New Investments in the Carrier Data Center: Cloud and NFV Webinar

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TECHNOLOGY BUSINESS RESEARCH, INC.

New Investments in the Carrier Data Center: Cloud and NFV Webinar

Technology Business Research (TBR) Quarterly Webinar Series

11.19.13

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2 TBR Quarterly Webinar Series | 11.19.13 | www.tbri.com | ©2013 Technology Business Research Inc.

Michael Sullivan-TrainorNetworking & Mobility Practice Executive Analyst

Email: [email protected]: @mikest

Webinar Presenter

TBR


• Transformation motivation

• Cloud versus NFV

• Carriers trailing

• AT&T versus Verizon

• NFV defined

• Service provider initiatives

• Supplier positions

• Candidate functions

• Service provider expectations

• Spending shift

• Brave new packaging world

AgendaNew Investments in the Carrier Data Center: Cloud and NFV Webinar

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Carrier most wantedNew Investments in the Carrier Data Center: Cloud and NFV Webinar

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Carrier Cloud ProvidersCompete for XaaS with QoS

and global scale

NFV: Compete with service agility

Critical values:•Save capex and opex•Increase agility to generate revenue

SOURCE: BRITISH TELECOM

SOURCE: NFV GROUP WHITE PAPER

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Carriers behind in the public cloud market New Investments in the Carrier Data Center: Cloud and NFV Webinar

AT&T

AWS

Capgemini

CitrixCognizant

CSC

Dell

Deloitte

Dimension Data

EMC

Joyent

Oracle

Rackspace

Cisco

Savvis

Navisite

TCS

Fujitsu

GoGrid

IBM

Verizon

VMware

Orange

Accenture

Wipro

-5%

15%

35%

55%

75%

95%

115%

135%

-25% -15% -5% 5% 15% 25% 35% 45% 55%

Year

-to-

year

IaaS

Rev

enue

Gro

wth

(%)

Year-to-year Corporate Revenue Growth (%)

CORPORATE REVENUE GROWTH VS. ESTIMATED IAAS REVENUE GROWTH

SOURCE: TBR ESTIMATES, COMPANY DATA

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HP(-8%, N/A %)

Google(16%, 1,664%)Microsoft(10%, 144%)

Alibaba(71%, 106%)

NOTE: SPHERE SIZE REFLECTS VOLUME OF REVENUE.GRAPHIC FROM TBR 2Q13 PUBLIC CLOUD MARKET LANDSCAPE

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Verizon vs. AT&T — near parity in two cloud wars and enterprise

• Verizon is behind AT&T and others in public cloud IaaS.

• Verizon and AT&T are leaders in enterprise private/hybrid cloud and are expected to be among the leading cloud brokers.

• Both have strong internal development plans and expectations that any vendor offer will be designed for them, i.e., implementing open standards their way.


$68 $75

$79 $82 $87

$63 $68

$72 $77

$81

$0

$20

$40

$60

$80

$100

2Q12 3Q12 4Q12 1Q13 2Q13

Reve

nue

(In

$ M

illio

ns)

PUBLIC CLOUD REVENUE

AT&T Verizon

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SOURCE: TBR AND COMPANY INFORMATION

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Verizon/Terremark: Investing in Cloud broker and SDN models

• Expanding: 2013 New E-Cloud Data Centers in London and Dallas

•Competing: IaaS make over shifted from monthly resource pools to instances as needed to better compete with Amazon, etc.

• Security: Security enhancements — role-based access control, certificate-based multifactor authentication

•Cloud Broker: John Considine, Terremark CTO — cloud brokerage (managing workloads across multiple sites and providers) coming late 2013 and early 2014

•Do It Yourself: Building own controller for SDN for specific workload orchestration in the cloud


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Network function virtualization defined

Category Definition

Key Concept Transforming the network from a large number of different elements with separate functionality to a collection of high-volume servers, storage elements, Ethernet switches and IT systems able to run applications from independent developers.

Requirements Carrier-grade reliability, scalability and security and the ability to automate operations across hundreds of virtual machines

Expectation Reduce capex while increasing operational efficiency and application and services agility

Standards Groups

• ETSI sponsored NFV Industry Specification Group (Members: AT&T, BT, CenturyLink, China Mobile, Colt, Deutsche Telekom, Orange, KDDI, NTT, Telecom Italia, Telefonica, Telstra, Verizon); now 100+ members http://portal.etsi.org/NFV/NFV_List_members.asp

• Carrier Ethernet Forum (SDN aspects)

“As an industry, we need to accelerate the journey toward NFV. §Wide array of best-of-breed ‘virtual network functions’ that run on purpose-built HW.§An NFV cloud Platform that’s optimized to run these functions at scale,” Axel Clauberg, Vice President of Architecture, Group CTO team, Deutsche Telekom AG


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NFV initiative examples

AT&T Verizon Vodafone

NFV Initiative Domain 2.0 Supplier Program;NFV ETSI ISG Founder

NFV ETSI ISG Founder

NFV ISG Participant

Current Status NFV POC NFV POC NFV interest

Purchase bias Looking for industry-standard solution

Looking for point solution to enhance internal work

Looking for industry-standard point solutions

Lead suppliers ALU, Ericsson, IBM, HP, Cisco

ALU, Ericsson, IBM, HP, Cisco

ALU, Ericsson, NSN, IBM, Cisco


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Network function virtualization supplier positions

Category Solutions Partners

Alcatel-Lucent

• CloudBand provides a management platform for orchestrating and automating NFV platforms• Opened NFV/Cloud research facility in

Kfar Saba, Israel

CloudBand Ecosystem Program — community of SPs, developers and suppliers to accelerate NFV (13 members: Deutsche Telekom, Telefonica, Citrix, Intel, Vyatta, Radware, Red Hat, HP, Nuage Networks, Gigaspaces, StackIQ, Inktank and Nominum)

Cisco Open Network Environment, Quantum HCL Technologies, Leap Wireless

Ericsson Cloud System, Virtual Network System moving toward NFV platform

Joined OpenStack to contribute to development of solutions

HP Cloud Service Automation, Matrix, Aggregation Platform

Intel

IBM PureFlex, Virtual Core Mobile, Service Activator

Optus, Connectem

NSN • Liquid Net includes virtualized elements for radio networks, applications and management.• Liquid Applications are being trialed for

base station functions, IMS and TAS.

IBM, Intel, CD NetworksIndia-based Service ProvidersSK Telecom


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Candidates for network function virtualization

Solutions

Mobile Core Networks (EPC)

Radio Access Network Elements

IMS Elements

OSS/BSS Platforms

Policy Control

Deep Packet Inspection

Session Border Controllers

Security appliances (firewalls, IDS/IPS, SSL VPNs)

Server load balancers

WAN acceleration


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AT&T’s expectations of suppliers

Margaret Chiosi, executive director of Optics and Ethernet development, representing AT&T’s founding membership in the network function virtualization (NFV) organization

• Deliver more than marketing hype• Conform to OpenFlow as protocol for the interface between the

data and control plane• Deliver OpenFlow-compliant APIs• Deliver hardware commoditization across applications

“We want our vendors to focus on software and be more innovative, enable us to shrink and grow our network requirements as we need them.” — Chiosi


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Verizon’s expectations of suppliers

Prodip Sen, director of Network Architecture, representing Verizon’s founding membership in the network function virtualization (NFV) organization

• Verizon has been engaged in NFV POCs since 2011, covering consumer and enterprise services.

• Suppliers can help solve fundamental problems of lowering cost, increasing service agility and making the network flexible to adapt to shifting user behavior and traffic patterns.

• Lacking tools and operational environment to make NFV operational in the network

“We are exploring NFV through POC and trials in limited ways. What we really need is a lot of help in the management and orchestration layers, which go above the functions.” — Sen


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Spending shift to NFV/SDN comprise large share of smaller pie

Shift to NFV/SDN opens up platform spending toIT suppliers, threatens network suppliers

Traditional99%

NFV1%

Tier 1 Service Provider NFV/SDN Share of Spend 2013-2014

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SOURCE: TBR ESTIMATES

Traditional80%

NFV20%

Tier 1 Service ProviderNFV/SDN Share of Spend 2015-2018

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SOURCE: TBR ESTIMATES


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Brave new world of solution packaging

Session-based licensing and third-party certification


Own Function

Own Platform

Own Hardware

Own Function

Own Platform

Third-party Hardware

Own Function

Third-party Platform

Third-party Hardware

Systems Supplier Software Supplier ISV

Services Supplier — Consulting, Integration, Manage/Operate, Maintain

Service Provider direction — Lower cost via standards

Virtual

Abstraction

Server

What’s your charging model for virtual instances of network functions?

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Questions?

For further information, please contact:

Kate Price James McIlroyPractice Manager, Networking & Mobility Vice President of [email protected] [email protected]

Q&A

@TBRincwww.slideshare.net/TBR_Market_Insightwww.youtube.com/user/TBRIChannel

Michael Sullivan-TrainorNetworking & Mobility Practice Executive Analyst

Email: [email protected]: @mikest

TBR

TECHNOLOGY BUSINESS RESEARCH, INC.

About TBR

Technology Business Research, Inc. is a leading independent technology market research and consulting firm specializing in the business and financial analyses of hardware, software, professional services, telecom and enterprise network vendors, and operators.

Serving a global clientele, TBR provides timely and actionable market research and business intelligence in formats that are tailored to clients’ needs. Our analysts are available to further address client-specific issues or information needs on an inquiry or proprietary consulting basis.

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New Investments in the Carrier Data Center: Cloud and NFV Webinar

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