Evolutions are comfortable and revolutions less so, but it’s pretty obvious that in many ways we’re facing a revolution in networking. And yes, network technologies are among the things that are changing radically, but the foundation of the revolution is fundamental changes in the role of connectivity. Those changes are impacting both the consumer market for Internet services and the business market for both Internet and private-network connectivity. What we need to do now, to prepare for the changes to come, is trace the demand-side pressures on networking. When we’ve done that, though, we have to deal with the basic question of whether we respond to the market with positioning which is largely a new story, or with strategy which implies new technologies and even products.
The core of our demand-side revolution is the smartphone, which (unlike other mechanisms for connecting users to information) is fully mobile, making experience delivery mobile as well. Even though smartphones are not replacing everything else (use of personal computers and televisions has been impacted only marginally, for example), the need to connect a device that moves around easily creates the need for agile connectivity, and that need impacts both the way we deliver experiences and the way the experiences themselves are framed.
Linear TV is the easiest example of the challenge. A smartphone doesn’t have a TV receiver, and the bandwidth needed to broadcast every cable TV channel in a lineup to a smartphone would be prohibitive even if we had the ability to process it there. Phones need streaming video, and if you have to deliver video in streaming IP-friendly form to phones that are roaming all over the place, it makes sense to think of the same format for delivering video to fixed devices, whether they’re personal computers or TV sets.
Another driver of this change is the fact that even personal computers in homes need an Internet connection, and that connection is most conveniently provided using WiFi, a wireless technology that has short range but (in modern versions in particular) high bandwidth. WiFi isn’t suitable for delivering linear video, and as people become accustomed to having video on a device instead of a TV, they expect to be able to use their computers to watch things. If we can extend WiFi to TV sets, which of course the current “smart” TV models can do, we can stream to TV. If we format all video in streaming form, we could eliminate all those in-home cable jacks.
In the business world, we’ve long recognized that having Ethernet jacks in every office and conference room and making people fight for jacks when they assemble in groups is inefficient. People take their laptops with them everywhere, even often to a cafeteria, and they now have their phones available at all times. Some of their uses are business, and some are things like catching up on a TV show they fell asleep on the prior evening. Phones, of course, are also moving in and out of WiFi range, roaming across WiFi cells, and being generally disorderly.
This disorder is mirrored in the experiences we’re trying to connect with. With the virtualization of hosting and the advent of the public cloud, we have created a situation where the sources of information and experiences are floating around in an increasingly vast pool of resources. Getting people connected to the stuff they want, keeping the connection through scaling and redeployment, and maintaining connection security and tenant/application isolation, is becoming difficult if one presumes that the physical network (IP VPNs and the Internet) provide both access and connectivity. It’s easier if we assume that another layer, the “virtual network” or “software-defined network” does the latter.
Can associate all of this with some of the developments in the market, including financial results and M&A.
The interest both AT&T and Verizon have in millimeter wave 5G can be linked to the fact that mobile streaming in IP and the potential for sharing infrastructure between wireline and wireless offers operators the potential to improve wireline home and business connectivity while consolidating much of the infrastructure needed with that of wireless mobile networks. With millimeter 5G/FTTH, you drop linear TV delivery from the network requirement. That means data-formatted live TV instead of two different forms, caching of video in a single form, and eliminating the difference in video handling between live TV and deferred-viewing stored or recorded TV.
Our demand-side changes introduce the potential competition between 5G wireless and WiFi too. WiFi is already a kind of micro-cell technology. If every worker’s phone has 5G, might it be better to provide a 5G radio (built-in for new devices, or added on as WiFi adapters used to be) to laptops? We might even see our 5G/FTTN hybrid service offer mobile 5G from the same nodes, which would make infrastructure for wireline and wireless converge more and faster. Homes connected through the hybrid with 5G could also then benefit from computers and even TVs with 5G connectivity.
Even if we did see this sort of thing develop over time, the near-term impact is to create a need to build seamless connectivity between WiFi and 5G. That goes back to virtual networking, to the notion that somehow connectivity rises (in an OSI layer sense, not metaphysically!) to a higher level and overlays multiple delivery technology. However, it also means (particularly for business) that it’s important to deal with the way capacity is allocated where the pool is finite. That means, whatever it is, has to be applied to all the wireless options you expect to use, meaning in this case both WiFi and 5G.
This might help explain the Juniper decision to buy Mist Networks, a managed-WiFi player. Wink uses AI to manage WiFi capacity, but Juniper’s comments on the acquisition include at least the implications of applying AI to things like “software-defined enterprise” and even “multi-cloud”. These comments leave me with two alternative Juniper motives to consider.
Motive one is that Juniper is thinking that everything that can be connected to their current positioning story, which includes those two things, has to be connected. They bought Mist because it had AI in the story, and that’s hot. Those workers are probably accessing the cloud, so multi-cloud is logical, and software-defining an enterprise is surely logical in today’s software-defined-everything age. This interpretation isn’t implausible given that Juniper has historically messed up virtually all the M&A they’ve done and that they are indeed bad at positioning.
Motive number two is that Juniper is really looking ahead to the WiFi/5G tension I’ve described, is seeing a broader virtual-network connectivity future emerging from both the access side and the cloud side, and sees a linkage between WiFi, 5G, and Contrail (their virtual-network concept) a strong strategy, not just a pretty positioning. This is a bit less plausible in my view, only because there were so many things Juniper might have said to make the case for the strategy strongly. Instead they fell into painting graffiti on the wall facing the nearest tech publication.
If virtual networking is really coming, and if part if it is related to 5G, then that might explain why Ciena turned in a good quarter. No matter how much wireless you might think you have, every 5G node or WiFi cell is going to connect to fiber somewhere. Not only that, one way to reduce the cost of network operations is to oversupply the network with capacity and route redundancy. If you have highly reliable, under-filled, pipes at Level 1, you can kiss a lot of complexity at the higher layers goodbye, because the complexity relates to capacity and availability management.
This is why I’ve been saying that Ciena needs a strong virtual-network story. With such a position, they could be the provider of “infrastructure services” in the future. Without it, somebody else will provide the virtual-network part, and if that party also does fiber or forms effective alliances with those who do, Ciena is then plumbing. That doesn’t reduce fiber total addressable market, but it does reduce Ciena’s differentiation.
It’s worth noting here that VMware released its new disconnected-from-vSphere version of NSX, NSX-T, at MWC. NSX has always been a credible virtual-network play, but its value is limited if you have to buy into the whole VMware hosting and software paradigm to get it. Unleashing it makes it more competitive with offerings like Nokia’s Nuage, which has been an independent network product since Nuage was acquired. In fact, it might make it more than just competitive with Nuage, because VMware is including SD-WAN, data center networking, and hosting integration. Nokia doesn’t have a specific data center position to exploit, and they’re another player who’s done a far less than stellar job at positioning their own assets.
Marketing and positioning are different from product planning, but the two eventually have to end up in the same place. With Juniper, Ciena, and VMware, we have companies who might have a great strategy but who have adopted a marketing/positioning approach that doesn’t leverage it (or even recognize it). Is that the best approach? We only have to look at what happens when you do the opposite to answer that. Cisco is legendary for erecting exciting new positioning billboards that represent little or no changes in actual technology. They turned in a pretty good quarter, didn’t they? For other network vendors, at the very least, that adds up to a mandate for positioning effectively for the visible future, no matter how smart you think your “strategy” is.