A Review of NFV Vendors

I think that 2016 is a critical year for NFV because this is the year that real deployment models have to be proven out if they’re to impact 2017 costs and revenues.  That fact also makes it a critical year for vendors, and so this is a good time to take a look at where vendors are and what they have to do to optimize their place in an NFV future.

Alcatel-Lucent/Nokia has a strong position going into 2016 because it’s one of the vendors who have sufficient product scope to make a complete operations-to-equipment business case.  The only challenge that the new combined company has is that it is a combined company.  The merger has focused Nokia even more on mobile broadband services, which means that its NFV strategy almost certainly has to win there.

The big question for Nokia is whether it can look beyond connectivity for NFV and for IoT in particular.  It’s one thing to do mobile infrastructure better, but another to do NFV on a broad scale or impact revenues as well as costs.  IoT is an example of something that can be looked at (as most look at it today) as simply a 4/5G connectivity problem with some IPv6 thrown in, or as an example of adding cloud features to services.  Nokia has to do the latter, because if anyone else does that better than they do, then Nokia’s whole NFV approach is at risk, including mobile broadband.

HPE is another vendor who can make the complete NFV business case, and I think they have the strongest service modeling approach—certainly the best-documented one.  Their biggest asset is that they can attack any NFV opportunity equally—they are not type-cast into a specific NFV mission.  That makes it hard for competitors to shunt them into a backwater of positioning.

It also means that HPE doesn’t have a real linchpin to revolve their marketing around.  I think that the company has focused too much on the ETSI process, and in particular the PoCs.  Because HPE doesn’t really offer a good story on how NFV evolves, this ETSI-centricity tends to link them to the theme of the PoCs (which, remember, come from a bunch of vendors).  Right now, that theme is vCPE, and vCPE is actually perhaps the worst NFV application in terms of driving server deployments.  HPE sells servers, and they need to sell them through NFV positioning if they’re going to win.

Dell is a sort-of-competitor to HPE, and I qualify that because Dell does not have the ability to make an NFV business case with their own offerings.  Their currently-in-progress EMC/VMware acquisition puts them in a funny position because the bulk of NFV has been directed at OpenStack and VMware is a competing technology.  Until Dell positions VMware there’s little it could hope to do with NFV, and it may take some time for Dell to accomplish that.  Meanwhile they have to figure out how to sell servers, just like HPE does.

Red Hat is also a sort-of-competitor to HPE, but with a more complicated set of issues.  They do not sell servers, they sell support-inclusive licenses to open-source software.  That has always driven Red Hat to try to insure that their successes pull through additional software licenses, which makes it hard for them to embrace a fully open framework for something like NFV.  Could an NFV solution have to deploy machine images based on many other operating systems than Red Hat’s?  Sure could.  But right now they really don’t have the ability to make the NFV business case on their own, which makes it much harder to create that initial value island that would pull through other Red Hat licenses in an NFV data center.

Oracle is one of the six vendors who can make the NFV business case, but they may be the only one who doesn’t have a clear major financial win coming out of a business-case success.  Oracle sells servers, but they’re unlikely to be a power player in server deployments.  There aren’t any signs that they are trying to do that, in fact.  Since operators really want an open NFV strategy, can Oracle find stuff to sell if they successfully drive an NFV deployment, or will they end up making somebody else rich?  That’s a question that we can expect to have answered in the next six months, I think.

Ericsson is a kind of NFV maverick.  They have one of the strongest operations systems product suites on the market, and they have impeccable professional services capability.  They don’t have much in the way of infrastructure products at this point, and many operators believe that Ericsson thinks they’ll make money on NFV primarily through integration and not product sales.  The wild card is their alliance with Cisco, who those same operators feel is more an obstruction in the path of SDN and NFV than a supporter of either.  Since Cisco is focusing on making current devices “software-defined” or controlled, it is very possible Ericsson and Cisco could find common ground in the service-to-infrastructure boundary, which might be very appealing to operators looking to migrate from router-centric installed bases.

ADVA and Ciena are both interesting because both of them could make a complete NFV business case and both are obviously committed to optical networking.  If you model all the possible ways that NFV could transform infrastructure, the one that deploys the most servers is where SDN first creates virtual-wire grooming of transport paths that are then augmented by virtual switch/router instances deployed by NFV.  Both ADVA and Ciena could do this, but so far it’s been Ciena who has been working to position itself in the space.  The challenge here is that this sort of transformation goes right to the heart of current service practices and may scare operators off.  There’s a lot of marketing work to be done, particularly by ADVA whose only aspirations with its NFV buy of Overture seems to be extending vCPE to carrier Ethernet.

Huawei is the wildest of wild cards in this game.  While they’re known primarily as a price leader in network equipment, Huawei has been incredibly active in NFV and SDN and has recently started to build what might well be the most insightful and powerful open-source team in the industry.  Their big problem has been the effective ban on their network gear for US operators.  However, Sprint has been winking at that issue and there are hints that it might be up for review in the next administration.  If Huawei can sell here in the US it would put incredible pressure on Nokia, Ericsson, Cisco, and Juniper.  Even if they can’t reverse their US ban, they are making great strides in Europe.  Their big problem remains marketing/positioning, and if they fixed that then they could influence even US operator strategy.  An open-source win in NFV, for example, could undermine everyone else.

My final vendor is one you don’t always think of in NFV terms—Intel.  There’s nobody out there that has more to gain from optimal deployment of NFV.  Imagine a hundred thousand new data centers, all filled with servers running Intel chips.  NFV could more than double Intel’s profits if it worked.  And Intel’s Wind River group could fill the functional gap, give operators top-down NFV, open-source technology, everything they want.  But if they do that they step on every other NFV vendor, some of whom are already major conduits for Intel sales.  Somehow, perhaps through positioning support for things like a rational cloud-intensive IoT model, Intel has to promote data center NFV deployment or it runs the risk of being the biggest loser.

The first test of all of this will be the announcement of the Telefonica integrator contract award, now long past its expected late January date.  Rumor has it that three of the vendors I’ve named above are on the short list for that, and whoever gets named will gain a lot of experience in NFV integration and perhaps have a chance to build a broad benefit model and business case.  It will also be enlightening to see what Telefonica tries to do.  A business-case-driven and practical approach to NFV would advance the chances that other operators will take a similar position and move up the chances of a big NFV success in trials this year, which would set the stage for deployment at scale in 2017.