The chatter has turned up a notch on private wireless and edge cloud. The major public cloud providers, including the three leaders – Amazon Web Services (AWS), Google, and Microsoft – all have designs on building out wireless services at the edge.
Google recently boosted its presence, adding to the chatter in edge and private wireless. Earlier in the month, it announced its own private wireless services. And this week it announced it has partnered with startup Celona to deliver private 5G to the enterprise edge. Celona also has agreements with Verizon and NTT.
The “edge” has been discussed for many years as the next frontier of cloud, where higher connectivity rates and better infrastructure deliver free-flowing data and automation for applications such as industrial automation, computer vision, and data analytics – among others.
But already, before we even get to tangible results of the edge, there are already piles of disappointments. Without naming names, there have been a lot of startups crowing about edge that haven’t really gone anywhere. And the edge startups of a decade ago haven’t amounted to much. For example, I haven’t heard much of anything about Cisco’s Jasper acquisition from way back in 2016.
Private wireless is interesting because it’s a new catalyst to shift the game at the edge. It could change the economics by connecting more things, more easily. With the public cloud providers, those economics can be grown at scale. We need to watch this development closely.
Big cloud providers ramp up wireless
What's interesting about private wireless and edge cloud is that the major cloud providers – including Amazon, Google, and Microsoft – have all shown a keen interest in developing wireless services.
Even though the edge has been a dud so far, that doesn’t mean that it will continue to be. The big cloud guys are making billions of dollars in investments in wireless, so they must know something. Microsoft’s twin acquisitions of Affirmed and Metaswitch have helped it build a formidable wireless edge platform. Last fall, Amazon unveiled quite a shocker, announcing its own private wireless platform and service. Amazon has taken a totally different tack from Google, looking to partner with Federated Wireless to deliver the service.
CBRS is cloud-friendly
So, what’s different about private wireless? The key distinction between the emerging private wireless market and public wireless services such as 5G is that private wireless services are based on unlicensed spectrum, such as the Citizens Broadband Radio Service (CBRS) used in the U.S. At 3.5 GHz to 3.7 GHz, CBRS is considered "mid-band," so it competes directly with some of the mid-band 5G being deployed by the major service providers, who paid billions of dollars in licenses to the Federal Communications Commission (FCC). Although portions of CBRS are controlled by the FCC and others are reserved for the military, there is a free portion released for use by the general public. That means that enterprises can use it for high-bandwidth wireless applications. Some of the applications being talked about include edge business analytics, sensors, and computer vision. Cloud people like free and open things – and CBRS is more free and open than traditional 5G, which requires spectrum and licenses.
Who Makes the Money?
Before we get too excited about edge as a hype topic, let’s ask the question we like to ask the most: Where is the money going to be made, and who’s going to make it? You need to investigate where value is going to accrue. Let’s take a look at all the players:
Edge hardware. If you haven’t noticed, enterprise hardware has been pretty much commoditized. If you are one of the big hardware OEMs, you won’t make piles of money on hardware, unless you are a chip pure-play (see below). As you may have seen, we think the OEMs need to move toward a software strategy, which will determine whether they are successful.
Edge software. This is a much better play. Microsoft’s large communications partnership with AT&T is yet another warning to the slow-moving telecom infrastructure industry: The future is software. Nokia has made some progress with its telecom software as a service (SaaS) play, though it’s hard to detect any result in the stock price. Ericsson is trying to bridge the gap by buying telecom applications programing interface (API) companies such as Vonage, and Cisco has been challenged pivoting to security software. But all of these plays seem slow and laborious. The vendors have got to move faster or make the right acquisition. As mentioned, the major cloud providers, especially Microsoft, have built up wireless software assets. Some startup providers with traction, such as Celona, seem well positioned because the market isn’t that crowded.
Chips. Chip providers do well at the edge. Just ask NVIDIA and AMD, or even specialized IoT plays like NXP. Unlike makers of plain-vanilla hardware boxes, the largest chip players maintain a competitive advantage with intellectually property and can maintain margins. The edge will mean more chips, which is good for this segment.
Data center infrastructure. There are bevy of smaller, “micro data center” providers that have carved out a niche building data centers where others haven’t. Some of these, have been acquired. The larger providers, such as Digital Realty and Equinix, are building out infrastructure. But the question is: Will they own the boxes at the edge, or will those be owned by the customers? Micro data centers are a dicey play unless you have identified an incredibly valuable and underserved niche – or unless you deliver better software.
Telecommunications providers. The largest global providers have mostly focused on business as usual – buying spectrum, building out access, and drawing subscribers to new services. Unfortunately, that’s not happening fast enough. 5G network buildouts and growth have been uninspiring. The big problem is the cost of acquiring spectrum and the capital costs of new infrastructure. Some innovative newcomers, such as Ligando and Rakuten, have come up with more interesting ways to roll out services to niches and innovate with spectrum or software. Bottom line? Not enough has changed to indicate that the telecoms won’t have their pockets picked by the cloud.
Large public cloud providers. We’ve gone over many of the details for the private wireless investments of the larger cloud providers. Interestingly, the private wireless initiatives from the public cloud providers are almost always announced alongside their regional edge infrastructure strategies. For Microsoft, that’s Azure Edge Zones and Azure Arc. Amazon has Outposts. Google has Anthos. So private wireless is tied to a larger edge strategy to draw in applications and data to their cloud platforms.
Others – edge platforms, content delivery networks (CDNs), and Secure Access Service Edge (SASE). As I’ve dug into edge, what I’ve realized is there are myriad services and networks at the edge. For example, CDNs such as Akamai like to say, “We invented the edge decades ago,” which is true, as CDNs offer edge infrastructure for specific applications. Adding to the mix are hybrid CDN/security services such as Cloudflare and Fastly and then cloud security services such as Zscaler. But wait, there’s more! SD-WAN and edge security providers such as HPE Aruba, VMware, and Versa Networks offer compute services on their SASE or WiFi devices, with integrated 5G functionality. And Aryaka Networks, a SD-WAN managed services provider, is building out a network of service POPs and supplying customers with access devices equipped with compute. There is compute power in all these services. The ecosystem is complex, with many opportunities for pivots or partnerships to unlock value of edge infrastructure.
In summary: It’s a mess, but it’s big, and it’s going to be interesting. And you’re going to have to do something with the big cloud providers.
The bottom line: A huge number of companies in various niches are going after the changing nature of the edge. The edge will accelerate the need for integrated compute, data, and security as well as cloud integration. There are opportunities for everyone. Many of the retailers we are talking to are turning to cheap compute and open-source technology.
The biggest problem will be cost and efficiency. I’ve heard from enterprises that the biggest challenge with the edge is the cost of the hardware and software investment. For example, say you are a big box retailer with thousands of sites. Are you going to install an entirely new networking infrastructure to provide edge analytics? Probably not.
For now, I think anybody with a cloud-heavy model – for example, public cloud providers, CDNs, or specialized cloud SaaS providers – are probably best positioned to roll out additional edge services, or perhaps acquire bolt-on functionality.
The powerful combination of edge cloud services and private wireless services is something to be watched. At the highest level, it represents a major threat to the 5G ambitions of the major carriers, who would like to capture enterprise business such as industrial automation and analytics. But it's increasingly looking like the major cloud providers also have designs on that. It's also possible that the private wireless opportunity will be quite large. At this point, I would bet on that.
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. 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 FierceWireless staff. They do not represent the opinions of FierceWireless.