AT&T, Microsoft "Private 5G Edge" Illustrates How MEC, 5G are Often Indistinguishable

AT&T Private 5G Edge--now under development--allows enterprises to more easily set up internet of things edge computing networks based on Microsoft Azure multi-access edge computing. 

“A feature we are working on for AT&T Private 5G Edge is the ability to roam off these private networks but still stay connected via AT&T’s U.S. public mobile network,” AT&T says. 

For example, a hospital might use its private network to precisely track ventilators, wheelchairs, and other critical items in its building. But if a ventilator gets loaned to another hospital, that feature ensures the “roaming” machine always remains accounted for even outside the private network, AT&T suggests. 

source: Microsoft 

AT&T also runs its 5G core using Azure, so in a sense, AT&T Private 5G Edge will be running on an AT&T 5G core network that uses Azure cloud computing infrastructure. 

The new offering is designed to help enterprises deploy private wireless networks rapidly across radio spectrums, including Citizens Broadband Radio Service spectrum, licensed or unlicensed, and uses the public network to support a private 5G deployment.

The new offer from AT&T and Microsoft creates private 5G networks using public network resources. Logically, the network is private. Physically, the private network is built using public network resources. 

ABI Research believes “5G network” capital investment, by about 2036, could rival mobile operator capex on the “public” network. Keep in mind that forecast includes what enterprises spend on infrastructure to create their own private 5G networks as well as what mobile operators spend on public 5G. 

That spending includes support of private and enterprise networks “on the premises” and “indoors” instead of being spent on the outdoors infrastructure. What is not yet clear is how much of that investment will create private 5G networks using public network resources, and how much is invested building private 5G networks on a “do it yourself” basis. 

source: ABI Research, Enterprise IoT Insights 

It is one more example of how virtualized public networks create new opportunities for use cases and applications. 

 source: Janakiram & Associates, Forbes. 

Our terminology and thinking evolves as edge computing evolves and we might, in some cases, be overthinking the concept. 

Not all edge computing requires use of the public networks. “Micro edge” computing does all the computation directly on a device microprocessor. “Mini edge” computing also runs autonomously from the public network, but at the device level. 

“Medium edge” uses a cluster of edge machines, while “heavy edge” runs gear in a data center rack. In addition to MEC, which supplies computing someplace outside the enterprise premises, but within a regional location, some refer to “cloud edge,” which is the running of distributed functions at a remote location beyond the metro region.

IoT Will Not Drive as Many new WAN Connections as Often Believed

Mobile service provider interest in internet of things connections is driven in substantial part by the sheer number of projected devices to be supported.

But edge computing will sharply condition the sorts of connections required, as a majority--perhaps up to 80 percent--of those connections will be local, and many will rely on edge computing to some significant extent.

To be sure, WAN connectivity also will be involved. But the number of direct WAN connections will not be as large as many seem to believe. And WAN connections will use a variety of platforms.

IoT Analytics expects the global number of connected IoT devices to grow nine percent,  to 12.3 billion active endpoints. By 2025, there will likely be more than 27 billion IoT connections, the firm estimates. 

source: IoT Analytics

But there are lots of nuances. Perhaps 22 million of the projected 2025 connections of 27 billion will use some short-range technology, not the mobile or other specialized networks, or fixed networks. 

source: IoT Analytics

In other words, up to 80 percent of IoT connections will use local or personal area networks, not the mobile--or some other network--for access. So new revenue will be an issue, even as huge forecasts are easy to find.  

The IoT Landscape in 2022

It will remain hard to untangle the IoT revenue opportunity for access providers in 2022, as it has been complicated over the last few years. One has to back out spending on devices, platforms and other infrastructure. One has to estimate market shares for various forms of connectivity. And then there is the matter of average revenue per unit, which will be quite low, in comparison to phone accounts. 

Also, up to 80 percent of IoT devices will use some form of local connectivity--personal or local area networks--rather than having a direct WAN connection. 

Intended Advantage of any Technology is Not Always What Customers Value

Sometimes the planned-for values of a technology are not necessarily the upside users see. Consider multi-access edge computing. The stated value is ultra-low latency performance. But connectivity service provider executives say their own belief is that MEC’s greatest value--as a means of moving workloads to the edge,  will be a reduction of bandwidth use or cost. 

But a recent survey conducted by Heavy Reading--94 percent of whom were connectivity providers--suggests the top motivator for moving workloads to the edge is to “reduce bandwidth use or cost.” “Improved application performance” was fourth on the list, ranked in terms of “top motivators.”

source: Heavy Reading 

To be sure, multiple values exist. But it is worth noting that the intended value as developed by suppliers  is not always the “perceived value” seen by end users or customers.

Edge Computing Growing about 15% to 20% Annually to 2025

Edge computing  products, services and solutions will grow to reach US$17.8 billion in 2025, up from an estimated US$8 billion in 2019, at a compound annual growth (CAGR) rate of 15.6 percent, according to GlobalData. 

source: Global Data 

International Data Corporation estimates are higher. IDC projects enterprise and service provider spending on edge computing will reach $40 billion in 2022 in Europe alone. 

Worldwide spending on edge computing is expected to be $176 billion in 2022, an increase of 14.8 percent over 2021, according to IDC. The two edge use cases that will see the largest investments in 2022 – content delivery networks and virtual network functions – are both foundational to service providers' edge services offerings. Combined, these two use cases will generate nearly $26 billion in spending in 2022.

Across enterprise end user industries, discrete and process manufacturing combined will invest $33.6 billion in edge solutions this year. Retail and professional services will also see spending of more than $10 billion on edge computing in 2022, says IDC. 

From a geographic perspective, the United States will be the largest investor in edge solutions with spending forecast to reach $76.5 billion in 2022. Western Europe and China will be the next largest regions with spending totals of $30.6 and $20.8 billion, respectively. 

China will see the fastest spending growth over the five-year forecast with a CAGR of 19.7 percent, followed by Latin America at 19.4 percent.

By 2025, edge computing in Europe alone will reach $64 billion, IDC forecasts,  with a five-year compound annual growth rate (CAGR) of 16.4 percent.

In North America, sales of edge computing products, services and solutions will amount to US$6.85 billion by 2025, which is equivalent to 38 percent of the total global market. 

Sales in Asia Pacific and Western Europe will amount to US$4.65 billion and US$3.39 billion, respectively, equivalent to 26.4 percent and 19.3 percent of the total global market.

Enterprise IT Spending Has Plateaued, Cloud is Driving Growth, Says Gartner

Enterprise information technology spending on public cloud computing will overtake spending on traditional IT in 2025, according to Gartner researchers. 

Gartner’s analysis includes only those enterprise IT categories that can transition to cloud, including application software, infrastructure software, business process services and system infrastructure. 

By 2025, 51 percent of IT spending in these four categories will have shifted from traditional solutions to the public cloud, compared to 41 percent in 2022, Gartner predicts. 

Almost two-thirds (65.9 percent) of spending on application software will be directed toward cloud technologies in 2025, up from 57.7 percent in 2022.

source: Gartner

Edge Computing and Metaverse are Made for Each Other

Edge computing is certain to play a bigger role in our computing fabric as augmented reality, virtual reality and future Metaverse environments become possible. “Even at ultra-low latency, it makes little sense to stream (versus locally process) AR data given the speed at which a camera moves and new input data is received (i.e. literally the speed of light and from only a few feet away),” says Matthew Ball, EpyllionCo managing partner.

The conventional wisdom today is that multi-player games, to say nothing of more-immersive applications, do not work when total latency is greater than 150 milliseconds and user experience is impaired when latency is as low as 50 milliseconds, says Ball. 

source: Matthew Ball 

Will the Metaverse require 1,000 times more computing power? Intel thinks so. And that implies we might be decades away from a ubiquitous and widely-accepted Metaverse that people actually use routinely. 

“Consider what is required to put two individuals in a social setting in an entirely virtual environment: convincing and detailed avatars with realistic clothing, hair and skin tones; all rendered in real time and based on sensor data capturing real world 3D objects, gestures, audio and much more; data transfer at super high bandwidths and extremely low latencies; and a persistent model of the environment, which may contain both real and simulated elements,” says Raja Koduri, Intel SVP and GM of Intel’s Accelerated Computing Systems and Graphics Group. “Now, imagine solving this problem at scale--for hundreds of millions of users simultaneously--and you will quickly realize that our computing, storage and networking infrastructure today is simply not enough to enable this vision.”

“We need several orders of magnitude more powerful computing capability, accessible at much lower latencies across a multitude of device form factors,” says Koduri. 

“Truly persistent and immersive computing, at scale and accessible by billions of humans in real time, will require even more: a 1,000-times increase in computational efficiency from today’s state of the art,” he notes. 

AWS Local Zones Coming to 32 Additional Metro Areas in 26 Countries

Amazon Web Services says it plans to add new AWS Local Zones for edge computing in 32 new metropolitan areas in 26 countries around the world. 

In this illustration, the purple locations are commercially available, while the green locations are planned. 

source: AWS 

AWS Local Zones extend AWS Regions to place compute, storage, database, and other AWS services at the edge of the cloud near large population, industry, and information technology (IT) centers, to support single-digit millisecond latency closer to end users or on-premises data centers. 

Over the next two years, new AWS Local Zones will launch in Amsterdam, Athens, Auckland, Bangkok, Bengaluru, Berlin, Bogotá, Brisbane, Brussels, Buenos Aires, Chennai, Copenhagen, Delhi, Hanoi, Helsinki, Johannesburg, Kolkata, Lima, Lisbon, Manila, Munich, Nairobi, Oslo, Perth, Prague, Querétaro, Rio de Janeiro, Santiago, Toronto, Vancouver, Vienna, and Warsaw. The new AWS Local Zones will give customers around the world the ability to offer hundreds of millions of end users single-digit millisecond performance for their applications.

DX and the Edge

Virtually everyone agrees that more "cloud" or "remote" computing is going to happen at the edge. And that implies that edge computing will be a bigger part of all computing, digitalization and digital transformation, going forward.

IDC has predicted that 65 percent of global gross domestic product will be “digitalized by 2022.”  IDC also predicts that by 2023, 75 percent of organizations will have comprehensive digital transformation (DX) implementation roadmaps.

We might disagree about precisely what “digitalization” means without disagreeing that it ultimately must result in outcomes. It is one thing to change a business process; it is quite another to change a business outcome. So it is with any applied effort involving digital transformation. The objective is always to change business outcomes. 

source: AWS 

So here is the point: DX is important when it allows entities and organizations to achieve more. 

By 2025, 75 percent of business leaders will leverage digital platforms and ecosystem capabilities to adapt their value chains to new markets, industries, and ecosystems, argues IDC. 

Note the key phrase: “New markets, industries, and ecosystems.” New; not existing or incumbent or legacy. 

That is not to say almost every business process will be affected; obviously that seems the case. But digitized processes do not help much if they do not also support the move into new markets, industries and ecosystems. 

“In some cases, the use of digital tools and technol­ogies can upend entire business models or create entirely new businesses,” McKinsey consultants say. “Look no further than the way the internet has changed the way consumers research and purchase airline tickets and hotel rooms, disintermediating many traditional travel agents—one of the original cases of industry reinvention,” McKinsey has said.

Or look at the way  video-streaming services has disrupted the economics of traditional broadcast and cable TV channels. 

Consider the way cloud computing has changed “how we do computing” but also has disrupted and changed the computing hardware and software businesses. Or look at the way enterprises, businesses and consumers now use computer applications and services: remote and distributed applications are the rule. 

source: Deloitte 

Our apps are stored “someplace else” and accessed using the internet when we need to invoke them. 

We used to say that “digitization” allowed any media type to be transported over a single connectivity medium. It also has proven true that the internet allows almost any application or process to be supported by remote computing and storage facilities. 

We have separated “where computing is used” from “where computing happens.” But there is more to it than that. Some might argue that DX is just what we used to call “information technology.” 

It arguably is much more. According to IDC, DX is the way to achieve business advantage. We often have proxies for advantage. Sometimes we say DX is valuable because it increases resiliency, or provides agility. DX-enabled firms can survive crises better, and innovate faster. All of that really matters if revenue is at stake; if survival is at stake. 

To be sure, customer experience, product development, fulfillment, marketing, human resources and all other business processes are potentially affected by DX. But it is the ability to protect the legacy financial returns and potentially accelerate revenue growth in new areas that is the foremost outcome of digital transformation. 

Public Cloud Computing Market is Contestable, But Moving Towards a Stable Structure

The public cloud computing “as a service” market had a market share pattern in 2019 that by some estimates had changed significantly by 2021. 

Where some estimated Amazon Web Services in 2019 had 47 percent share; Microsoft about 22 percent share and Google with about eight percent, by 2021 some estimates had AWS at about 33 percent share; Microsoft at about 21 percent and Google at about 10 percent, according to Synergy Research Group data. Other early 2021 estimates had slight variances from end of year projections. 

source: Finbold, Synergy Research Group 

All the estimates show that leadership is consolidating among a handful of suppliers. 

source: Gartner, Goldman Sachs 

Though it is perhaps unwise to argue that market leadership cannot change, there are some intriguing patterns we might glean from other “mature” or “stable” markets. One rule of thumb suggests that--in a mature and stable market--the leading provider has twice the share of number two, which in turn has twice the share of number three. 

That would work out to a predicted market share pattern something like 34-17-8 or 30-15-7.5. The present pattern in the cloud infrastructure services market does not fit exactly, but is close. 

The conclusion we might draw is that the public cloud computing market now is approaching a more-stable structure, but remains contestable.

Telco Edge Computing Roles: Easy to Hard

Different telcos (fixed and mobile) have different ideas about how to encourage revenue growth. But most telcos globally have to contend with revenue growth that has declined between 2017 and 2020, according to data from World Wide Technology. 

source: World Wide Technology 

Some of the challenges grow from various roles beyond connectivity, assuming continued low growth rates in the core connectivity business. In edge computing, for example, as with most other applications and use cases, the highest value--and most commonly the highest financial return--come from the actual application role. 

The lowest value, and typically most modest return, comes from the real estate function supporting edge computing. World Wide Technology estimates that 59 percent of edge computing revenue will be earned by the actual computing services--the end user facing apps-- supplier, for example. 

source: WWT, Analysys Mason 

As defined by Analysys Mason, the “edge location owner” role is the traditional connectivity function.

The “edge connector” role is different, entailing integration of edge computing with the enterprise’s current infrastructure, with specific focus on cybersecurity capabilities.

The “edge application enabler” role involves end-user use cases and associated applications. 

To succeed as an “edge connector,” mobile and fixed network service providers must operate much more as system integrators, with “some expertise” to “great expertise”  in integrating edge computing with the existing platforms. 

Few mobile or fixed operators have natural competencies as providers of the end-user-facing applications and business use cases. 

Digital Infrastructure Investment Trends

Anthony Rossabi, Chief Executive Officer, Recovery Point Systems Andrew Schaap, Chief Executive Officer, Aligned Data Centers Craig Scroggie, Chief Executive Officer & Managing Director, NEXTDC Limited Steve Smith, Chief Executive Officer, Zayo Moderator: Jonathan Atkin, Managing Director, Global Head - Communications Infrastructure, RBC Capital Markets

How Much Telco Risk from Using Hyperscale Cloud Computing?

By definition, 5G networks are virtualized: software functions are disaggregated from hardware. There are many implications, some positive, some possibly negative.

Virtualized network functions mean network services running as software processes on off-the-shelf server hardware, replacing dedicated hardware devices. That means lower infrastructure costs for mobile operators, more use of commodity hardware and platforms. 

VNFs use a microservices architecture, which should mean faster deployment of applications, at lower cost, with easier upgrades. 

VNFs also underpin new services such as network slicing that allow the rapid creation of virtual private networks. 

The software-based approach also makes it easier to load-balance, scale up and down, and move functions across distributed hardware resources, Ericsson says. 

The shift to cloud-native computing is a part of the shift. 

source: STL Partners 

But some worry there are other strategic implications, such as a connectivity provider loss of ability to determine their own destinies. In principle, some of that concern might flow from a feared “hollowing out” of connectivity provider operating system core competencies. 

That is hard to quantify, but the industry has faced such issues before. Before the global business moved from monopoly to competition, telcos used to develop and create their own network infrastructure. They no longer do so much of that, having outsourced such capabilities to independent infrastructure suppliers. 

Telcos used to create and deploy their own “home-grown” operations support systems and billing platforms. Again, they do not do so, so much. 

The danger of losing core capabilities is a non-zero risk. But the danger of ceding the ability to move as fast as modern computing does is arguably a greater risk.

-

Cloud Infrastructure Business Might be More Stable than Connectivity Business

Amazon Web Services (AWS) accounts for the largest share of cloud infrastructure service providers at 33 percent. Microsoft’s Azure platform ranks second with a share of 21 percent, followed by Google Cloud at 10 percent, according to Synergy Research Group data. 

source: Finbold, Synergy Research Group 

Though it is perhaps unwise to argue that market leadership cannot change, there are some intriguing patterns we might glean from other “mature” or “stable” markets. One rule of thumb suggests that--in a mature and stable market--the leading provider has twice the share of number two, which in turn has twice the share of number three. 

That would work out to a predicted market share pattern something like 34-17-8 or 30-15-7.5. The present pattern in the cloud infrastructure services market does not fit exactly, but is close. 

Compared to market share patterns in mobility or fixed network connectivity services, the cloud computing market is closer to stable than is connectivity, such as the U.K. fixed broadband market, India’s fixed networks market or mobile services market, Vietnam's telecom services market, for example.  

 

source: TRAI 

Based solely on patterns in other industries that are mature and stable, one might argue there remains significant potential for further share changes in the connectivity business, less potential change in the cloud computing “as a service” market.

Turbidite CEO Bill Barney on Opportunities for Edge Computing in Asia

Will digital infrastructure demand outstrip supply, after Covid? Possibly, Barney says. Higher interest rate impact is an unknown, though. 

Where Will Microsoft Put Activision Blizzard Revenues?

Microsoft’s acquisition of Activision Blizzard raises a question: will that unit’s earnings be reported as part of Microsoft’s “intelligent cloud” or “more personal computing” segments. 

source: Statista

By some estimates AWS had 32 percent share of the “computing as a service” market in early 2021, with Microsoft behind at 20 percent. 

source: Synergy Research Group 

“More Personal Computing” seems the likely reporting segment. 

The “Productivity and Business Processes” segment includes:

•

Office Commercial (Office 365 subscriptions, the Office 365 portion of Microsoft 365 Commercial subscriptions, and Office licensed on-premises), comprising Office, Exchange, SharePoint, Microsoft Teams, Office 365 Security and Compliance, and Skype for Business.

•

Office Consumer, including Microsoft 365 Consumer subscriptions and Office licensed on-premises, and Office Consumer Services, including Skype, Outlook.com, and OneDrive.

•

LinkedIn, including Talent Solutions, Marketing Solutions, Premium Subscriptions, Sales Solutions, and Learning Solutions.

•

Dynamics business solutions, including Dynamics 365, comprising a set of intelligent, cloud-based applications across ERP, CRM, Customer Insights, Power Apps, and Power Automate; and on-premises ERP and CRM applications.

The “Intelligent Cloud” segment includes:

•

Server products and cloud services, including Azure; SQL Server, Windows Server, Visual Studio, System Center, and related Client Access Licenses (“CALs”); and GitHub.

•

Enterprise Services, including Premier Support Services and Microsoft Consulting Services.

The “More Personal Computing” segment includes:

•

Windows, including Windows OEM licensing and other non-volume licensing of the Windows operating system; Windows Commercial, comprising volume licensing of the Windows operating system, Windows cloud services, and other Windows commercial offerings; patent licensing; Windows Internet of Things; and MSN advertising.

•

Devices, including Surface and PC accessories.

•

Gaming, including Xbox hardware and Xbox content and services, comprising digital transactions, Xbox Game Pass and other subscriptions, video games, third-party video game royalties, cloud services, and advertising.

•

Search advertising.