The NFV Torch Has Passed, Forever, to Open Source

Look at the quarterly reports from both vendors and operators and you see all the signs that the traditional model of telco and Internet services is slipping.  This, after more than a decade of supposed progress on technologies that would change that, most recently SDN and NFV.  So here are the questions we have to ask now; have key transformation vendors given up on transformation?  Is the wave of SDN and NFV now dead, or are we transitioning to a new vision with perhaps new players behind it?

Commoditization would seem to be the driving force today; vendors are suffering continued drops in revenue as operators place limits on capital spending.  Operators have long hoped to avoid this commoditization by “transforming” infrastructure, operations, and services.  Transformation, if it meets operator goals, could at least slow the negativity, but making transformation happen has been more difficult than most expected.  Let’s be honest—SDN and NFV have both undershot expectations.  It’s more than waving a magic SDN/NFV wand, apparently, and there are signs that vendors won’t be taking as big a role as vendors, operators, and the media all expected.

SDN and NFV have been the at-the-point technologies for transforming operators’ business models.  The initial notion was that they could radically impact capital spending, both by simplifying technology through software hosting of features and from the substitution of white-box switching for proprietary devices.  From the first, vendors seemed to have offered only lukewarm support for the capex-driven flavor of transformation because operator benefits would come at the vendors’ expense.

Starting last year, we saw a shift in focus for SDN and NFV, from reducing capex (which meant reducing the total addressable market for network vendors to go after) to reducing opex or improving revenues.  Operations efficiency and service agility were still framed as benefits for SDN and NFV, but the value proposition for opex-and-services transformation needs a lot more moving technology parts to fulfill.  From where?  Network equipment vendors, understandably unimpressed with strategies to lower their own TAM, should have lined the opex-and-services focus better.  Not so; network vendors have still held back even with the TAM threat off the table.  Now, even vendors who don’t have incumbent network businesses to defend seem to be pulling back.

The news that HPE was closing its OpenSDN unit (which interestingly came from ConteXstream who was at the time active in the NFV ISG) is the most obvious signal of change, but it’s only the most and latest.  Operators tell me that in 2017 there has been a decided shift in vendor positioning.  You can read it in the media, where SDN/NFV stories have either disappeared or turned to tales of disappointment.  Vendors would still be happy with SDN/NFV success, and perhaps even happier with transformation overall, but they are now looking to sell their own products into solutions that the operators themselves are driving.  The idea that vendors would offer pre-packaged products to drive things forward seems to have vanished.

Many vendors knew from the first that “transformation” was the right approach, or at least their deep thinkers did.  The challenge was that transformation is an enormous task, one that would involve years of effort at the sales level, considerable customer education, a broad product portfolio, and so forth.  None of this looked like it would add up to sales in the current quarter, so even the vendors who saw the opportunity were reluctant to grasp it.  I think some found reasons to believe that they could take a tactical approach.  Nobody really faced the transformation issue head-on.

Even operators tended to think of transformation in technology terms.  NFV in particular was launched to solve the problem of declining profit per bit, or at least to mitigate it.  It attracted enormous operator enthusiasm, and as a result it came to appear like a technology commitment rather than a possible vehicle to ride to transformation goals.  I think the big problem both SDN and NFV fell prey to was that they became the goal rather than the path to the goal.  Not surprisingly, most of the vendors in the NFV ISG believed at some level that NFV was going to be purchased, and that it was just a matter of who would win at the vendor level.  This was about products already validated, not about solutions that needed to be proven out.  Buyer and seller, then, both forgot where the transformation goal line was.

But the NFV ISG made the critical contribution of our time—orchestration.  Service lifecycle management has to be automated to make transformation work, and orchestration is the overall process to do that.  Had NFV orchestration been made more inclusive, had it morphed into service lifecycle management and adopted full end-to-end automation as its goal, it could have become the centerpiece for transformation.  I actually tried to do that with my CloudNFV project and my (constant, and yes sometimes nagging) protests on scope on the NFV message boards.  In any event, it didn’t happen.  Nor did it happen for SDN (I did a presentation to the ONF leadership on the same points, which also got nowhere).  Instead, both SDN and NFV focused on their own incremental issues, and that’s what’s got us to where we are today.

Because vendors didn’t push broad, benefit-rich, service lifecycle management and that forced operators to take a greater role.  AT&T’s ECOMP is the perfect example.  Since operators can’t form exclusive groups to develop stuff for the broad interest of the market (I saw two situations where lawyers told the operators they were in violation of anti-trust rules in the EU and the US by doing just that), they turned to open source.  So now the benefits that will drive the future are going to be realized by open source, which means that the vendors have played a major role in their own commoditization.

Once operators realize an open-source-driven service lifecycle management transformation, everything that SDN and NFV is and does gets subducted into that open-source effort.  It makes no sense, then, for vendors to be pushing the technologies—why not just get on the open-source-driven transformation bandwagon?  HPE’s dropping of SDN may presage their reducing their NFV-specific efforts too.  SDN and NFV will both succeed “above” the two technologies themselves, and whatever benefit vendors reap will probably come simply by selling into the opportunity created by the operators’ open-source initiatives.

We had a half-dozen vendors who could have made a complete NFV business case by 2014, including HPE who arguably had one of the most complete stories out there.  There is absolutely no technical reason why at least these half-dozen vendors couldn’t have stepped up to drive transformation forward, so what we’re seeing is the perfect example of a victory of tactical thinking over strategic planning.  Computer players like HPE had everything to gain by pushing hard for transformation of infrastructure that favored hosted features and software automation of service lifecycles.  Instead, they focused on very limited applications, and now that decision can’t be rolled back.

For years, I’ve favored the notion that vendor competition for NFV excellence would drive the industry toward the transformation goal.  Now, reluctantly, I have to admit that the vendor option is off the table.  Open source will win things, or lose them.

Don’t think this is a victory for operators, or for the market.  We’re a long way from even a useful answer to transformation in any open-source SDN or NFV project, and there’s a good chance that we’ll never get to optimality.  All along, what SDN and NFV have needed is competitive pressure driving multiple vendor solutions.  That’s why multiple open-source initiatives in the transformation and orchestration space don’t bother me; survival of the fittest could be a good thing about now.  But evolutionary forces are like geological ones, they take a long time to operate.  We could have gotten this right, from the very first.  I think a lot of vendors, and operators, will be sorry that didn’t happen.