Server vendors have both special benefits and special challenges in the battle for telco infrastructure, the “telco cloud” or “carrier cloud”. On the plus side, any cloud requires servers, and having a seat at that table gives a vendor more leverage in deals, and may also help keep competitors out. On the minus side, the solution can’t be hardware alone, so server vendors will have to partner, and partnering means integration and the risk of introducing new competitors. Dell is confronting both risks with its previously announced “Telecom Systems Business”, and related and expanded offerings announced at MWC.
Like most telco players these days, Dell needs to pay homage at the 5G shrine. Telcos are committed to 5G, and to at least some feature hosting is written into 5G specifications. 5G is not only budgeted, it’s deploying, and that means it’s an active opportunity. Best of all, the open 5G initiatives are attracting a lot of interest from the mobile operators, and those initiatives give the vendors not part of the usual mobile plays a shot at future ones.
All open-model 5G demands integration by its nature. While telcos want open approaches in general, they seem to want somebody to do the heavy lifting in initial deployment integration, and to stand behind the approach to end finger-pointing and assure continued openness. Dell reflects this with a very explicit commitment to being the integrator in its offering, the giant behind the concepts overall. That leverages its server position because hardware is surely the biggest cost in the project, and the biggest seller is usually the most credible integrator.
Integration isn’t Dell’s only challenge here. Most of the mobile operators are on the fence with respect to 5G hosting, and in several dimensions. First, they’re uncertain whether they want to capitalize telco cloud hardware or simply ride on one or more public clouds. Second, they’re uncertain whether they want to rely on one of their familiar mobile partners (Ericsson and Nokia, notably, and Huawei where there’s no public policy barrier) or look for new players, and finally they’re uncertain whether the should favor a network vendor or a server/platform vendor. Dell is trying to thread all these needles at once.
Dell has four elements to its telco strategy, according to their website. They are Telecom Multi-Cloud Foundation, Open RAN, 5G Converged Core, and Services Edge. The first references Red Hat (OpenShift and OpenStack), VMware (Telecom Cloud Platform), and Wind River (Wind River Studio). The second adds VMware and Mavenir Open RAN and Altiostar, NEC, Netcracker and Red Hat as partners. 5G Converged Core doesn’t reference a specific configuration partner set, and Services Edge currently lists Red Hat OpenShift and Intel SmartEdge as elements.
It would be fair, I think, to characterize Dell’s telco stuff as being responsive/reactive rather than evangelistic. Their website doesn’t try to sell 5G hosting or edge computing as much as present strategies to prospects who already have a specific interest. That, I think, is a strategy consistent with marketing to the telcos, and one likely to be effective if the telco prospect is looking for 5G carrier cloud or perhaps even public cloud, but I wonder whether it’s the optimum strategy for the market as it’s now evolving. I think that current evolution has to address three specific strategic options—the carrier cloud option, the public cloud option, and the metro option.
Dell, as a server vendor, would naturally fit well into the carrier cloud. They’re smart to mention edge computing opportunity in their material, but they are at the same time careful not to sound like they’re dissing the public cloud choice that many operators are making. That makes their positioning of what should be their favored model a little tentative. They could make up for that at the sales level, in particular calling out the risk of lock-in that public-cloud telecom dependence creates, the risk of outages that are beyond their control, and the likely higher price. They don’t do it in their website positioning.
The public cloud option is perhaps even a little more carefully danced around. It’s a bit inherent in the “multi-cloud” platform thinking, and of course the partners Dell identifies in that space are all happy to promote their software either on a server or on a VM or container in a public cloud. I think Dell knows that they can’t really either push or question the public cloud choice given their software partners, and they likely think they need to at least have a fallback position to the hosted carrier cloud option, if the telco prospect doesn’t want to incur the first costs.
That leaves the metro option, and this one has both interesting potential and risk potential. The interesting characteristic about metro positioning is that it focuses on the place where the most profound changes are going to be made to telco networks. There are a variety of ways that “metro” could come together, meaning that Dell would have a wider range of options to push at the sale level if they started with a metro strategy.
The risk comes from the fact that metro is also where almost every vendor interested in the network of the future will have to jockey for position. Network vendors, for example, are likely to make a strong play there, as would platform vendors, software vendors, server vendors…you get the picture. To draw an analogy from the wild, metro is a big carcass but it attracts a lot of scavengers.
Dell’s strategy for the telco space is already heavily dependent on partners. Metro, as an option, would demand some partners in the network equipment space. Dell has switches, including their PowerEdge data center switches, but it doesn’t have routers. Most router vendors, and all the major ones, are also switch vendors so Dell’s portfolio would collide with theirs. Not only that, the major router vendors all have telco strategies of their own, which puts Dell into potential collision with them (and vice versa).
The only answer to this, if Dell wants a metro option, would be to adopt a vendor-neutral router strategy for their metro story. If Dell created a metro model based on abstract router capabilities, they would dodge the need for a specific partnership and also address the fact that most telcos would already have some metro routers in place.
In the end, Dell needs to find a way to sell servers to telcos, of course. That almost surely means they need to make carrier cloud the preferred telco strategy for edge computing, and that will be a tall order. Operators are concerned about making a large carrier cloud investment to support 5G when in truth they don’t have a clue what they could do with the technology in the broader edge mission. Early MWC activity isn’t giving them much good news, either.
Microsoft, at MWC, is promoting their own 5G and MEC offerings for Azure, and many mobile operators seeing public cloud hosting as an alternative to a lot of 5G edge capex. And while Orange is committed to Oracle’s 5G Core signaling/routing, it’s committing to 5G features from both Ericsson and Nokia. Dell really needs Open RAN validation to be able to ride 5G to carrier cloud, and while there are some open-model 5G successes, it may well be that the lack of a widely accepted edge-computing kicker to 5G carrier cloud will stall momentum.
There’s another problem for Dell behind the technology scenes, which is financial. Their latest quarterly earnings weren’t a big hit; rival HPE did better. 5G, while important to the telcos, isn’t likely to pay off for server vendors like Dell unless it expands radically beyond simple function hosting. The only certain 5G element is the radio technology, and Dell doesn’t make that. So despite the fact that MWC seems determined to push the esoteric 5G benefits (“slicing”, “private 5G”), the reality is that only edge computing on a large scale can make even open-model 5G pay off significantly, and the telcos need leadership, insight, inspiration, of anything beyond function hosting is going to happen.
This is where Dell joins former-subsidiary-now-telco-partner VMware in needing to exercise some marketing/positioning aggression. Any vendor who hopes that the telecom industry is going to catch strategic edge computing fire and warm all vendors is surely in for a sharp disappointment. There’s a lot to win, or lose, in telco cloud, and those who aim to be in the former group need to get with it.