Jarich: September's acquisition flurry: Opportunities, costs, risks and the wireless network

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Current Analysis Peter Jarich

     Peter Jarich

If Labor Day marks the unofficial end of summer, the telecom and tech world got back to work pretty quickly. Verizon and Vodafone. Microsoft and Nokia. Smart watches from Samsung and Qualcomm. And the iPhone.

The "so what" from much of this is pretty straightforward. Verizon wants greater control of VZW, and VZW might just benefit if it doesn't need to worry about foreign ownership issues. Microsoft wants better control over the end-to-end Windows Phone experience. Qualcomm wants to showcase its component technologies like Mirasol and drive thinking around wearables and the Internet of Things. You probably know all of this. 

Somewhere lost in much of this, however, is the broader discussion around "opportunities." Beyond the opportunity for Microsoft to get deeper into hardware or Samsung to make your spouse's Christmas shopping a little easier this year, the Vodafone deal--along Amdocs' acquisition of Actix that got lost in the shuffle--highlights opportunities on the network side of things. 

-        Vodafone's Project Spring. My colleague Emma Mohr-McClune recently sized up Vodafone's Project Spring as an exercise in spreading around CapEx too thinly to worry competitors in a meaningful way. She's usually right about these things. Regardless, the operator's plans to build on its Verizon windfall to spend about $9 billion on additional CapEx represents potential for new vendors to work their way into the operator's networks as Vodafone thinks about how to spend the half it said will go towards mobile networks. Its LTE RAN might not see any disruption but if small cells and virtualization are a part of its plans (and they should be) then we could see much needed references for any number of vendors who want to further prove their mettle. Cisco or NEC on the small cell front. Further traction for SpiderCloud in the enterprise. Maybe even virtualized packet core investigations with someone like Affirmed or Connectem, or OSS/BSS evolutions with a hungry vendor like AsiaInfo-Linkage. I'm not saying any of these companies has an inside track. Instead, that as Vodafone looks to spend some more money, a win for any of them would be significant.

-        Amdocs, Actix and Rethinking Customer Experience. Largely lost in the shuffle of news this month, was the acquisition of Actix by Amdocs. On its face, the combination of OSS/BSS and mobile network optimization might now seem to compute. The fact that Amdocs had already rolled out a small cell deployment solution makes the rationale a little clearer--though SON principles essentially put the link between OSS and network planning front and center. Add in the ability to leverage network intelligence (including location) to drive customer experience and the pieces begin to fit together. More importantly, it highlights that the collision of the telecom network and IT domains is very real, driven by complex use cases where network intelligence and network capabilities are used to drive service offers, features and functionalities. 

Separately, these stories might not seem to be linked, but there is a thread that runs through them.

Compared with the services or device spaces, the wireless network may seem rather staid. New service evolutions and market dynamics, however, are opening up opportunities for operators and vendors in the mobile network. Technology evolutions, and a general interest in driving innovation from their suppliers, drives operator interest in working with new vendors. Incremental network investments (with or without the benefit of a cash influx) provide a good opportunity to do that. Those introductions, in turn, benefit the vendors but also create an opportunity for other carriers to follow suit as previously unproven suppliers get an endorsement. At the same time, the new technologies being introduced create a dynamic of R&D investments in specialist firms that can't necessarily be replicated by larger vendors, but can be monetized as larger vendors look to business adjacencies as a way to grow their business and meet new customer demands.

Of course, none of these opportunities will materialize on their own. Each comes with a cost, and, in this case, the key cost is risk. The risk of a start-up vendor failing to deliver on its promises or being difficult to integrate. The risk of new technologies taking longer to gain operator acceptance than anyone could imagine. The risk of dedicating sales resources towards an operator that will never look beyond its incumbent suppliers. Yet, if the flip side of an opportunity are the costs it implies, the flip side of risk is reward, and not just for those of us who enjoy a more diverse, dynamic market.

Peter Jarich is the VP of Consumer and Infrastructure at Current Analysis. Follow him on Twitter: @pnjarich.