It’s about time for somebody to ask the question “Is NFV going mainstream?” so I may as well ask it here, then try to answer it. To be sure, NFV deployment is microscopic at this stage but NFV interest is high and growing. It’s obviously possible that this is a classic hype wave (remember the CLECs?) but there are some interesting signs that perhaps it’s more substantive. The question isn’t whether NFV is here, but whether it’s now so accepted that it’s on the way that vendors are positioning for NFV as a given, for them and for the industry.
Case in point: Alcatel-Lucent has hired former Oracle software/operations guru Bhaskar Gorti, who takes leading IP Platforms, which is where NFV activity reports in (CloudBand). This could be big as far as signaling Alcatel-Lucent’s NFV intentions because up to now CloudBand hasn’t really had much executive engagement. Many in Alcatel-Lucent have considered it little more than a science project, in fact. Gorti could put some executive muscle behind it in a political sense, and his operations background means he might also do something useful to link CloudBand to the operations efficiency mission of NFV, a mission that’s been a bit of an NFV weak point for Alcatel-Lucent up to now.
Conceptually, CloudBand has always been a contender in the NFV space. Of all the network equipment vendors, Alcatel-Lucent is the only one that has really gotten decent reviews from operators in my surveys. Obviously the company is credible as a supplier of NFV technology, but its big problem for many operators is that it’s seen as defending its networking turf more than working to advance NFV. Which is why Gorti’s access to Alcatel-Lucent CEO Combes could be important. He’s either there to make something of NFV or to put NFV to rest.
Why now? I think the first reason is one I’ve blogged on before. Operators say that 2015 is the year when either, NFV-wise. Either NFV gets into some really strong field trials that can prove a business case, or NFV it loses credibility as a path to solving operator revenue/cost-per-bit problems. Alcatel-Lucent needs leadership either way, and arguably they need OSS/BSS strength either way. Operators are well aware of the fact that network complexity at L2/L3 is boosting opex as a percentage of TCO, to the point where many tell me that by 2020 there would be little chance that any rational projection of potential capex reduction would matter.
A second reason, perhaps, is HP. Every incumbent in a given market knows that the first response to a revolutionary concept is to take root and become a tree in the hopes that it will blow over. However, at some point when it doesn’t you have to consider that losing market share to yourself through successor technology is better than losing it to somebody else. HP has nothing to lose in network terms and it’s becoming increasingly aggressive in the NFV sector. HP also links NFV to SDN and the cloud, and their story has a pretty strong operations bend to it. If HP were to get real momentum with NFV they could be incumbent Alcatel-Lucent’s worst nightmare, a revolutionary that’s not investing their 401k in the networking industry.
Another interesting data point is that Light Reading is reporting that Cisco is going to say that software and the cloud are the keystones of its 2015 business strategy, due to be announced to an eager Wall Street and industry audience late this month. Cisco poses a whole different dimension of threat for Alcatel-Lucent because they are both a server player (they displaced Oracle in the server market lineup recently) and obviously a network equipment giant. Were Cisco to take a bold step in NFV, SDN, and the cloud they’d immediately raise the credibility of these issues and make a waffling in positioning by Alcatel-Lucent (which arguably has been happening) very risky.
Then there’s the increasing sentiment that service provider capex has nowhere to go but lower, at least if current service/infrastructure relationships continue as is. Every operator has been drawing the Tale of the Two Curves PowerPoint slides for a couple years. These show trends in revenue per bit and cost per bit, and in all the curves there’s a crossover in 2017 or so. If operators can’t pull up the revenue line, drive down the cost line, or both, then the only outcome is to reduce infrastructure spending to curtail their losses. Well, what’s going to accomplish that lofty pair of goals if not NFV?
We have some “negative evidence” too. SDx Central (even the name change here is a nod to NFV!) did a story on things not to look for in 2015—restoration of carrier capex was one. Another was some sanity at Juniper. Juniper is a company Alcatel-Lucent has to be concerned about in a different way, which is as the “there but for the grace” alternative for themselves. Juniper doesn’t have servers. Its prior executive team didn’t know the difference between SDN and NFV and some at least say that its CTO and vice-Chairman is conflicted on this whole software thing. It’s changed CEOs twice in the last year and it’s getting downgraded by Street analysts because of capex trends. Arguably Juniper had as good a set of assets to bring to the NFV party as anyone, but they stalled and dallied and never got up to dance. The article, and many on the Street, think it’s too late. How long might it be before it’s too late for Alcatel-Lucent?
It may be already in a traditional NFV sense, in which case the selection of Gorti may have been truly inspired. We are now, in my view at least, at the point where if you don’t demonstrate a truly awesome grasp of the operationalization of not only NFV but SDN and legacy networking, you don’t get anything new to happen with carrier spending. There’s not time to save them with new services, and those new services could never be profitable without a better operations platform than we can provide with current OSS/BSS technology.
We seem to be aligning NFV positioning with the only relevant market realities that could drive deployment. That means that those late to the party may find it impossible to grasp one or more of the NFV benefits and make it their own. Differentiation could drive later players to avoid opportunity in order to avoid competition. That would be, as it always is, fatal. So 2015 is more than the year when field trials have to work, it’s the year when vendor positioning has to work.