Service Providers > Networks & Service Platforms Blog



Leading Infrastructure Vendors Pushing Transformation to IP and Cloud – Ericsson Restructuring & Observations in Huawei Global Analyst Summit

by Guang Yang | Apr 28, 2014

Transformation has been the watchword for telecommunications operator strategies for many years. Operators are repositioning themselves in this dramatically changing industry, as pressure mounts from Internet companies like Google, Facebook, Tencent  etc. Now the transformation extends to telecom infrastructure vendors. Software Defined Network (SDN) and Cloud Computing, initiated by the Internet community, are gaining momentum in the global telecom world. They are going to change the models for network deployment and operation, service provisioning and even the overall business structure of telecom operators. As a consequence, the products, solutions and even business models of telecom infrastructure vendors are impacted and now it is the turn of these vendors to change.

We saw indications of change this week, when two leading infrastructure vendors stated that they are embracing concepts from the Internet community.

First Ericsson announced on Thursday April 24th. that it will restructure the network business organization into two units - 1. Radio and 2. Cloud & IP. The Cloud & IP unit will drive Ericsson’s work on virtualization. “In a transforming market we will now intensify our work to capture opportunities in virtualization and cloud, building on our leading position in core networks.” stated Ericsson’s President and CEO Hans Vestberg.

In the same week, Huawei, Ericsson's largest competitor, hosted its global analyst event in Shenzhen of China. The keynotes from Huawei’s executives and their Carrier Network Business Group focused on the transformation to an IT centric architecture and using IT philosophy in the infrastructure business. Almost all Huawei executives highlighted their determination to transform the traditional telecom network to an IT platform based, software defined, virtualized architecture, named as SoftCom. The key words throughout the entire event were Software Defined, Virtualization and Cloud. Huawei thinks that in the future the network will not be Core centric but Data Center centric, so it is strengthening its data center solutions to develop Distributed Cloud Data Center (DC2) and the Data Center as a Service (DCaaS).

Huawei hopes that the SoftCom architecture can not only address traditional telecom market but also create opportunities in the enterprise market. It has already launched a public cloud service in China. Although Huawei states that it will never be compete directly with operators but will use public cloud service to provide operators with broad options for future development.

Huawei even plans to push Cloud to the basestation. Its ‘CloudEdge’ solution will be commercially available in next year. The solution will integrate both a content cache and service node into the Huawei basestation. The service node will be based on general purpose Intel x86 platform that can be connected to Huawei’s own or a 3rd party’s cloud service. The 3rd party applications can also be integrated onto CloudEdge platform through open API’s.

So, Huawei seems to be moving aggressively to an IT centric architecture. However, I also heard some different voices in offline discussions. One delegate from Huawei’s partner - who was invited by Huawei to endorse the trend of Software Defined Infrastructure - told me that the transformation to IT architecture may take longer to actually implement. This partner is working with Huawei to support them to develop IT architecture based solutions but observes that Huawei internally has not yet reached the full consensus on this movement.

Huawei is currently one of the leaders in key areas of the telecom infrastructure market. Naturally they must move carefully to change the industry ecosystem and market structure where they bare so successful. So, even if the executives and strategy planning team are pushing the company to transform to an IT centric strategy, the pace of movement in product R&D is likely to be slow. The current promotion for the SoftCom concept is primarily to show Huawei’s strategic view on market and technology trends. There is still a long way to the real availability of these IT centric architectures.

Infrastructure giants will accelerate their transformation progress only as operators exert significant pressure.

Hence, it will take some time to see the real progress in vendors’ transformation to IP and Cloud world. Organization restructuring - like the one Ericsson just announced -  may begin to set new work priorities and unify internal thinking.

Note: Behind the scenes Intel and Commodity platform vendors are actively increasing the pressure on global operators to promote off the shelf IT platforms.

Previous Post: An important step for Alcatel-Lucent’s LTE overlay strategy | Next Post: Huawei Global Analyst Summit 2014 on Automotive Business
Leave a comment