Canalys: Global cloud services spending +33% in Q2 2022 to $62.3B

According to market research firm Canalys, cloud infrastructure services continued to be in high demand in Q2 2022. Worldwide cloud spending increased 33% year on year to US$62.3 billion, driven by a range of factors, including demand for data analytics and machine learning, data center consolidation, application migration, cloud-native development and service delivery. The growing use of industry-specific cloud applications also contributed to the broader horizontal use cases seen across IT transformation. The latest Canalys data shows expenditure was over US$6 billion more than in the previous quarter and US$15 billion more than in Q2 2021.

The top three vendors in Q2 2022,  Amazon Web Services (AWS), Microsoft Azure and Google Cloud, together accounted for 63% of global spending in Q2 2022 and collectively grew 42%.  The key to increasing global market share is continually growing and upgrading cloud data center infrastructure, which all big three cloud service providers are working on.

  • AWS accounted for 31% of total cloud infrastructure services spend in Q2 2022, making it the leading cloud service provider. It grew 33% on an annual basis.
  • Microsoft Azure was the second largest cloud service provider in Q2, with a 24% market share after growing 40% annually.
  • Google Cloud grew 45% in the latest quarter and accounted for an 8% market share.

In the next year, AWS plans to launch 24 new availability zones in eight regions, and Microsoft plans to launch 10 new cloud regions. Google Cloud, which accounted for 8% of Q2 cloud spend, recently announced Latin America expansion plans.

The hyperscale battle between leader AWS and challenger Microsoft Azure continues to intensify, with Azure closing the gap on its rival. Fueling this growth, Microsoft had a record number of larger multi-year deals in both the US$100 million-plus and US$1 billion-plus segments. Microsoft also said it plans to increase the efficiency of its server and network equipment by extending the depreciable useful life from four years to six.

A diverse go-to-market ecosystem, combined with a broad portfolio and wide range of software partnerships is enabling Microsoft to stay hot on the heels of AWS in the race to be #1 in cloud services.

Cloud remains the strong growth segment in tech,” said Canalys VP Alex Smith. “While opportunities abound for providers large and small, the interesting battle remains right at the top between AWS and Microsoft. The race to invest in infrastructure to keep pace with demand will be intense and test the nerves of the companies’ CFOs as both inflation and rising interest rates create cost headwinds.”

Both AWS and Microsoft are continuing to roll out infrastructure. AWS has plans to launch 24 availability zones across eight regions, while Microsoft plans to launch 10 new regions over the next year. In both cases, the providers are increasing investment outside of the US as they look to capture global demand and ensure they can provide low-latency and high data sovereignty solutions.

“Microsoft announced it would extend the depreciable useful life of its server and network equipment from four to six years, citing efficiency improvements in how it is using technology,” said Smith. “This will improve operating income and suggests that Microsoft will sweat its assets more, which helps investment cycles as the scale of its infrastructure continues to soar. The question will be whether customers feel any negative impact in terms of user experience in the future, as some services will inevitably run on legacy equipment.”

Beyond the capacity investments, software capabilities and partnerships will be vital to meet customers’ cloud demands, especially when considering the compute needs of highly specialized services across different verticals.

“Most companies have gone beyond the initial step of moving a portion of their workloads to the cloud and are looking at migrating key services,” said Canalys Research Analyst Yi Zhang. “The top cloud vendors are accelerating their partnerships with a variety of software companies to demonstrate a differentiated value proposition. Recently, Microsoft pointed to expanded services to migrate more Oracle workloads to Azure, which in turn are connected to databases running in Oracle Cloud.”

Canalys defines cloud infrastructure services as those that provide infrastructure-as-a-service and platform-as-a-service, either on dedicated hosted private infrastructure or shared public infrastructure. This excludes software-as-a-service expenditure directly, but includes revenue generated from the infrastructure services being consumed to host and operate them.

For more information, please contact:  Alex Smith: [email protected]  OR  Yi Zhang:  [email protected]

References:

https://canalys.com/newsroom/global-cloud-services-Q2-2022

AWS, Microsoft Azure, Google Cloud account for 62% – 66% of cloud spending in 1Q-2022

New data from Synergy Research Group shows that Q1 enterprise spending on cloud infrastructure services was approaching $53 billion. That is up 34% from the first quarter of 2021, making it the eleventh time in twelve quarters that the year-on-year growth rate has been in the 34-40% range.

To the surprise of no one, Amazon AWS continues to lead with its worldwide market share remaining at 33%. For the third consecutive quarter its annual growth came in above the growth of the overall market.

Microsoft Azure continues to gain almost two percentage points of market share per year while Google Cloud’s annual market share gain is approaching one percentage point.

In aggregate all other cloud providers have grown their revenues by over 150% since the first quarter of 2018, though their collective market share has plunged from 48% to 36% as their growth rates remain far below the market leaders.

 

Synergy estimates that quarterly cloud infrastructure service revenues (including IaaS, PaaS and hosted private cloud services) were $52.7 billion, with trailing twelve-month revenues reaching $191 billion. Public IaaS and PaaS services account for the bulk of the market and those grew by 37% in Q1. The dominance of the major cloud providers is even more pronounced in public cloud, where the top three control 71% of the market. Geographically, the cloud market continues to grow strongly in all regions of the world.

“While the level of competition remains high, the huge and rapidly growing cloud market continues to coalesce around Amazon, Microsoft and Google,” said John Dinsdale, a Chief Analyst at Synergy Research Group. “Aside from the Chinese market, which remains totally dominated by local Chinese companies, other cloud providers simply cannot match the scale and geographic reach of the big three market leaders. As Amazon, Microsoft and Google continue to grow at 35-50% per year, other non-Chinese cloud providers are typically growing in the 10-20% range. That can still be an attractive proposition for those smaller providers, as long as they focus on regional or service niches where they can differentiate themselves from the big three.”

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Separately, Canalys estimates global cloud infrastructure services spending increased 34% to US$55.9 billion in Q1 2022, as organizations prioritized digitalization strategies to meet market challenges. That was over US$2 billion more than in the previous quarter and US$14 billion more than in Q1 2021.

The top three cloud service providers have benefited from increased adoption and scale, collectively growing 42% year on year and accounting for 62% of global customer spend.

Cloud-enabled business transformation has become a priority as organizations face global supply chain issues, cybersecurity threats and geopolitical instability. Organizations of all sizes and vertical markets are turning to cloud to ensure flexibility and resilience in the face of these challenges.

SMBs, in particular, have driven investment in cloud infrastructure services to support workload migration, data storage services and cloud-native application development. At the same time, infrastructure hardware shortages and the threat of further price inflation has spurred many large enterprises to invest in large-scale, multi-year cloud contracts to lock in upfront discounts with the hyperscalers.

All the major cloud providers have seen a significant increase in order backlogs as a result, which now total several hundred billion dollars worldwide. This in turn is driving the importance of cloud marketplaces as a sales channel for third-party software and security, as businesses seek to burn down these cloud commitments, further fueling infrastructure consumption.

“Cloud has continued to be a hot market and transformation strategies are emphasizing digital resiliency to face the market challenges of today and tomorrow,” said Canalys Research Analyst Blake Murray. “To be effective in resiliency planning, customers are turning to channel partners with the technical and consulting skills to help them effectively embrace hyper-scaler cloud services.”

Top cloud partners are doubling down on certification efforts and skills recruitment around hyper-scaler cloud services.

Global systems integrators, including Accenture, Atos, Deloitte, HCL Technologies, TCS, Kyndryl, Tech Mahindra and Wipro, are building practices with tens of thousands of cloud engineers and consultants. This has also included acquisitions of cloud application development and migration specialists, as well as the launch of new dedicated cloud services brands.

Smaller consultants, resellers, service providers and distributors are pursuing similar strategies as mid-market and SMB customers also demand support with cloud adoption.

“As the use cases for cloud infrastructure services expand so does the potential complexity, and we see that hybrid and multi-cloud deployments are commonplace in the market,” said Canalys Research Analyst Yi Zhang. “The hyperscalers are investing in rapid channel development and partners are responding as the opportunities grow.”

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About Synergy Research Group:

Synergy provides quarterly market tracking and segmentation data on IT and Cloud related markets, including vendor revenues by segment and by region. Market shares and forecasts are provided via Synergy’s uniquely designed online database SIA ™, which enables easy access to complex data sets. Synergy’s Competitive Matrix ™ and CustomView ™ take this research capability one step further, enabling our clients to receive on-going quantitative market research that matches their internal, executive view of the market segments they compete in.

About Canalys:

Canalys is an independent analyst company that strives to guide clients on the future of the technology industry and to think beyond the business models of the past. We deliver smart market insights to IT, channel and service provider professionals around the world. We stake our reputation on the quality of our data, our innovative use of technology and our high level of customer service.

References:

https://www.canalys.com/newsroom/global-cloud-services-Q1-2022

https://www.srgresearch.com/articles/huge-cloud-market-is-still-growing-at-34-per-year-amazon-microsoft-and-google-now-account-for-65-of-all-cloud-revenues

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May 6, 2022 Update from Light Counting:

ICPs (Internet Cloud Providers) have grown spending by double digit rates (year-over-year) for many quarters and Q1 2022 looks like it will be no exception, as the combined spending of Alphabet, Amazon, Meta, and Microsoft increased 29% versus Q1 2021. What is surprising though is that Alphabet, not Meta, showed the fastest growth, with a 65% increase to more than $9.5 billion, a new record. And Alphabet’s big increase was not fueled by spending on infrastructure however, but by the closing of purchases of office facilities in New York, London, and Poland, which the company said added $4 billion to total spending in the quarter. We expect Alphabet’s Q2 capex will return from the stratosphere to the $5 billion range it has been running at. If Alphabet’s real estate spending is removed, Q1 capex for the group of four was up only 15% compared to Q1 2021, at the low end of the typical range for the Top 15 ICPs.

While ICP spending appears on track to continue growing at double-digit rates this year, Q1 revenues were decidedly ‘off’ for the four majors that have reported, with no records set, and two of the four (Amazon and Meta) growing sales by only single-digit growth rates y-o-y.

The Cloud services revenues of Alphabet, Amazon, and Microsoft continued to grow faster than overall company sales, increasing 44%, 37%, and 17% respectively.
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Network equipment makers sales growth in Q1 2022 declined by 1% y-o-y in aggregate among the reported companies, but this figure belies the fact that individual company growth rates ranged from strong double-digits (Adtran, ADVA), middling single-digits (Ericsson Networks, Infinera, ZTE), to sales declines (Nokia Networks, Ribbon Communications).
Five Chinese optical transceiver vendors have reported Q1 results, and four of them showed strong growth: HG Tech, Innolight, Accelink, and Eoptolink.  CIG was negatively impacted by shutdowns in both Shanghai and Shenzhen, which affected its ability to fulfill orders.
Among U.S.-based optical component makers, Neophotonics reported Q1 2022 revenue of $89 million, up 47% year-over-year, with 400G and above products growing 70% y-o-y to $54 million. The company is now shipping production volumes of 400ZR modules to cloud and data center customers.
Two years after the start of the COVID-19 pandemic, the effects of the COVID mitigation measures continue to disrupt manufacturing, shipping, and sales in the optical industry.  Several companies warned that shortages and higher component and shipping costs would persist or even worsen as 2022 progresses.  And finally, costs from Russia’s invasion of Ukraine, and subsequent withdrawals from the Russian telecoms market are starting to become known, ranging from $5 million (Infinera) to 900 million Euro (Ericsson).

Telenor expands cloud-based core network with AWS to deliver 5G and edge services for customers

Nordic network operator Telenor signed a strategic collaboration agreement with Amazon Web Services (AWS) to help expand its 5G core transformation, the telco said in a press release.

Telenor said that the new deal will allow it to deliver new 5G and edge services to enterprise customers worldwide.  As part of the agreement, Telenor and AWS will invest in joint go-to-market activities in select industries—such as manufacturing, supply chain and logistics, and automotive—to enable more 5G and edge services for customers. Working with existing customers to demonstrate the possibilities of cloud-based resources, Telenor will scale its cloud footprint, while innovating to develop new services that use a combination of the most advanced and secure cloud technologies from AWS.

The agreement further expands the existing collaboration between both companies, with Telenor also becoming a member of the AWS Partner Network. Working with AWS, Telenor has already implemented an entire mobile core, running in the cloud, for Vimla, which is Telenor’s virtual mobile network operator (MVNO) brand in Sweden.

Running on AWS, Vimla’s mobile core is scalable, programmable, and employs self-service APIs, enabling Vimla to create new services for its customers. Vimla uses a wide range of AWS services, including Amazon ElastiCache, AWS Lambda and AWS Transit Gateway, among others.

The new cloud-based mobile core at Vimla is developed and managed as-a-service by Working Group Two, a company incubated by Telenor. The Nordic operator also said it plans to expand the work at Vimla to other areas in the company’s worldwide network.

As part of their collaboration, Telenor and AWS will continue to innovate in the areas of 5G edge for mobile private networks (MPNs) and edge computing. For example, Telenor 5G enabled a “network on wheels (NOW)” prototype powered by AWS. The NOW gives customers the ability to set up an autonomous private 5G network wherever it is needed. The NOW prototype is currently being used by the Norwegian defense material agency and the Norwegian Public Service broadcaster Norsk Rikskringkasting (NRK) for critical communication and remote production use cases, respectively. Internationally, Telenor’s Thailand brand dtac, launched a 5G private network proof-of-concept for Thai enterprises based on edge computing and the AWS Snow Family. This solution helps customers process real-time, artificial intelligence (AI)-based video analytics and other applications in remote locations.

Working with AWS, Telenor has already implemented an entire mobile core, running in the cloud, for Vimla—Telenor’s virtual mobile network operator brand in Sweden. Running on AWS, Vimla’s mobile core is scalable, programmable, and employs self-service APIs, enabling Vimla to create simple, innovative and valuable services for its customers. Vimla uses a wide range of AWS services, including Amazon ElastiCache, AWS Lambda, AWS Transit Gateway, and others to help scale elastically and provide a better service to more customers. The new cloud-based mobile core at Vimla is developed and managed as-a-service by Working Group Two, a company incubated by Telenor. As a result of driving network transformation on AWS, Telenor plans to expand the work at Vimla to other areas in the company’s worldwide network.

“Working with AWS, we are continuing to advance and modernize  the telecoms industry—digitalizing and expanding our offerings beyond connectivity. Together, we are building on our individual strengths and scaling secure, robust, and advanced cloud services, alongside the latest networking technology, for our customers much faster than we could ever do before. Our shared ambition is to use scalable and flexible building blocks from AWS to continuously raise the bar for what’s possible,” said Sigve Brekke, president and CEO of Telenor Group.

“Telenor is pushing the boundaries of innovation by running their Vimla core on AWS. Cloud technology is allowing Telenor to scale their network in a way that was not possible before and is allowing them to experiment and develop new experiences for customers to keep them engaged, entertained, and online. We are pleased to collaborate with Telenor as they continue to expand this innovative work to other parts of their business,” said Adam Selipsky, CEO of AWS.

In addition to its home market in Norway and MVNO in Sweden, Telenor has operations in Denmark, Finland, Bangladesh, Pakistan, Thailand and Malaysia (and Myanmar, but it is trying to exit that market), but currently Telenor is not disclosing the details of which markets will be next or when the next deployment might happen.

Telenor and AWS have developed what they call a ‘Network On Wheels’ (NOW), which “gives customers the ability to set up an autonomous private 5G network wherever it is needed.” This model is already being used by the Norwegian Defence Material Agency for critical communications needs and by Norway’s public service broadcaster, Norsk Rikskringkasting (NRK), for remote production use cases.

In Thailand, Telenor group operator dtac has developed a 5G private network proof-of-concept for local enterprises using AWS Snow Family edge compute devices.

“This solution helps customers process real-time, artificial intelligence (AI)-based video analytics and other applications in remote locations, even in areas with intermittent connectivity,” Telenor said.

Ray Le Maistre of Telecom TV wrote:  “Telenor has clearly identified AWS as the cloud partner that can help it with its specific need in both the consumer and enterprise markets, so this will be a relationship well worth tracking as the operational models are innovative.”

This author wonders what has become of Telenor’s deal with Nokia to launch a new cloud-native core solution in Denmark, Norway and Sweden.  When it was announced in May 2020, Nokia said the deployment will “enhance performance and reliability and drive mobile broadband service agility as Telenor prepares for the introduction of 5G.”

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References:

https://www.telenor.com/media/press-release/telenor-teams-with-aws-to-accelerate-modernisation-of-telecommunications

https://www.telecomtv.com/content/cloud-native/telenor-embraces-cloud-based-core-private-networks-with-aws-43398/

https://technologymagazine.com/cloud-and-cybersecurity/nokia-and-telenor-group-launch-cloud-native-core-solution-scandinavia-prepare-5g

 

VMware Cloud with Tanzu services delivers enterprise-grade kubernetes services

VMware has announced new advancements for VMware Cloud on AWS [1.], a multi-cloud computing infrastructure. The new innovations include a new portfolio of managed Kubernetes services to modernize apps on VMware Cloud.  The new functions will make it simpler and safer to run enterprise apps in VMware Cloud.  This new VMware initiative supports the need for customers to run their IT software in sovereign clouds, as well as technology previews that showcase the future of VMware Cloud.

Note 1. VMware Cloud on AWS is the preferred service for AWS for all vSphere-based workloads [2.]. VMware Cloud on AWS brings VMware’s enterprise-class SDDC (Software Defined Data Center) [3.] software to the AWS Cloud with optimized access to native AWS services. Powered by VMware Cloud Foundation, VMware Cloud on AWS integrates VMware’s compute, storage, and network virtualization products (VMware vSphere, VMware vSAN, and VMware NSX [4.]) along with VMware vCenter Server management, optimized to run on dedicated, elastic, bare-metal AWS infrastructure.

VMware Cloud on AWS uses NSX-T to create and manage internal SDDC (Software Defined Data Center) networks and provide endpoints for VPN connections from the customer’s on-premises network infrastructure. This subnet is used by the vCenter, NSX, and HCX appliances in the SDDC.

Note 2.  vSphere is a server virtualization software application from VMware. It debuted in 2009 as the successor to the company’s flagship VMware Infrastructure solution and serves as a complete platform for implementing and managing virtual machine (VM) infrastructure on a large scale.

Note 3.  A SDDC network has two notional tiers:

  • Tier 0 handles north-south traffic (traffic leaving or entering the SDDC, or between the
    Management and Compute gateways).
  • Tier 1 handles east-west traffic (traffic between routed network segments within the SDDC).

Note 4.  NSX is a network virtualization and security platform that enables the virtual cloud network, a software-defined approach to networking that extends across data centers, clouds and application frameworks.

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The company said that together, the innovations will give VMware Cloud customers more tools to accelerate modernization of their enterprise apps, increase business agility and resiliency, and significantly reduce costs compared to existing approaches.

 

VMware Cloud on AWS is an integrated cloud offering jointly developed by Amazon Web Services (AWS) and VMware. 

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VMware Cloud with Tanzu services (see illustration below) is a new portfolio of managed Kubernetes services that will be available at no additional charge as part of VMware Cloud on AWS (see illustration above), for enterprise-grade Kubernetes on a fully managed, hybrid-cloud ready Infrastructure as a Service (IaaS) for all enterprise applications.

IT admins will be able to use the VMware vCenter interface to unify VM and container management on a common platform and provision Kubernetes clusters within minutes. Platform operators or SREs will be able to manage Kubernetes clusters consistently across clouds using Tanzu services as a multi-cloud Kubernetes management plane.

VMware Cloud with Tanzu services

Tanzu services include the following capabilities:

  • Managed Tanzu Kubernetes Grid Service: ision Tanzu Kubernetes clusters within a few minutes using a simple, fast, and self-service experience in the VMware Cloud console. The underlying SDDC infrastructure and capacity required for Kubernetes workloads is fully managed by VMware. Use vCenter Server for managing Kubernetes workloads by deploying Kubernetes clusters, provisioning role-based access and allocating capacity for Developer teams. Manage multiple TKG clusters as namespaces with observability, troubleshooting and resiliency in vCenter Server.
  • Built in support for Tanzu Mission Control Essentials: Attach upstream compliant Kubernetes clusters including Amazon EKS and Tanzu Kubernetes Grid clusters. Manage lifecycle for Tanzu Kubernetes Grid clusters and centralize platform operations for Kubernetes clusters using the Kubernetes management plane offered by Tanzu Mission Control. Tanzu Mission Control provides a global visibility across clusters and clouds and increases security and governance by automating operational tasks such as access and security management at scale.

Tanzu services on the VMware Cloud on AWS platform brings together the three personas working on modern applications. vSphere Administrators manage virtual machines on-premises and in the cloud and allocate resources for platform operators to deploy workloads. The operators use Tanzu Mission Control to manage and maintain clusters across environments. Developers can create code using a flexible platform for container and virtual machine-based workloads.

The managed Tanzu Kubernetes Grid Service, which is one of the Tanzu services, will enable admins to provision Tanzu Kubernetes clusters within a few minutes using a simple, fast, and self-service experience in the VMware Cloud console.

  • The underlying SDDC (Software Defined Data Center) infrastructure and capacity required for Kubernetes workloads is fully managed by VMware. Use vCenter Server for managing containerized workloads by deploying Tanzu Kubernetes Grid clusters, provisioning role-based access and allocating capacity for Developer teams.
  • One can manage multiple TKG clusters as namespaces with observability, troubleshooting and resiliency in vCenter Server.

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References:

https://blogs.vmware.com/cloud/2021/10/05/introducing-vmware-cloud-with-tanzu-services/

https://blogs.vmware.com/cloud/2021/10/05/vmware-cloud-tanzu-services-a-technical-introduction/

https://docs.vmware.com/en/VMware-Cloud-on-AWS/services/vmc-on-aws-networking-security.pdf

https://www.telecompaper.com/news/vmware-launches-new-advancements-for-vmware-cloud-including-tanzu-for-managed-kubernetes-services–1399488

https://www.vmware.com/products/vmc-on-aws.html

https://aws.amazon.com/vmware/faqs/

Ericsson IoT Accelerator Cloud Connect to connect cellular IoT devices to AWS

Ericsson has launched IoT Accelerator Cloud Connect to make it easier for enterprises using Ericsson’s IoT Accelerator platform to cellular devices to connect to the Amazon Web Services (AWS) server securely. According to Ericsson, Cloud Connect shifts the complex encryption required for secure IoT connectivity away from the device and onto the edge of the cellular network.

With an estimated five billion cellular IoT devices to be in use by the end of 2026, according to the Ericsson Mobility Report (June 2021), enterprises are increasingly outsourcing IoT device authentication and data management to public cloud providers such as AWS.

Enterprises on Ericsson IoT Accelerator-managing cellular devices such as sensors, meters, or tracking devices now have a much simpler way to connect to the already secure AWS server through Ericsson’s IoT Accelerator Cloud Connect, which moves complex encryption from the device to the edge of the cellular network.

Quotes from companies across multiple industry sectors:

Steve Dunn, CEO and Co-Founder at Digital Keys, a smart IoT security company, says: “Our cellular connected smartlocks with digital keys application are used for banks, hotels, universities, office buildings, shared labs, and apartments. Every smartlock has a SIM card that needs to connect to the cellular networks and the AWS cloud securely. It was a smooth process with Ericsson’s IoT Accelerator Cloud Connect.”

Communication service providers (CSPs) play a crucial role in the IoT ecosystem, providing global cellular connectivity using Ericsson IoT Accelerator. With more than 35 global CSPs already on Ericsson’s IoT Accelerator, enterprises of any size can manage the connectivity of their devices worldwide. It is now even easier to connect to AWS IoT Core.

Cristoff Martin, Chief Marketing Officer, Telenor Connexion, says: “This capability, integrated with our IoT Cloud service also developed together with AWS, will allow even more efficient development and operation of new connected solutions taking benefit of network technologies like Narrowband-IoT and the superior security capabilities of mobile networks in general.”

Jan Willem Smeenk, Chief Architect at SODAQ, a leading company in solar-powered asset tracking that specializes in scalable and efficient IoT hardware and software to empower businesses, says: “It is costly and complicated to connect our smart asset trackers securely, but with Ericsson as a key partner, we were able to order SIM cards from the operator on IoT Accelerator, insert them into our device with no additional encryption or certificate management required. Then, using Ericsson’s IoT Accelerator Cloud Connect, the device is authorized and automatically provisioned to the target AWS destination. It was simple and can serve our customers of any scale and size.”

Connecting to AWS IoT Core requires each connected device to use Transport Layer Security (TLS) encryption for all communications. With Cloud Connect, the IoT Accelerator service offers a plug-and-play alternative. In this, enterprises benefit from simple activation of devices that tunnel to the edge of the cellular infrastructure before automatically self-provisioning to AWS and securely connecting via Cloud Connect generated encryption and keys.

Rauno Jokelainen, Chief Technology Officer at UROS Group, a leading company in digital water services, says: “We see high value with the use of Cloud Connect in the UROS Sense Liquid Quality as a Service solution to provide real-time water quality detection to the municipalities and enterprises around the world in an easily deployable manner. With this solution, we can bring the peace of mind to the CIOs of the municipalities that their water networks are monitored in a secure manner.”

With Ericsson’s IoT Accelerator Cloud Connect, devices with unencrypted yet privately secured communications over cellular network leveraging Message Queuing Telemetry Transport (MQTT) or narrowband User Data Protocols (UDP) – such as Constrained Application Protocol (CoAP) – can connect seamlessly to AWS IoT Core, resulting in significantly lower power and data consumption.

Initial results show that Ericsson’s IoT Accelerator Cloud Connect enables low-powered devices to reduce mobile data by up to 95 percent and extend battery life by up to 50 percent by removing the need to run public end-to-end internet encryption.

Michael MacKenzie, General Manager, AWS IoT Connectivity & Control, says: “As enterprises connect more IoT devices to the public cloud, they want an easy and secure way to ingest IoT device data to AWS. Simple solutions like Ericsson’s IoT Accelerator Cloud Connect give enterprises flexibility by leveraging AWS IoT to easily manage and authorize devices, use zero touch provisioning, and ensure data is encrypted and secure.”

Kyle Okamoto, General Manager IoT, Ericsson, says: “Ericsson’s IoT Accelerator Cloud Connect removes barriers for enterprises to connect their IoT devices to numerous public clouds and to optimize the IoT data management infrastructure offered by providers like AWS. This means a faster time to market for enterprise devices and products. We are excited to offer this service to our IoT Accelerator community of over 7,000 enterprises globally.”

RELATED LINKS:

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Separately, Ericsson is cutting hundreds of jobs in China after losing market share during the recent awards of 5G contracts, according to Light Reading.

“Layoffs will happen by the end of this year as Ericsson merges three separate customer units in China into one. Until now, it has maintained a unit for each of China’s big mobile operators – China Mobile, China Telecom and China Unicom – but the restructuring will create a single mainland China customer unit catering to them all.”

Ericsson’s recent loss of market share has left it with a lower volume of 5G business to serve. Its move is aimed at rebalancing sales and costs so that it remains competitive on price.

Employees in China were briefed on the plans at an internal company meeting earlier today, where Chris Houghton, Ericsson’s head of market area for northeast Asia, said: “I sincerely regret that we now need to make changes to our great team, in order to reflect Ericsson’s changing market share position in China. We are committed to China and delivering value to our customers with our leading technology and solutions.”

The restructuring comes weeks after China Mobile gave Ericsson just 2% of the 700MHz bid on top of its existing share in 2.6GHz. This phase-two allocation in 5G is down from about 11% last year.

Ericsson has also picked up only a 3% share of the phase-two 5G work for China Telecom and China Unicom, which have joined forces to build a 5G network.

References:

https://www.ericsson.com/en/news/2021/9/ericsson-iot-cloud-connect-connects-iot-devices-to-aws

https://www.lightreading.com/5g/ericsson-to-cut-hundreds-of-jobs-in-china-after-5g-setbacks/d/d-id/772358?

NEC expands partnership with AWS for global 5G, digital government, hybrid cloud

NEC Corp. expanded its collaboration with Amazon Web Services (AWS) in areas that include global 5G, digital government, and hybrid cloud in support of accelerating digital transformation for business customers.

In November 2020, NEC and AWS concluded a corporate-level strategic collaboration agreement and have been developing offerings and strengthening delivery functionalities since then. NEC will now expand this collaboration and strengthen efforts in the following areas: global 5G, digital government, and hybrid cloud as follows:

1. Global 5G

NEC aims to develop an end-to-end 5G offering and to provide it globally by combining NEC’s high-performance cloud-native open 5G mobile core, OSS/BSS solutions, local 5G use cases etc., and AWS cloud and edge solutions. NEC will accelerate telecom carriers’ cloudification of network workloads and enhance digital transformation for enterprises by deploying 5G-based infrastructure and applications at the network edge. This combined solution stack will be supported by NEC’s system integration services to enable customers to efficiently deploy and scale 5G networks, enhance automation and drive significant improvement in operational economics.

2. Digital government

NEC has been certified as an AWS Government Competency Partner based on the strategic collaboration that started last year and its achievements for governments to date. Going forward, NEC will further strengthen its relationship with AWS and focus on developing and providing a menu of offerings to accelerate the digital transformation for government activities in Japan.

3. Hybrid cloud

By collaborating with AWS, NEC aims to develop and provide a menu of offerings that connects on-premises and cloud environments securely, at high speed, and with low latency. This will contribute to the acceleration of digital transformation through modernization that utilizes the customer’s existing information technology (IT) assets.

To accelerate these initiatives, the NEC Group has increased the number of AWS-certified engineers to 2,000 at present, aiming for 3,000, double the number from the start of collaboration in 2020, and firmly maintains one of Japan’s largest delivery capabilities for cloud projects. Going forward, NEC will continue to strengthen these positions and to ensure that it responds to customers’ digital transformation demands.

NEC also intends to enhance its hybrid cloud offering with support from AWS, providing services that connect both on-premises and cloud environments in order to support enterprise digital transformation strategies.  NEC has already been building up expertise in this field. The Japanese IT vendor has increased the number of AWS-certified engineers to 2,000, up from 1,500 in November 2020, and is aiming for 3,000 in three years.  Furthermore, NEC has been certified as an AWS Government Competency Partner and said it will focus on “developing and providing a menu of offerings to accelerate the digital transformation for government activities in Japan.”

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Comments from both companies on this collaboration are as follows:

“NEC is pleased to announce the expansion of its strategic collaboration with AWS. Last year, NEC announced this global collaboration as the first of its kind between AWS and a Japanese company. It has been a great year, seeing many successes in the areas of government, modernization and in the skill enhancement of NEC engineers. NEC is now expanding the collaboration with AWS in the areas of global 5G, digital government and in enhanced hybrid cloud offerings. With the strong global support from AWS, NEC will help drive digital transformation in the government sector and across industries as part of orchestrating a brighter world,” says Toshifumi Yoshizaki, Executive Vice President at NEC Corporation.

“We are delighted to deepen our relationship with NEC. AWS welcomes NEC’s commitment and delivery of solutions built on AWS to deliver high-quality solutions that accelerate customers’ digital transformations. We look forward to NEC’s continued expansion of offerings and further expansion of delivery capabilities to optimize these transformations,” says Doug Yeum, Global Head of Alliances & Channels at Amazon Web Services, Inc.

Toshifumi Yoshizaki, Executive Vice President at NEC Corporation and Matt Garman, Senior Vice President at Amazon Web Services Inc.

NEC and its Netcracker subsidiary have already deployed their 5G core and full stack digital BSS/OSS on AWS cloud infrastructure to orchestrate and automate 5G digital services. The service was demonstrated at Mobile World Congress 2021, when NEC deployed its 5G core control plane on an AWS Region and its 5G UPF on an AWS Outposts’ edge location.

Other NEC cloud related partnerships:

  • NEC’s collaboration with Rakuten Mobile, Japan’s disruptive open RAN and cloud-native 4G/5G wireless service provider, has certainly raised its open RAN and 5G Core profile. In May, Rakuten Mobile signed MoUs with Fujitsu and NEC to try and accelerate “global expansion” of Rakuten Communications Platform (RCP).
  • In June, NEC and Rakuten Mobile said they would jointly develop the containerized standalone (SA) 5G core network (5GC) to be utilized in Rakuten Mobile’s fully virtualized cloud native 5G network.
  • Later in June, Rakuten Mobile, NEC and Intel announced that they have achieved a performance of 640 Gbps per server for the containerized User Plane Function (UPF) on the containerized 5G SA core network jointly developed by Rakuten Mobile and NEC running on the Rakuten Communications Platform (RCP).
  • In July, NEC expanded its “multi-year strategic partnership” with Microsoft whereby NEC adopted Microsoft Azure as its preferred cloud platform provider.  (But now it’s in bed with AWS?)
  • In August, NEC announced a collaboration with Fujitsu on interoperability testing for 5G base stations that conform to specifications from the O-RAN Alliance.

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About NEC Corporation:

NEC Corporation has established itself as a leader in the integration of IT and network technologies while promoting the brand statement of “Orchestrating a brighter world.” NEC enables businesses and communities to adapt to rapid changes taking place in both society and the market as it provides for the social values of safety, security, fairness and efficiency to promote a more sustainable world where everyone has the chance to reach their full potential. For more information, visit NEC at https://www.nec.com.

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References:

To view and hear the comments from Toshifumi Yoshizaki, Executive Vice President at NEC Corporation and Matt Garman, Senior Vice President at Amazon Web Services Inc (pictured above), please visit: https://www.nec.com/en/press/202109/global_20210908_01.html

https://www.lightreading.com/5g/nec-expands-aws-tie-up-to-gain-5g-edge/d/d-id/771938?

Rakuten Mobile, Inc. and NEC to jointly develop the containerized standalone (SA) 5G core network

 

Why It’s Important: Rakuten Mobile, Intel and NEC collaborate on containerized 5G SA core network

 

Gartner: AWS, Azure, and Google Cloud top rankings for Cloud Infrastructure and Platform Services

Gartner’s latest Magic Quadrant report for cloud infrastructure and platform services (CIPS) ranks Amazon Web Services (AWS), Microsoft Azure, and Google Cloud as the top cloud service providers.

Beyond the top three players, Gartner placed Alibaba Cloud in the “visionaries” box, and ranked Oracle, Tencent Cloud, and IBM as “niche players,” in that order.

The scope of Gartner’s Magic Quadrant for CIPS includes infrastructure as a service (IaaS) and integrated platform as a service (PaaS) offerings. These include application PaaS (aPaaS), functions as a service (FaaS), database PaaS (dbPaaS), application developer PaaS (adPaaS) and industrialized distributed cloud offerings that are often deployed in enterprise data centers (i.e. private clouds).

Figure 1: Magic Quadrant for Cloud Infrastructure and Platform Services

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1.  Gartner analysts praise Amazon AWS for its broad support of IT services, including cloud native, edge compute, and processing mission-critical workloads.  Also noteworthy is Amazon’s “engineering prowess” in designing CPUs and silicon. This focus on owning increasingly larger portions of the supply chain for cloud infrastructure bolsters the No. 1 cloud provider’s long-term outlook and earns it advantages against competitors, according to the Gartner report.

“AWS often sets the pace in the market for innovation, which guides the roadmaps of other CIPS providers. As the innovation leader, AWS has materially more mind share across a broad range of personas and customer types than all other providers,” the analysts wrote.

AWS, which recently achieved $59 billion in annual revenues, contributed 13% of Amazon’s total revenue and almost 54% of its profit during second-quarter 2021.

AWS’s future focus is on attempting to own increasingly larger portions of the supply chain used to deliver cloud services to customers. Its operations are geographically diversified, and its clients tend to be early-stage startups to large enterprises.

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2. Microsoft Azure, which remains the #2 Cloud Services Provider, sports  a 51% annual growth rate.  It earned praise from Gartner for its strength “in all use cases, which include the extended cloud and edge computing,” particularly among Microsoft-centric organizations.

The No. 2 public cloud provider also enjoys broad appeal. “Microsoft has the broadest set of capabilities, covering a full range of enterprise IT needs from SaaS to PaaS and IaaS, compared to any provider in this market,” the analysts wrote.

Microsoft has the broadest sets of capabilities, covering a full range of enterprise IT needs from SaaS to PaaS and IaaS, compared to any provider in this market. From the perspective of IaaS and PaaS, Microsoft has compelling capabilities ranging from developer tooling such as Visual Studio and GitHub to public cloud services.

Enterprises often choose Azure because of the trust in Microsoft built over many years. Such strategic alignment with Microsoft gives Azure advantages across nearly every vertical market.

“Strategic alignment with Microsoft gives Azure advantages across nearly every vertical market,” Gartner said. However, Gartner criticized Microsoft for very complex licensing and contracting.  Also, Microsoft sales pressures to grow overall account revenue prevent it from effectively deploying Azure to bring down a customer’s total Microsoft costs.

Microsoft Azure’s forays in operational databases and big data solutions have been markedly successful over the past year. Azure’s Cosmos DB and its joint offering with Databricks stand out in terms of customer adoption.

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3.  Google Cloud Platform (GCP) is strong in nearly all use cases and is slowly improving its edge compute capabilities.  Google continues to invest in being a broad-based provider of IaaS and PaaS by expanding its capabilities as well as the size and reach of its go-to-market operations. Its operations are geographically diversified, and its clients tend to be startups to large enterprises.

The company is making gains in mindshare among enterprises and “lands at the top of survey results when infrastructure leaders are asked about strategic cloud provider selection in the next few years,” Gartner analysts wrote. Google is also closing “meaningful gaps with AWS and Microsoft Azure in CIPS capabilities,” and outpacing its larger competitors in some cases, according to the report.

The analysts also noted that Google Cloud “is the only CIPS provider with significant market share that currently operates at a financial loss.” The No. 3 public cloud provider reported a 54% year-over-year revenue increase and a 59% decrease in operating losses during Q2.

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Separately, Dell’Oro Group Research Director Baron Fung recently said that hyperscalers make up a big portion of the overall IT market, with the 10 largest cloud-service providers, including AWS, Google, and Alibaba, accounting for up to 40% of global data center spending, and “some of these companies can have really tremendous weight on the ecosystem.”

The Dell’Oro report noted that some providers  have deployed accelerated servers using internally developed artificial intelligence (AI) chips, while other cloud providers and enterprises have commonly deployed solutions based on graphics processing units (GPUs) and FPGAs.

Fung explained that this model has also spilled over into those cloud providers also building their own servers and networking equipment to better fit their needs while “moving away from the traditional model in which users are buying equipment from companies like Dell and [Hewlett Packard Enterprise]. … It’s really disrupting the vendor landscape.”

Certain applications—such as cloud gaming, autonomous driving, and industrial automation—are latency-sensitive, requiring Multi-Access Edge Compute, or MEC, nodes to be situated at the network edge, where sensors are located. Unlike cloud computing, which has been replacing enterprise data centers, edge computing creates new market opportunities for novel use cases.

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References:

https://www.gartner.com/doc/reprints?id=1-26YXE86I&ct=210729&st=sb

https://www.sdxcentral.com/articles/news/amazon-microsoft-google-control-gartners-cloud-rankings/2021/08/

5-Year Forecast: Server CPU Refresh, Accelerated Computing, and Edge Computing to Drive Future Data Center Spending

 

Google Cloud revenues up 54% YoY; Cloud native security is a top priority

Google Cloud revenues increased 54% year over year to $4.62 billion during the second quarter of 2021, parent company Alphabet reported today. Google Cloud’s operating loss shrunk 59%, from $1.42 billion a year ago to $591 million last quarter.

Google Cloud includes both Google Cloud Platform (GCP) and its Workspace (formerly G Suite) cloud computing services and collaboration tools.

Like previous quarters, “GCPs revenue growth was, again, above cloud overall, reflecting significant growth in both infrastructure and platform services,” the company said in a statement.

“As for Google Cloud, we remain focused on revenue growth, and are pleased with the trends we’re seeing across cloud,” Google CFO Ruth Porat said on the company’s 2Q-2021 earnings call today. Porat added that growth in its Google Cloud Platform segment again surpassed overall cloud gains “reflecting significant growth in both infrastructure and platform services.”

“We will continue to invest aggressively, including expanding our go-to-market organization, our channel expansion, our product offerings, and our compute capacity,” she said.

Also on today’s earnings call, Google CEO Sundar Pichai cited security as a competitive differentiator and “our strongest product portfolio.”  Google will continue to invest in security and continue its work to integrate its various security products such as Beyond Corp and Chronicle, he added.

“Cyber threats increasingly are on the mind of not just CIOs but CEOs across our partners. So it’s definitely an area where we are seeing a lot of conversations, a lot of interest…so a definite source of strength and you’ll see us continue to invest here,” he said.

“We are cloud native, we pioneered … zero trust and built the architecture out from a security-first perspective.  Particularly, over the course of the last couple of years, with the recent attacks, [companies] really started thinking deeply about vulnerabilities, supply chain security has been a major source of consensus, cyber threats are increasingly on the mind of, not just CIOs, but CEOs across our partners. So it’s definitely an area where we are seeing a lot of conversations, a lot of interest.”

Google Cloud, along with its other business units, boosted  Alphabet’s revenue 62% year over year, to $61.9 billion. As usual, Google ad revenue represented the biggest piece of the pie. It grew 69% to $50.44 billion.  Retail was the biggest contributor to advertising growth.

Google Cloud holds around 7% market share in the cloud services segment, according to a Canalys report released in April 2021. It trails Amazon Web Services (AWS) and Microsoft Azure, which hold 32% and 19% market share, respectively.

Microsoft posted financial results Tuesday, its Intelligent Cloud revenue increased 30% to $17.4 billion. The company stated Azure revenue grew of 51%, but did not break out a dollar figure. Amazon is set to report earnings on Thursday.

Along with their hyper-scale cloud competitors Google Cloud is partnering with telecom companies all over the world to help them drive transformation and accelerate 5G adoption and monetization.

Here are a few of their telco partners:

 

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References:

https://abc.xyz/investor/static/pdf/2021Q2_alphabet_earnings_release.pdf?cache=4db52a1

https://abc.xyz/investor/

https://www.fiercetelecom.com/financial/google-cloud-revenue-climbs-54-q2

https://www.sdxcentral.com/articles/news/google-cloud-losses-shrink-59-revenue-hits-4-6b/2021/07/

https://techblog.comsoc.org/tag/google-cloud/

https://cloud.google.com/solutions/telecommunications

Mavenir to deploy cloud-based 4G/5G radio units & telco software on Amazon Web Services

Less than one month after Dish Network disclosed it is collaborating with Amazon Web Services, Inc. (AWS) for its “cloud native” 5G core network [1.], Mavenir has announced support for deployments and integration of its “cloud-native” telecom network functions with telco infrastructure solutions on AWS.

Mavenir’s collaboration with AWS allows Communications Service Providers (CSPs) to deploy Mavenir’s 4G and 5G products and applications with AWS’s computing infrastructure, state of the art container deployment and management technologies, and big data analytics services.

Note 1. Both Mavenir and AWS are vendors for Dish Network’s (DISH) greenfield 5G wireless network which is comprised of a virtualized RAN (vRAN) and a “cloud native” 5G core network (which includes highly touted functions such as network slicing, orchestration/automation, virtualization, etc).

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Mavenir’s “cloud-native” Open RAN, 5G packet core, IMS, and messaging will be combined with Amazon Elastic Kubernetes Service (Amazon EKS) anywhere, supporting AWS Outposts. There will also be options for existing deployments to migrate Mavenir’s IMS core, voice, and messaging to Amazon EKS and Amazon Elastic Compute Cloud (Amazon EC2) infrastructure.

AWS will also be able to run Mavenir’s orchestration and network slicing solutions. The two companies will combine their technologies to centrally manage data for network-wide insights and optimization. Mavenir and AWS will also work together to provide private networks and edge deployments.

The solution is designed to scale and leverages the same tools and technologies offered by AWS to enterprise applications today. These tools are the backbone for visibility and automation for any AWS-based offering and generally referred to as Platform-as-a-Service (PaaS).

That, in effect, results in offloading some of the telco application business to cloud functions.  Mavenir says that will reduce complexity, put service providers at par with organizations which are realizing cost savings from cloud migrations without losing insight, performance, and control on their networks.

Opinion: The above claims remain to be proven!  Time will tell.  However, this partnership provides a well respected host environment (AWS) for Mavenir’s cloud resident 4G/5G software. That certainly lowers the risk for service providers that want to deploy Mavenir’s products and applications.

Another key element from this collaboration is the enablement of Private Networks and Edge deployments on AWS, powered by Mavenir’s Digital Enablement platform. With a digital app store for enterprise and various industry 4.0 applications such as IVA, AR/VR, IIoT and Robotics control, Mavenir’s Edge AI application suite is empowering an ecosystem of developers, service providers, partners, and enterprises to create and deploy applications in AWS to power digitalization and industry 4.0 with 5G.

This collaboration also lowers the network deployment time and cost for Mobile Network Operators and enterprises equally fulfilling use cases of either adding 5G and edge capabilities to an existing network or a greenfield 4G/5G network launch leveraging public clouds.

“The collaboration with Mavenir and AWS allows us to build out our 5G network and messaging platforms in a true cloud-native manner, harnessing the speed and agility that the AWS cloud brings along with Mavenir’s expertise in deploying and operating cloud-native network functions,” said Sidd Chenumolu, Vice President of Technology Development, DISH. “Together, we will enable our customers to take full advantage of the potential of 5G, reimagining wireless connectivity and giving our customers the ability to customize their network experience.”

“Working with AWS enables us to bring new customer-focused 5G use cases and 5G deployments to the market faster and with unique capabilities to realize true 5G potential,” said Bejoy Pankajakshan, Mavenir’s Chief Strategy Officer. “Mavenir’s solutions are designed to support full public cloud as well as hybrid cloud deployments.”

“We’re delighted to collaborate with Mavenir to offer voice and messaging solutions for core network and RAN customers along with AI/ML solutions for orchestration and observability.” said Amir Rao, General Manager Telco Solution Portfolio and Tech Alliances, AWS. “Together, we are providing true cloud native benefits to CSP customers, combining Mavenir’s expertise in the NFV market with the global scale of the AWS infrastructure to meet industry challenges of agility, scaling, slicing, and resiliency.”

Mavenir’s 4G and 5G deployments on AWS provides unique capabilities, including:

  1. Integration of Mavenir’s cloud-native Open RAN (vDU, vCU-CP, vCU-UP), Converged 4G/5G Packet Core, IMS, and Messaging with Amazon Elastic Kubernetes Service (Amazon EKS) anywhere supporting AWS Outposts.
  2. Use of AWS platform services and tools to deploy and manage cloud native network functions.
  3. Options for existing deployments to migrate Mavenir’s IMS core, voice, and messaging solutions to Amazon EKS and Amazon Elastic Compute Cloud (Amazon EC2) infrastructure.
  4. Mavenir’s Orchestration and Network Slicing solutions to manage hybrid cloud workloads running on AWS.
  5. Adoption of AWS for centrally managed telco workloads on far-edge, network edge and core simultaneously.
  6. Deployment of Mavenir’s standards compliant observability framework, RIC, NWDAF, AIOps and Analytics platform in AWS to collect the data from various AWS nodes in a centrally managed data lake and process the data using AI/ML for network wide insights and optimization.
  7. Integration of Mavenir’s telecom adaptation layer (Telco PaaS) as a common open source-based platform adaptation layer designed for telco specific workloads to support various carrier grade requirements on top of Amazon EKS and AWS PaaS functions.

Chart Courtesy of Amazon Web Services

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References:

https://www.mavenir.com/press-releases/mavenir-to-deliver-cloud-based-5g-solutions-on-aws/

Mavenir’s In-House Radio Units Show Open RAN Ecosystem’s Growing Pains

https://partners.amazonaws.com/partners/0010L00001u5BBiQAM/Mavenir

https://www.fiercewireless.com/tech/mavenir-aws-deliver-cloud-based-5g-functions-to-telcos

Analysis of Dish Network – AWS partnership to build 5G Open RAN cloud native network

https://docs.aws.amazon.com/whitepapers/latest/cicd_for_5g_networks_on_aws/5g-networks-on-aws.html

 

Analysis of Dish Network – AWS partnership to build 5G Open RAN cloud native network

On its Q1-2021 earnings call, Dish Network Chairman and Co-founder Charlie Ergen did not provide any specifics regarding Dish’s deal with Amazon/AWS or its overall plan to build a nationwide 5G Open RAN, “cloud native” core network.  Are you a bit tired of cliché’s like this:

“We’re building a Netflix in a Blockbuster world.” All Netflix did was put video on the cloud. Instead of going to a physical store, you put it in the cloud. Right. All the business plans in the world, all the numbers, all the thought if they just did something simple they put it in the cloud and the technology was they were a little ahead of the technology but the technology got there. All we’re doing is taking all those towers that you see as you drive down the highway, we basically put them in the cloud. And so instead of driving to physical store and rent a movie, you’re going to get all your data and information and automation everything from the cloud. And so it’s a dramatic paradigm shift in the way network is built and it should and it’s an advantage over legacy carriers who have 30-year-old architecture.”  Of course, that’s incorrect as almost all 5G carriers plan to build a 5G cloud native core network.

Dish is planning to build the world’s first standalone, cloud-based 5G Open Radio Access Network (O-RAN), starting with the launch of a 5G wireless network for enterprise customers in Las Vegas, NV later this year.

Dish says it will leverage AWS’s architecture and services to deploy a cloud-native 5G network that includes O-RAN—the antennas and base stations that link phones and other wireless devices to the network. Also existing in the cloud will be the 5G core, which includes all the computer and software that manages the network traffic. AWS will also power Dish’s operation and business support systems.

“Amazon has made massive investments over the years in compute storage transport and edge, [and] we’ll be sitting on top of that and as we tightly integrate telco into their infra, then we can expose APIs to their development community, which we think makes and enables third-party products and services to have network connectivity, as well as enterprise applications,” said Tom Cullen, executive VP of corporate development for Dish, explaining some of the technical details of the arrangement during Thursday’s earnings call.

Ergen reiterated Dish’s plan to spend up to $10 billion on its overall 5G network and provided milestone date for completion of the first phase of the 5G build-out.

“All of that $10 billion isn’t spent by June of 2023, which is our major milestone,” Ergen said, pointing to the company’s agreement with the U.S. government to cover at least 70% of the population with 5G no later than June 14, 2023.  However, Ergen has an escape hatch:

“The agreement we have [with the FCC] recognizes that [there could be] supply chain issues outside of our control, and that the timelines could be adjusted. But we don’t look at it that way internally. There is always unforeseen circumstances, and this one might be particularly acute. But we’re not going to let anything stop us. We’re focused on meeting our timelines, and regardless of what the challenges are. And we’ll have to reevaluate that from time to time, but we’re focused right now on Las Vegas and we’re focused on the 20% build-out by June of next year.”

“We’re not going to let anything stop us, he added.  The $10 billion “does take us through the complete (5G) buildout.”

On the 5G cloud native aspect, Ergen said:

“Yes, we anticipated a cloud native network from the beginning, he said. “So the $10 billion total build-out cost that we announced a couple of years ago–I think people are probably still skeptical … But you can see where we’re headed. Most of your models will probably take a lot of capex off the board when you understand the architecture, and we’re not going to go through all the architecture in this call, but it’s certainly has a material impact on capex.”

Dish said last week it plans to run all of its network computing functions inside the public AWS cloud – a plan that represents a dramatic break from the way most 5G networks around the world run today.  Many analysts think that’s a huge cyber-security risk as the attack surface is much greater in a virtual, cloud based network.

Marc Rouanne — Executive Vice President and Chief Network Officer:

“Yeah, the way to think of our cloud native network is a network of networks, that’s the way it’s architected. So when a customer comes to us, it’s easy for us to offer one sub network, which we can call it private network and there are techniques behind that like slicing, like automation, like software defined, so I’m not going to go into the techniques, but natively the way to think of it is really this network of networks. Right. And then, as Stephen, you’ve seen that you plan this to the postpaid customers and telling you how they would shake lose sub networks.”

Stephen Bye — Executive Vice President, Chief Commercial Officer

“Absolutely, yeah. No, I think we’ve talked to a number of customers across multiple verticals in different industry segments and is an increasing appetite in demand for the kind of network that we’re building, which is really to enable them to have more security, more control and also more visibility into the data that’s coming off the devices, so that they can control their business more effectively. So we’re seeing a terrific demand. And the network architecture, we’re putting in place actually enables and unlocks that opportunity for those enterprise customers and it’s again not restricted to any specific vertical.

We’re touching a lot of different companies and a lot of different vertical segments across the country and the other aspect of the opportunity that we see for ourselves is that while we build out a nationwide network, we are in the process of working with customers and prospective customers on private networks that are not limited by the geography of our national footprint. So we can deploy those within their environments to support their business operations as well. So the demand we’re seeing is terrific and we’re already engaged with a number of customers today.”

Ergen chimed in again:

“The cloud infrastructure as it existed a couple of years ago, really didn’t handle telco very well, there has been a lot of R&D and investment that they’ve had to make to transform their network into something that where a telco can operate in the cloud, because it’s a little bit different than their traditional IT infrastructure. And then today they are, they were best in class room for what we needed and whether it be their APIs and the documentation and discipline and vendor at the — community that supports them and their — the developers and then of course obviously reach into the enterprise business. So it was — so that’s the first and foremost.

And then the second thing I think is, is the company committed? I’m not going to put words in Amazon’s mouth, I’ll let them talk to their commitment, but they’ve done a lot of work for us to help us without knowing where they have the deal or not and very appreciative that it. I think it’s helpful that Andy will become the CEO because he’s owned this project from the start and he can — he will be able to move all the pieces within Amazon to focus on this. And so I think at the end of the day, I think we’re going to be their largest customer in cloud and I think they’re going to — they may be the largest customer in our network. I mean, but we have to build a network and prove it, and they have to build and prove it. I think that all other carriers around the world will, including the United States will look at Amazon as a real leader here because we’re just doing something different.”

Stephen Bye — Executive Vice President, Chief Commercial Officer

“Yeah. So just in terms of what the Las Vegas build looks like. I think there are several attributes that are really important to what we’re doing to build on Charlie’s comment. One is we are building a cloud native infrastructure. We are using an Open Radio Access architecture. But it’s also a 5G native network. We’re not trying to put 5G on top of 2G, 3G and 4G, the infrastructure that we’re deploying is optimized for 5G and the way we’ve designed the network from an RF perspective and a deployment perspective is to take advantage of the 5G architecture as well as the 5G platform. And so, what does that look like?

It’s basically a new network, it’s new infrastructure, it’s designed using all of the spectrum bands that we have and the RF is optimized to take advantage of that. So we’re on a path to launching that in the third quarter, but it’s one of a number of markets we have coming on. We just have announced those markets through the end of the year, but it’s the first, obviously a number that we have in flight today and we’ve got activity going on across the country to actually build out this network. So it will be the first one that people can touch and feel and get the experience, but it is really a 5G native network and we’ve proven that O-RAN from a technology perspective can work compared to that at the end of last year. Now we are in the execution phase, now we’re in the deployment phase and so you know Vegas will have to be the first one that it will be a fully deployed market that people will be able to touch and feel and experience.”

Bye added that the 5G build-out will be done in phases but the network is designed to support all customers across all segments.

5G Network End-to-End Architecture.   Image courtesy of AWS.

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In a note to clients, analyst Craig Moffett said that Dish was purchasing services from AWS rather than Amazon investing in Dish’s 5G network:

“It was a purchase agreement, albeit one freighted with lots of rather fuzzy jargon, and nothing more. Notably, Verizon already has its own relationship with AWS, and theirs does call for AWS to co-market Verizon services to AWS’s enterprise customers. By contrast, the Dish agreement calls only for Dish to market AWS services to Dish’s customers, not the other way around. Objectively, it is Verizon, not Dish, that has the more strategic relationship.

Amazon isn’t likely to market a service to its customers unless they are highly confident that its quality is first rate and that its staying power is assured. Perhaps Dish will get there. But it won’t be clear that they have arrived at that point until their network is successfully serving customers… without the safety net of the T-Mobile MVNO agreement. That’s not until 2027. That feels to us like a long time to wait.”

Regarding Dish Network’s new business model, Craig said “It is now fair to say that Dish’s core business is wireless rather than satellite TV. Not by revenues, of course; the wireless business is today but the modest reseller stub of what once was Boost (Mobile). But certainly by valuation….What does matter, however, is the extent to which the satellite TV business can serve as a source of funds for financing the wireless business.”

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References:

https://www.fool.com/earnings/call-transcripts/2021/04/29/dish-network-corp-dish-q1-2021-earnings-call-trans/

https://www.nexttv.com/news/dishs-aws-deal-to-put-5g-in-the-cloud-like-netflix-in-a-blockbuster-world-ergen-says

https://d1.awsstatic.com/whitepapers/5g-network-evolution-with-aws.pdf

https://www.lightreading.com/service-provider-cloud/ergen-hazy-on-dish-aws-deal-financials-5g-buildout-costs/d/d-id/769152?

https://www.lightreading.com/service-provider-cloud/dishs-5g-network-architect-explains-new-amazon-deal/d/d-id/768933

https://docs.aws.amazon.com/whitepapers/latest/cicd_for_5g_networks_on_aws/5g-networks-on-aws.html