London, United Kingdom - 19 Nov 2019
5G will catalyze change in the industry by enabling new business models and pave the way for new enterprise use cases. Complementary to 5G, cloud-native platforms promise operational efficiencies and new growth for Mobile Service Providers (MSPs). The market for cloudified 4G and 5G network elements is expected to reach US$20 billion by 2024, at a Compound Annual Growth Rate (CAGR) of 25%, finds global tech market advisory firm ABI Research.
This growth aligns with the industry’s pursuit to embed a degree of agility in the ecosystem. There are some promising cloud-native technologies that cater to varying use cases across numerous enterprise verticals. The benefits notwithstanding, cloud-native computing poses some challenges for an industry that is geared towards verticalized country-specific/region-specific services. “Therefore, there is no ‘one size fits all’ model that MSPs can adopt in a way that is sufficiently impactful and not disruptive,” says Don Alusha, Senior Analyst at ABI Research.
Cloud-native software constitutes a key pillar of today’s planet-spanning digital economy. Hyperscalers like Alibaba, Facebook, and Google are using it successfully to deploy new services. Alusha explains, “In telecoms, MSPs are asking three questions before they adopt new products predicated on cloud-native principles. 1) Does it help re-engineer existing processes? 2) Does it scale across a wide geographic and technology footprint? 3) Does the solution - and the vendor providing it - help them acquire the necessary human capital that will be key for internal ‘change’ toward global software-centric operations?” These are not trivial questions and remain some of the biggest hurdles for the industry to lead with more manageable and automated 5G networks in an increasingly digitalized global economy.
The industry recognizes that the technology layer is a key piece to drive new growth. But it is a cultural and process change that may well mark a real watershed for a successful digital strategy. Such changes will be propelled by MSPs’ ability to achieve the right mix of telco, IT, big data and analytics expertise. The required shift in mindset is as applicable to MSPs as it is to vendors who are presented with new variables that fall outside their traditional purview. Building a cloud-native environment and industrialization of existing vertically integrated deployments across multiple geographies are some key areas of focus for vendors. For example, Nokia Cognitive Collaboration Hubs initiative and Ericsson’s Global Artificial Intelligence Accelerator are two initiatives that aim to blend telecoms, AI and cloud expertise into a large-scale commercial offering.
Now it is not the time to cease innovation or to sacrifice creativity for both the supply and demand sides in telecoms. But there is a call to redirect energy and investment towards creating easy to consume products, new value chains and horizontal value creation that piggyback on 5G and cloud-native platforms. A common cloud-native platform that accommodates multiple technology variances is expected to be a key piece of the wider cloud-native 5G deployments puzzle. Canonical, Mavenir and VMware are some vendors, among many others, that are supporting that evolution with products that are “naturally horizontal”, a fitting value proposition for a software-centric network such as 5G.
“Cloud native methodologies bode well for an industry that is firing on all cylinders to streamline existing processes and operations, pursue new revenue streams, and compete as effectively as possible with non-telecoms players. One side of the coin is vendors’ significant role to guide the industry to the benefits of the broader cloud native computing story. The other side is MSPs’ readiness to embrace a mindset that creates value horizontally. MSPs are big organizations with thousands of employees. It is viable for the leadership to influence the culture, but it will take relentless communication. It is what they say and how they say it, and it may also be how often they say it,” Alusha concludes.
These findings are from ABI Research’s Cloud-Native Computing in 5G Networks application analysis report. This report is part of the company’s 5G Core & Edge Networks research service, which includes research, data, and analyst insights. Based on extensive primary interviews, Application Analysis reports present in-depth analysis on key market trends and factors for a specific technology.
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