VMworld Europe 2019: Powering Telco Cloud-Native Transformation

Emir Halilovic – Principal Analyst

Summary Bullets:

  • After forming its telco business to take a piece out of the NFV cake several years ago, VMware has continued to gain momentum with CSPs.
  • VMware is likely to expand its presence in telco networks as its core products develop to address key cloud-native transformation priorities.

At the onset of the NFV revolution, most industry players reached a consensus that the virtualized telco of the future will become a DevOps shop, running mainly on open source software components. However, even though it may work for the largest telcos, this blueprint is far from universal – as exemplified by the telco business momentum shown by one of the largest global ISVs, VMware. At the VMworld Europe event in Barcelona on November 3-7, VMworld executives put a special emphasis on their telco business, which nowadays encompasses three primary focus areas: building the telco cloud, optimizing the edge, and optimizing the radio. VMware now counts more than 100 telco cloud and service assurance clients in production serving over 800 million mobile subscribers. Telco – the only vertical business within VMware – figured prominently in the keynotes as well, with the launch of VMware’s ‘Project Maestro’ telco cloud orchestrator as one of the main points of CEO Pat Gelsinger’s presentation.

Project Maestro illustrates VMware’s elevated ambitions in telco very well; it expands VMware’s role in telco cloud to NFV orchestration and opens the way for telcos to utilize other VMware products, such as its Tanzu portfolio of Kubernetes solutions. This cross-sell capability will become increasingly important as telcos start to build edge computing capabilities and focus their attention on running cloud-native, containerized applications. But even without synergies with Tanzu, Maestro will be VMware’s vehicle for addressing upcoming edge cloud deployments, due to its ability to provide a consistent telco cloud infrastructure environment from the edge to the core data centers.

VMware is making additional inroads into the telco space, including its recent acquisition of radio access analytics specialist Uhana and the evolution of its VeloCloud SD-WAN offering. Presented as its first step in ‘cloudifying’ the RAN, Uhana provides predictive AI analytics to operators running 4G and 5G networks and provides a foundation for automating RAN deployment and operations.

In addition, VeloCloud – acquired by VMware in November 2017 – is well along the way to becoming a mainstream part of VMware’s offering. The number of customer sites it covers has almost doubled to 150,000, with the largest customer installations covering around 5,000 sites. Its number of network gateways – which VeloCloud considers its key competitive advantage – has reached 2,000. VeloCloud is also adding telco partners, the latest being Deutsche Telekom’s T-Systems, as well as new capabilities like advanced security functionality.

All this points to an increasingly large ‘contact area’ that VMware has with telecom providers, as well as its eagerness to address the challenges of telco cloud-native transformation. The timing is fortuitous, as operator interest seems to be accelerating now that the first phase of decoupling telco functions from hardware is nearing completion. In this quest, VMware’s strengths are its delivery capability, size, and lack of vested interest in the status quo, but it will have to continue to prove its value versus open source alternatives and stay ahead of the mainstream software development curve.

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