. They developed their own NFV solution in 2014, and it was comprehensive both in its ability to orchestrate legacy equipment and to integrate management/operations tools. As a result, they were one of the six firms I said could make an NFV business case.
Overture had great NFV capability but they still seemed a bit mired in that old CE space. They didn’t jump aggressively into positioning their NFV assets, and perhaps as a result of this they didn’t generate an exit strategy for themselves during the hope-and-hype period of NFV. Now, with NFV facing the real challenges of deployment, operators traditionally look for bigger partners. Overture may simply have shot behind the duck in positioning, even with a drop-dead great feature set.
So now, the next act. But what is that? If you look at Overture’s acquisition (for a mere, though rumored, $35 million) in the light of ADVA buying the ability to make the NFV business case, it’s a bargain for sure. But does ADVA want to make that business case? Unlike Ciena, who knew something about NFV, there’s no indication ADVA has much internal knowledge of the topic of NFV. Thus, it’s far from clear that ADVA expects to fully exploit their new Overture assets, which for a time were the most functionally complete implementation of NFV that anyone had.
Here’s a pullquote from the release page on their website: “ADVA Optical Networking can now deliver CE-based cloud services in a hybrid or NFV-pure-play environment – something nobody else in the industry can offer.” That’s an undershoot; the very same undershoot that characterized Overture’s own positioning. Overture can make an NFV business case—one of six who can. If you look at NFV as being only carrier-Ethernet-cloud, you’re restricting the application of NFV so severely that being able to make a full business case is a doubtful value.
The press release and company comments so far lead me to think that the Overture acquisition was more likely stimulated by Ciena’s NFV moves than by any specific NFV commitment by ADVA. Ciena apparently decided about a year ago that they needed to play in the NFV game, and their first effort was to develop a “Ciena-hosts-for-a-slice-of-the-business” approach. They’d establish a pay-as-you-earn program with partners and offer it in hosted form to operators. It didn’t work and at the time I said I didn’t think it would—for two reasons.
Reason one is that VNF providers really don’t want somebody like Ciena controlling their deals. Many VNF providers want to differentiate themselves by offering operators a use-license rather than an unrestricted license at a higher cost. Ciena disintermediates them. But reason two is the big problem; operators don’t want VNFs on a use-license or revenue-share basis. Some would accept that for a time to ease the early cost of NFV services, but very few like it as a longer-term model.
Ciena didn’t give up on NFV, and went on to buy Cyan. They’ve taken the latter’s Blue Planet and built a Ciena NFV strategy around it, augmenting the product in features/development and even more in marketing/positioning. And for ADVA? So let me see; my major competitor is making a name for themselves in NFV and I’m sitting on my hands? What’s wrong with this picture if you’re ADVA?
Ciena has to see this announcement as a real softball. Overture couldn’t functionally match the long-term results of Ciena’s Blue Planet development program, but it would certainly be able to get to the same places in time and it might have a better near-term feature set. If ADVA came out swinging on this, with very aggressive development and positioning, they could be a threat to Ciena’s plans. But every day that goes by without any profound NFV statements from ADVA is an opportunity for Ciena to ask customers, analysts, and media whether ADVA is as serious about NFV (and even SDN) as Ciena is.
This is the challenge of interpreting this deal in a nutshell. Ciena brought its Cyan deal out with aggressive positioning and a strong development promise. ADVA has yet to say anything Overture couldn’t have said before the deal; in fact they’re saying much the same thing. If ADVA intends to exploit Overture aggressively they could raise the level of full-business-case NFV competition. If they have no such intentions they may well simply be taking one of the full-business-case players off the table. Better then that someone with NFV intentions had picked Overture up.
All too much NFV positioning today is based on factors that can’t drive real success for NFV or for the vendors involved. The firms who can make the business case are still largely bogged down in PoCs and trials that lack (by the trial sponsors’ and even participants’ own admission) any operations/management integration. Suppose two full-business-case NFV players went at each other on making the full business case? That would be the hope for this deal, but I can’t point to any comment from ADVA that makes me hopeful.
There’s going to be a shift in NFV in 2016, either positive or negative. I’d sure like to see a signal that ADVA was going to contribute to the positive possibilities, and I’ll let you know if I do.