NetCracker’s Analyst Day – Part II: Does SDN/NFV Have the Market in a State of Neurosis?

Jason Marcheck

Jason Marcheck

Summary Bullets:

  • NetCracker CEO Andrew Feinberg gave a lengthy talk at its analyst conference that was candid, but also shined a light on the challenges that lie ahead for OSS/BSS vendors looking to play a central role in telecom network virtualization.
  • Network operators are ‘feeling pain’ in a variety of ways that have them interested in SDN/NFV; however, that pain has yet to result in uniform urgency related to deploying virtualized networks.

As part of his talk at NetCracker’s 2015 Analyst conference (held May 13-15 in Boston), company CEO Andrew Feinberg provided some of his insights into not only how vendors need to approach SDN/NFV strategies, but also how operators are gauging the sense of urgency with which they need to approach deployment of the technologies.

Part I of this post examined Mr. Feinberg’s characterization of NetCracker’s place in the SDN/NFV supplier ecosystem. However, he went on to describe a state of affairs that appears fractured at best.

Frustrations of a Market with ADD

One nice thing about the tech market is that rather than complex remedies, money tends to be our panacea. In fact, just about any problem is solvable given the right amount of funding. So, it is easy to see why SDN/NFV has vendors racing headlong to solve problems… even if it might not yet be entirely clear which problems need to be solved in which order. Case in point, at various points in his talk, Mr. Feinberg described operators as all understanding that they have to transform, while simultaneously acknowledging that “they are feeling the pain, but just not enough pain,” or that they won’t move decisively on SDN/NFV until they are faced with life-and-death decisions and most of them “aren’t quite there yet.”

It’s hard to argue with this characterization…

Enter, then, Phil Jordan from Telefonica (who also spoke at the conference). By now, the competitive and regulatory environment faced by many European operators is well known. There are too many operators, ARPUs are too heavily regulated and OTTs are eating their collective lunch. In short, they need to differentiate themselves from players that can move far faster, with far fewer constraints. Add to that the fact that Telefonica maintains a large operation in Latin America, which has its own set of issues related to ARPU, regulations, etc. If that’s not pain, what is? For Telefonica’s part, it is responding by jumping headlong into SDN/NFV as the building blocks of a more agile, digital-oriented service delivery model.

Then again, there’s AT&T. Unlike Telefonica, it is under much less threat of imminent decline (even though AT&T faces its own set of market challenges). So, rather than jumping on SDN/NFV as a survival tactic, AT&T is largely doing so because it believes in the benefits that SDN/NFV can bestow. After all, few doubt the ultimate wisdom of adopting SDN/NFV. So, for those that can afford it, it’s a nice luxury. Of course, there’s also NTT’s case, which is largely driven by the Japanese government’s mandate to make its national communications infrastructure resilient even in the face of a collapse of the physical infrastructure (such as what happened with the earthquake/tsunami of 2011).

So, there you have it – three large operators, one fighting the barbarians at the gate, one being partially funded by government mandate, and the other one dipping into a well of cash flow. Now, this might be an oversimplification. However, it does illustrate the many masters a vendor must serve with its SDN/NFV go-to-market strategy. Moreover, if you throw in the remaining few thousand operators around the world that are at various stages of evaluating the technology, most of which cannot devote the resources needed for fully adopting SDN/NFV, then the landscape becomes much more varied. Now, layer on top the fact that SDN/NFV will force fundamental change in the way they do business, and the marching orders become… difficult at best.

The Playbook?

All vendors need to show their commitment to SDN/NFV; that much has been made clear. However, as Mr. Feinberg’s characterization of where operators are on the journey points out, it will be a long and sometimes arduous road. Vendors that can’t demonstrate a sustained commitment to this road will fail. Some will die. Likewise, all vendors need to demonstrate the wherewithal to prod, help, and in many cases, facilitate organizational change within the operators.

And, here’s where Mr. Feinberg’s talk made perfect sense from NetCracker’s point of view.

NEC has already demonstrated its commitment to SDN/NFV. From personal experience, I can recall NEC talking about SDN/NFV in the carrier space before it was cool. Now, to be fair, Current Analysis’ research shows that NEC is not as highly rated as an SDN/NFV supplier as many of its key rivals (Cisco, HP, Huawei, just to name three). This could cast some doubt on how long NEC will continue to fight in a market where it might not be seen as a leader. However, NEC is a $30+ billion a year multi-national conglomerate. That means it has resources to stay in a market it deems to be strategic. For its part, NetCracker’s core business deals with helping operators modernize their operations systems. So, if I’m NEC/NetCracker, I can hang my hat on a demonstrated, long-standing commitment to network virtualization, financial staying power, and specific expertise in helping telecom operators solve operational challenges.

Is NetCracker alone in laying claims to these strengths? Of course not. And, to be clear, NEC/NetCracker has a substantial amount of work to do in order to be seen in the same ranks as a host of large, higher-profile competitors. But, when given the chance to speak to a captive audience, they do come across as having the pieces in place, and the awareness required to handle the market and all of the frustrations that could come along with it.

The question is: can substance over style be enough, or will NEC/NetCracker need to bring to both to the table?

About Jason Marcheck
Jason is Research Director for the Current Analysis Service Provider Infrastructure service. Jason and his analyst team monitor and evaluate activities in the markets for Digital Media, Fixed Access, IP Services, Mobile Access, and Transport and Routing Infrastructure, Telecom Vendor Services, and the Service Enablement Ecosystem.

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