Nokia this week appeared to embrace the major cloud providers as future partners in the communications service provider (CSP) segment to deliver new 5G and edge services, announcing deals with Microsoft Azure, Amazon Web Services, and Google Cloud Platform.
The announcements were followed by the news today that Nokia may lay off up to 11% of its workforce as it pursues an aggressive restructuring. To me, it's quite simple what this all means: Nokia is acknowledging a permanent shift in the CSP infrastructure market that favors a shift toward cloud infrastructure to supply services – especially for emerging 5G services.
With the major service providers in the past week boosting their capital spending budgets in preparation for accelerated 5G wireless deployments, the timing is no coincidence. Nokia's announcement with AWS, Google and Microsoft is an important step forward in formalizing the working relationships between 5G equipment vendors and hyperscale cloud providers needed to realize the full potential of private wireless networking for enterprise use cases.
5G infrastructure will be the first major cycle in which almost all services can be virtualized in the telco core. This makes it more suitable for cloud deployment. It will also provide an interesting platform that can enable more creative services. The capability for 5G networks to work with edge cloud is a fundamental requirement to enable the ultra-reliable low latency communications (URLLC) that many advanced 5G use cases will require -- and hopefully generate new profitable services for both CSPs and cloud providers.
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Working to enable customers of the cloud providers to develop their own use cases will help to spur innovation needed to overcome enterprise-specific challenges driven by their unique requirements and operating environments. Nokia included specific communications service providers, namely DT and Telus, as part of the announcement, indicating customer demand from CSPs.
Breaking it down
Nokia appears to be finally facing the music, unlike some of its rivals in the CSP market that have been slow to acknowledge that 5G will largely be a cloud game, as I have been predicting for years. It's clear that traditional telecommunications infrastructure is rapidly shifting toward the software-defined model of the cloud, which favors "disaggregated" solutions -- unbundled hardware and software -- that provides more flexibility.
Let's take a quick look at the details of all three deals, which were laid out in a series of press releases from Nokia.
Nokia and Microsoft:
* Nokia to integrate its cloud RAN technology with Microsoft Azure
* Nokia partnering with best-in-class cloud providers to leverage its cloud RAN leadership and drive end-user 5G deployments.
Nokia and Google:
* The two companies will develop 5G solutions combining Nokia’s radio access network (RAN), open RAN, and cloud RAN, with Google’s edge computing platform.
* Building on recent partnership announced in February, new collaboration between Nokia and Google Cloud will deliver additional 5G monetization opportunities for CSPs.
Nokia and AWS:
* Collaboration to utilize cloud RAN and open RAN technology to develop new customer-focused 5G use case.
* Nokia working with AWS to extend reach of cloud RAN and open RAN technology and accelerate 5G deployments.
All of these deals make sense to target 5G edge applications and services. One of the growing opportunities in 5G is the use of a mix of 5G spectrum including newly auctioned C-band spectrum and unlicensed or shared spectrum resources such as Citizens Broadband Radio Services (CBRS) to provide private wireless capabilities -- or networks that enterprises can build themselves to serve applications at the edge ranging from retail analytics to industrial automation. Without robust edge cloud capabilities, private wireless is a non-starter as a major business opportunity.
The deals also support the idea that, even if run in an open environment, the telco expertise that Nokia brings can be essential for making 5G and edge cloud work together.
Some other points
- The fact that Nokia claims more than 200 private network customers is a nod that they are moving beyond proof of concept (POC) stages and putting the necessary pieces in place to run production networks. You can't run a production private wireless network with 5G demands without close cloud partnerships.
- The Microsoft announcement could be the most mature. Microsoft has done a lot of work to develop its CSP platform, including recent acquisitions of Affirmed and Metaswitch. Nokia sees Microsoft as becoming a major player in the telco cloud, as we do.
- The AWS partnerships include engineers from both teams getting to know each other. One goal seems to be to enable AWS EC2 customers to develop their own use cases and purchase the resources they need to build and run their own private wireless use cases.
- The Google partnership seems similar to AWS by delivering capabilities that enable Google cloud customers to design their use cases. The fact that this announcement featured two CSP quotes (DT and Telus) indicates that they could have been a driving force in putting something formal together. This shows that CSPs have a large role to play in driving the private wireless-as-a-service concept.
The timing of the announcement and the coordination among the cloud providers and CSPs seem to indicate that it is customer driven. CSP customers believe that integrators such as Nokia and the cloud providers will be instrumental in solving practical edge computing challenges associated to deliver URLLC requirements and 5G private wireless use cases – and they would like them to cooperate.
All of these announcements indicate that as part of Nokia's ongoing restructuring, it's going "all in" on private wireless and cloud-enabled 5G. As demonstrated by customer names, it's being driven by the end market, and it's the right thing to do.
It also begs the question: What will Ericsson and Huawei do? It seems to be clear to everybody that 5G means a massive shift toward cloud-enabled services, so it's just a matter of time that the rest of the world’s major CSP suppliers give up the ghost on the legacy model of vertically integrated technology.
Expect to see more on this trend from Nokia's CSP supplier rivals such as Huawei and Ericsson in the near future.
R. Scott Raynovich is the founder and chief analyst of Futuriom. For two decades, he has been covering a wide range of technology as an editor, analyst, and publisher. Most recently, he was VP of research at SDxCentral.com, which acquired his previous technology website, Rayno Report, in 2015. Prior to that, he was the editor in chief of Light Reading, where he worked for nine years. Raynovich has also served as investment editor at Red Herring, where he started the New York bureau and helped build the original Redherring.com website. He has won several industry awards, including an Editor & Publisher award for Best Business Blog, and his analysis has been featured by prominent media outlets including NPR, CNBC, The Wall Street Journal, and the San Jose Mercury News. He can be reached at [email protected]; follow him @rayno.
Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceTelecom staff. They do not represent the opinions of FierceTelecom.