While vendors are typically pretty coy about public pronouncements on the direction that networking will take, they often telegraph their visions through their product positioning. I think Alcatel-Lucent did just that with its announcement of its metro-optical extensions to its Photonic Service Switch family. Touting the new offerings as being aimed at aggregation, cloud, and content missions, Alcatel-Lucent is taking aim at the market area that for many reasons is likely to enjoy the most growth and provide the best opportunities for vendors. It’s just shooting from cover.
Networking isn’t a homogeneous market. Infrastructure return varies, obviously, by service type so wireless is generally more profitable than wireline, business more profitable than residential, high-level more profitable than lower-level. Operators will spend more where profits are greater, so there’s an emphasis on finding ways to exploit higher return potential. Unfortunately, the universality of IP and the fact that broadband Internet is merging wireline and wireless to a degree work against service-based targeting. Another dimension of difference would be helpful, and we have it with metro.
I’ve noted in past blogs that even today, about 80% of all profitable traffic for operators travels less than 40 miles, meaning that it stays in the metro area where it originates. Cloud computing, NFV-based services, and content services will combine to raise that percentage through the next five years. If NFV achieves optimum deployment, the number of NFV data center interconnects alone would be the largest source of cloud-connect services. Mobile EPC transformation to an SDN/optical model and the injection of SDN-based facilitation of WiFi offload and integration are another enormous opportunity.
Aside from profit-and-service-driven changes, it’s obvious that networking is gradually shifting focus from L2/L3 down to the optical layer as virtualization both changes how we build high-level connectivity and virtual switch/routers displace traditional hardware. It’s also obvious that the primary driver of these changes is the need to deliver lower cost bit-pushing services in the face of steadily declining revenue per bit.
Given that one of Alcatel-Lucent’s “Shift” focus points was routing, the company isn’t likely to stand up and tout all of this directly. Instead of preaching L2/L3 revolution from above, they’re quietly developing more capable optical-layer stuff and applying it where it makes the most sense, which is in the metro area. The strategy aims to allow operators to invest in the future without linking that investment to displacement of (or reduction in purchasing of) legacy switches and routers. Unlike Juniper, who tied its own PTX announcement to IP/MPLS, Alcatel-Lucent stays carefully neutral with its approach, which doesn’t commit operators to metro IP devices.
One of the omissions in Alcatel-Lucent’s positioning was, I think, negative for the company overall. They did not offer specific linkage between their PSS metro family and SDN/NFV, though Alcatel-Lucent has highly credible solutions in both these areas. Operators don’t want “service layer” activities or applications directly provisioning optical transport, even in the metro, but they do want service/application changes to influence transport configuration. There is a significant but largely ignored question of how this comes about. The core of it is the extent to which optical provisioning and management (even based on SDN) are linked to service events (even if SDN controls them). Do you change transport configuration in response to service orders or in response to traffic when it’s observed, or maybe neither, or both? Juniper, who has less strategic SDN positioning and no NFV to speak of, goes further in asserting integration.
I’m inclined to attribute the contrast here to my point on IP specificity. Juniper’s approach is an IP “supercore” and Alcatel-Lucent’s is agile optical metro. Because of its product portfolio and roots, Juniper seems determined to solve future metro problems in IP device terms, where Alcatel-Lucent I think is trying to prepare for a future where spending on both switches and routers will inevitably decline (without predicting that and scaring all their switch and router customers!). They can presume “continuity” of policy; transport networks today are traffic engineered largely independent of service networks. Juniper, by touting service protocols extending down into transport, has to take a different tack.
I’d hope that Alcatel-Lucent takes a position on vertical management integration in metro networks, even if they don’t have to do so right away. First, I think it would be to their competitive advantage overall. Every operator understands where networking is heading; vendors can’t hide the truth by not speaking it. On the other hand, vendors who do speak it have the advantage of gaining credibility. Alcatel-Lucent’s Nuage is unique in its ability to support what you could call “virtual parallel IP” configurations where application-specific or service-specific cloud networks link with users over the WAN. They also have a solid NFV approach and decent OSS/BSS integration. All of this would let them present an elastic approach to vertical integration of networks—one that lets either management conditions (traffic congestion, failures) or service changes (new service orders pending that would demand an adjustment at the optical layer) drive the bus.
With a story like this, Alcatel-Lucent could solve a problem, which is their lack of a significant server or data center switch position. It’s hard to be convincing as a cloud player if you aren’t a server giant, and the same is true with NFV. You also face the risk of getting involved in a very expensive and protracted selling cycle to, in the end, see most of the spending go to somebody else. A cloud is a server set, and so is NFV. Data center switching is helpful, and I like Alcatel-Lucent’s “Pod” switch approach but it would be far stronger were it bound into an interconnect strategy and a Nuage SDN positioning, not to mention operations/management. That would build Alcatel-Lucent’s mass in a deal and increase their return on sales effort and their credibility to the buyer.
Most helpful, perhaps, is that strong vertical integration in a metro solution would let Alcatel-Lucent mark some territory at Cisco’s expense. Cisco isn’t an optical giant, doesn’t like optics taking over any part of IP’s mission, doesn’t like purist OpenFlow SDN, NFV…you get the picture. By focusing benefits on strategies Cisco is inclined to avoid supporting, Alcatel-Lucent makes it harder for Cisco to engage. De-positioning the market leader is always a good strategy, and it won’t hurt Alcatel-Lucent against rival Juniper either.
I wonder whether one reason Alcatel-Lucent might not have taken a strong vertical integration slant on their story is their well-known insularity in product groups. My recommended approach would cut across four different units, which may well approach the cooperation vanishing point even today. But with a new head of its cloud, SDN, and NFV effort (Bhaskar Gorti), Alcatel-Lucent may be able to bind up what has traditionally been separate for them. This might be a good time to try it.