If network operators want their vendors to embrace software, stories in SDxCentral and Light Reading hint that Nokia may be thinking of doing just that. Details on the notion are incredibly scarce, so we’re left not only to ask the usual question “Is this the right approach?” but also the question “What is the approach?”
All the fuss comes from a single sentence in a Nokia release on its Capital Markets Day discussions. What they said was that one goal was to “Move beyond our current product-attached software model and create a software business with the margin profile of large software companies, focused on areas including enterprise software and IoT platforms.” So, to the question: Is this “software business” a business unit, a spin-off, or what? And, “What does “software model” mean?
Clearly, a software model not the “current product-attached software model”, by which Nokia means the practice of tying software that’s associated with equipment in some way into the equipment business unit. Many vendors have found that this approach tended to subordinate software advances to hardware sales, and also offered such a limited career path for software professionals that it was hard to get the right people, particularly in leadership roles.
The product attachment issue probably got especially acute when Nokia acquired Alcatel-Lucent. That company was almost legendary for its product silos and isolationist policies, many of which held over from the original Alcatel and Lucent merger. It was never really resolved after that first M&A, and that at least complicates achieving the “software business” goal.
As it happens, Alcatel-Lucent actually has an “independent software business” in Nuage, its SDN property. I’ve made it clear in a number of my blogs that Nuage is my pick for the top prize in the SDN and virtual network space. Despite this, it never got the kind of support from corporate that it should have, and many operators believed that this was to protect the router business, headed by the powerful executive Basil Alwan. The point is that just making something a business unit, even an independent one carrying its own brand, doesn’t guarantee its independence.
There’s also the question of the Ericsson example. I suggested in an earlier blog that Ericsson probably had abandoned a hardware-centric model too soon, and tied itself to a model of network evolution that was still too radical to be immediately successful. If that’s true for Ericsson, it certainly could pose a threat to Nokia’s software-business approach, whatever it turns out to be.
The big question for Nokia, then, is what software-centricity does turn out to mean. They can grab the software out of the product units, but they then have to do something specific with it. There has to be some new and specific focus to all that product-centric stuff or all you do is disconnect the old connections if you break it out. Having it as an independent business unit would essentially replicate the Nuage model, and I think it’s clear that Nuage didn’t really have the independence and senior management support it needed. Having the software business actually spin out as a separate company could create shareholder value but poses the risk of having two parts that need each other and don’t have a clear path to symbiosis.
Nuage may be the functional key to what Nokia should do in terms of planning a unified software strategy, whatever the relationship between the software unit and the rest of the company. In Nuage, Nokia has an outstanding virtual network model, a model into which you could fit SDN services, NFV, services, cloud services, and legacy infrastructure. If Nuage is the universal constant, then it would make sense to build an architecture positioning around it and fit other software (and even hardware) products into the architecture.
If virtualization is the future, then you have to start by virtualizing the network. That means creating a model of networking that’s as infrastructure-independent as you can make it. It’s fairly easy to do that with an overlay-SDN approach like Nuage has. You can then apply virtual network services directly as NaaS or even as SD-WAN (which Nokia is already doing), and you can also apply them to the cloud and to cloud-centric missions like NFV’s function deployment and connection. Nuage could have enriched Alcatel-Lucent’s NFV strategy, which was pretty good in any case, and it could enhance Nokia’s too.
The big benefit of a virtual-network approach is its ability to abstract resources, including legacy equipment. The traditional SDN model has been “fork-lift-and-install” where the virtual-network approach lets you “abstract-and-adapt”. You can create a unified model of networking and adapt the real-product element relationships as far as hardware-level virtualization and the cloud can take you. Overlay SDN works fine over Ethernet or IP, and also fine over OpenFlow-forwarded virtual wires.
The fact that you can base SD-WAN service, which is probably the most logical way to deliver NaaS, on overlay SDN and Nuage is to me a proof point for its value. It lets you deliver a service to users while at the same time exploring the questions of the relationship between virtual-overlay and underlay technology. It also lets you explore the relationship between virtual networks and the carrier cloud, which could consume those virtual networks either to deliver services or to connect its own elements—or both, of course.
The cloud is the key to all of this, in my view. Any operator software will end up running in it. All virtual functions and application elements will be hosted there. But first and foremost, the cloud is green field. It’s far easier to apply virtualization where you aren’t displacing something else. If operators were convinced that the Nuage model was the right approach for cloud networking, and if they also believed it could create an infrastructure-independent abstraction of connection infrastructure, they would have a single path forward to the networking model of the future.
Everything isn’t all beer and roses just because you build a virtual network, of course. All of the challenges of virtualization in the areas of operations and management remain. What a virtual network does is create a connection abstraction in a consistent way, which opens the door to using an expanded form of that abstraction (a “service model”) to bind the virtual and the real and to integrate it with OSS/BSS/NMS and onward to the service users.
Ultimately that has to be the goal of Nokia’s software business. Just finding a home for open-source or DevOps initiatives, as a Nokia person suggested in one of the articles, isn’t a real strategy. You have to find a role for all this stuff, a way to create one or more deployable ecosystems. And we know from Broadway that you have to understand what the play is so you can organize the players. Figuring that out will be Nokia’s challenge.
Competitors’ challenge, too. Other vendors have played with software-centric visions, including Nokia competitors Cisco and Juniper. The initiatives haven’t really moved the ball much for either company, in no small part because they haven’t figured out the answer to that first problem I mentioned—the box business generates a lot of revenue that the software business doesn’t. Software-centricity also frames another problem, a dimension of the Ericsson problem. Software is moving increasingly to open-source, which means it’s a commodity and isn’t differentiating. What then is the software business? If it’s professional services, then Nokia and every company who want software-centricity is surely heading into uncharted territory.