Operators want open source software and they want OCP hardware, or so they say. It would seem that the trend overall is to stamp out vendors, but of course neither of these things really stamp out vendor relationships. They might have an impact on the buyer/seller relationship, though, and on the way that operators buy and build networks. If the model crosses over into the enterprise space, which is very likely, then it could have a profound impact on the market overall.
If there are multiple stages of grief, operators have experienced their own flavor in their relationship with their vendors. Twenty years ago, operators tended to favor big vendors who could provide complete solutions because it eliminated integration issues and finger-pointing. Ten years ago, operators were starting to feel they were being taken advantage of, and many started creating “procurement zones” to compartmentalize vendors and prevent one from owning the whole network. Now, as I said, they’re trying to do what’s really commodity or vendor-independent procurement. That’s a pretty dramatic evolution, and one driven (say almost all operators) by growing concern that vendors aren’t supporting operator goals, but their own.
What created the divergence of goals can be charted. Up until 2001, technology spending by both network operators and enterprises was driven by a cyclical transformation of opportunity that, roughly every fifteen years, introduced a new set of benefits that drove spending growth. New opportunities will normally demand new features from technology products, new differentiators appear, and operators have new revenue to offset costs. Thus, they tend to be looking for ways to realize that new opportunity quickly, and vendors are their friends.
In 2001, the cycle stalled and has not restarted. If you go back to both surveys and articles you can see that this inaugurated a new kind of tech market, where the only thing that mattered was reducing costs. That’s a logical response to a static benefit environment—you can improve financials only by realizing those benefits more cheaply. But cost management usually starts with price pressure on purchases, and that’s what launches an “us-versus-them” mindset among operators and vendors.
The old saying “we have met the enemy and they are us” might then apply now. Both open source software and “COTS” hardware are very different because they are commodities. They present operators with a new problem, which is that vendor support for innovation depends on profit from that support. Absent a differentiable opportunity, nobody will support transformation unless operators pay for professional services. Ericsson probably foresaw this shift, and as a result focused more on professional services in its own business model. While realizing the benefits of a shift to commodity network elements has been slower to develop than Ericsson may have hoped, it’s still clearly underway.
But OK, operators want open-source and COTS. Will they be able to get it, and if so who will win out?
If you look at transformation as operators do, you see that their primary goal is what could be called “top-end engagement”. They have benefits—opex and capex reduction and revenue augmentation—and they need to engage these things. Traditional technology specifications and standards, starting as they normally do at the bottom, don’t even get close to the business layer where all these benefits have to be realized. That’s why the operator approaches seem to focus “above” the standards we know.
So the most important point here is to somehow get architectures to tie back to the benefits that, while they were expanding, drove industry innovation. A friend of mine, John Reilly, did nice book (available from Amazon in hard copy or Kindle form) called “The Value Fabric: A Guide to Doing Business in the Digital World” that might be helpful in framing business benefits for multiple stakeholders. It’s a way of describing how a series of “digital bridges” can establish the relationship among stakeholders in a complex market. It’s based on a TMF notion, which means it would be applicable to operator ecosystems, and vendors could explore the notion of providing digital bridges to link the stakeholders in an operator ecosystem together. Advertising, content providers, operator partners, hosting providers, and even software providers who license their stuff, are examples of stakeholders that could be linked into a value fabric.
But all of this good stuff is likely to be software, and however valuable software is in the end, it’s not going to cost as much as a couple hundred thousand routers. In fact, it’s reducing that hardware cost that’s the goal for operators. Network vendors are not going to embrace being cost-reduced till they vanish to a point. And if COTS servers and open-source software are the vehicle for diminishing network vendor influence, who’s incented to take their place in the innovation game? In the architectures that operators are promoting, no major vendor is a long-term winner.
I’m not saying this is bad, or even that vendors don’t deserve some angst. I’ve certainly told enough of them where things are heading, and tried to get them to address the issues while there was still time, to have lost sympathy. What I am concerned about is how the industry progresses. Is networking to become purely a game of advertising/marketing at the operator level, and of cheap fabrication of white boxes at the hardware level? If so, are the operators now prepared to drive the bus by investing some of their savings in technologists who can do the deep thinking that will be needed even more in the future?
The network of the future is going somewhere other than the simple substitution game that operators envision. You can see, for example, that personal agents are going to transform networks. So will IoT, when we finally accept it’s not about making every sensor into a fifty-buck-a-month LTE subscriber. The limitation in vendor SDN/NFV architectures is that they try to conserve the legacy structure that progress demands we sacrifice. The limitation in operator architectures is that they constrain their vision of services to the current network, and so forego the longer-term revenue-driven benefits that have funded all our innovations so far.
What’s above commoditizing services? Revolutionary services, we would hope. So let’s see some operators step up and show more determination to innovate than the vendors they’re spurning. Let’s find values to build a fabric around.