Summary Bullets:
- Last week, Nokia announced a strategy to build out private industrial LTE networks, Ericsson carved out four cellular IoT segments, and Cisco offered solutions to bring ‘intent-based’ networking to the edge.
- What do these announcements imply about the future of the IIoT and how should service providers respond?
Last week, three of the most powerful infrastructure and networking equipment vendors made IoT-related announcements, some in conjunction with their Q4 earnings reports. While this clearly denotes how strongly they view IoT as a key growth market, it also brings into question their relationships with the operators which in many cases have been their primary customers.
Ericsson divided its cellular IoT solutions into four markets:
- Massive IoT includes solutions to accommodate the expected surge in the number of connected devices, both from the availability of low-power networks (LPWANs) like NB-IoT and LTE-M as well as from the future ability of 5G networks to handle huge capacity requirements.
- Broadband IoT refers to use cases that need to span large distances but which may also need high speeds and bandwidth; Ericsson plans to offer solutions for the automotive sector, drones, AR/VR, wearables, and smart manufacturing.
- Industrial automation – e.g., in-building manufacturing solutions for robotics, automation, and predictive maintenance applications – has stringent high-bandwidth, real-time connectivity requirements and requires very accurate indoor positioning. Presumably, Ericsson will be developing equipment and related technical solutions to support this environment as well.
- Critical IoT requires ultra-low latency real-time communication and will support use cases in smart manufacturing, intelligent transportation, healthcare, and AR/VR.
Its support for massive connections appears straightforward, as Ericsson is helping operators build out their LPWAN and 5G networks. It is in the broadband, industrial, and critical IoT segments that Ericsson’s go-to-market gets interesting. If Ericsson is actually bundling vertical solutions, is it empowering or partnering with operators or is it potentially selling these solutions directly to enterprises, thus causing potential channel conflict? Do the operators want or need Ericsson to get involved by becoming a solution provider? It’s one thing to develop technical solutions and infrastructure equipment to help partners build out solutions, but another to directly provide vertical end-to-end solutions to customers. Perhaps Ericsson will be doing both; it may work with operators for certain deals, in certain geographies, or in certain vertical segments but will sell direct to enterprises in others, especially if it can’t find an operator partner with sufficient clout, interest, or expertise. In either case, it needs to clarify its position, as its operator customers are no doubt already asking these questions.
Cisco’s announcements on IoT last week were somewhat less controversial because it already sells directly to enterprises and may partner with operators (or sometimes compete against them) for particular deals. Cisco made announcements about its ‘intent-based networking’ (IBN) strategy, defined as networks capturing business intent and translating it into network policy. Cisco claims this approach has benefits for scale, flexibility, and security. It also has equipment that can be used to carry out this capturing and translating, i.e., the Cisco Catalyst IE3x00 Rugged Series of Switches and the Cisco IR1101 Rugged Integrated Services Router, which are optimized for IoT and can be used across the campus, branch, and WAN. In addition, Cisco announced developer tools for ecosystem partners to build and manage applications at the edge, as well as ‘blueprints’ for utilities, manufacturing, and remote and mobile assets. It notes that these validated designs enable customers and partners to quickly accelerate from PoC to successful, scaled deployments. Cisco also announced partner training programs for its ecosystem of industry partners, ISVs, equipment manufacturers, and service providers for customers in manufacturing, transportation, energy, retail, and the public sector.
Cisco also seems to want to have it both ways. Its Cisco Jasper connectivity platform, for example, is exclusively sold through operators, so the vendor needs to maintain strong relationships with these providers. It also has partnered with service providers for particular deals and verticals. But, it clearly also wants to sell its equipment and developer tools directly to enterprises and developers.
Nokia announced last week that it is going after the private LTE market in order to provide carrier-grade IoT solutions directly for factories, buildings, or campus environments. It notes that it may also partner with companies like AWS or HPE in these endeavors. Nokia had already announced that it is selling directly to enterprises through a new dedicated enterprise group. It also offers an MVNO service and a global service platform (WING) to help carriers and their business customers with seamless networking capabilities for global IoT deployments.
Building and managing private LTE (and future 5G) networks is clearly an opportunity that operators are very interested in. Several service providers such as Verizon and Boingo have applied for CBRS licenses in the 3.5GHz spectrum band and are testing indoor and outdoor applications. LoRa networks are also positioned as easy to deploy and cost-effective for private IoT use cases. But again, Nokia (as well as Amazon and Google and other non-carriers) is also testing CBRS. In addition, a group of companies including telecom equipment vendors, spectrum licensees, and utilities have formed an alliance to advance the development of private broadband networks for energy providers. It looks like the operators are going to have a lot of competition in this space, and it may come from the vendors they go to for their underlying network infrastructure. It is not clear that the operators can win this battle. Their public networks may be deemed too expensive, less secure, and of course, lacking in dedicated capacity to guarantee a given company’s traffic requirements.
Once again, are carriers going to be relegated to offering connectivity or only network-centric solutions as their own vendors compete against them for the heavy lifting of enterprise IoT deployments? Competing against the likes of Cisco, Nokia, or Ericsson in addition to large SIs/IT service providers in IoT is no small feat. Infrastructure vendors need to make sure they are empowering their operator customers, even as they seek higher revenues from growth areas like the IoT.