The Network Functions Virtualization stuff I talked about in my blog yesterday has picked up steam, adding more Tier One sponsors and turning to ETSI to host them as a body. The group is emphasizing that they’re not a “standards group”, hopefully trying to avoid the glacial pace and lack of market responsiveness that characterizes standards these days. Today, standards are to market needs as forensic pathology is to disease; it’s too late to help.
Stu Elby from Verizon offered a presentation that makes a clear distinction between what I’ve been calling NFV and what the market calls SDN. One of his slides shows services and applications talking to an orchestration process that then talks on the right to the SDN/OpenFlow world and on the left to the cloud/DevOps world. To me this is the heart of NFV; networking is more than bits, so network infrastructure is more than network equipment and service creation is more than circuit/forwarding control. We’re actually, via the NFV movement, on a track that just might give us the architecture for the “NGN”, the service network that finally replaces the PSTN and lets the operators play in the new-revenue sandbox.
Stu’s first slide was a price-cost curve that showed the compelling problem driving all of this. Revenue per bit has been falling steadily for a decade, and while cost per bit has also fallen it’s not falling nearly fast enough. The operators believe that means it’s time to create a new architecture where boxes (switches, routers, optics, whatever) are plug and play, where IMS is a cloud app (Elby showed Verizon’s progress with that). Host even IMS on generic servers? That’s an interesting development, and it shows how badly network vendors have booted this one. They should have been the ones taking this notion to ETSI, they should have (and could have) grabbed leadership. Instead they manned the walls while the foundations eroded.
Case in point: Juniper reported its quarter, and the results missed consensus expectations narrowly. The results offered a mixed view of the company to financial analysts who crunch numbers, but a pretty clear view to people who focus on fundamentals. More than any other network vendor, Juniper is vulnerable to commoditization because it lacks any conspicuous position in the money-spaces of the market, notably mobility. It’s suffered continuous loss of strategic influence in the operator and enterprise spaces in our surveys. Now the problem is that while Juniper could have done truly great things a year and a half ago, they’re largely caught at this point.
Operators don’t want to host services on edge routers; the whole NVF movement has made that clear. The PTX is a lower-cost core-network alternative, so wins there are losses in an overall sense. QFabric wasn’t built as an SDN strategy; there was nothing whatsoever said about SDN at its launch, only about the chip that rumor says isn’t even being used. Production versions of OpenFlow don’t deliver on SDN, they just deliver on a tiny piece of it. In fact, they don’t deliver on the SDN vision Juniper has talked about in public before. Instead we’ve had Cisco-like sponsored research on how traffic is growing, or the now-traditional Juniper assertions that they’re the TCO champs. Operators agree that traffic is growing, but they’re trying to counter that with LOWER cost, and they don’t believe TCO numbers and neither do I. And even on the earnings call, Juniper had to acknowledge some leadership changes as executives and lower-level key people depart.
There’s trouble here, pure and simple, and it’s trouble that is totally unnecessary because the company had a compelling story and opportunity just a year and a half ago. And Juniper isn’t the only one with a problem. Every vendor is still dragging their feet and watching their customers take over a leading role in defining the network of the future. Then they’re surprised and horrified when that network is made up of interchangeable commodity boxes and server-hosted features. Give me a break!
Apple had its own moment, even though it wasn’t an earnings call. The much-anticipated iPad Mini came out, and the product surprised a lot of people. The new tablet is bigger than a Kindle Fire or Google Nexus, has a lower screen resolution, and is priced significantly higher. It’s clear that Apple isn’t going after the mass market in 7-inch tablets at an over three hundred buck price-tag given incumbent products at two-thirds that price or less. What the heck are they going after?
The “Apple Basketers”. There are people who will buy an Apple product in a given space no matter how it’s priced relative to the competition. They can’t do that if there’s no Apple product in the space, though, so Cook is obliging them—with a bunch of new niche-targeted stuff, in fact. The goal is to tap off Basketers who will otherwise defect to Amazon or Google, which in the long term helps Apple keep an ecosystem intact. That’s their underlying strategy, and it’s not a bad one. Why be a market leader in a market where products are discounting to dirt?
But the big miss to me was iCloud. Apple still has perhaps the most pedestrian vision of the cloud that ever was, something that’s really surprising given the company’s record of innovation. Well, maybe not too surprising. Cloud-based services undermine the value of handset and tablet incumbency by focusing the user on the network and not the device. What Apple did in my view was to tell the world it’s going to be an MVNO, a handset player who starts selling their own mobile services based on carrier relationships worldwide—relationships some people tell me are already being discussed. Apple won’t make the cloud the star till they own at least the customer relationship at the service level.