What it Means For Cloud Technology

We are now in the third year of the “Year of 5G.” But really — this should be the actual Year of 5G! Years of marketing hype have resulted in a number of false starts for this exciting new mobile technology. But as budgets get freed up in 2021 we are ready to see the final explosion of the next-generation, low-latency mobile technology infrastructure that delivers a host of new services and applications ranging from real-time business analytics to connected tractor trailers.

Several developments in the past few months, including more than $100 billion in spending on C-band auction spectrum by the major North American carriers as well as an increase in capital spending budgets by the likes of Verizon and T-Mobile promises that real money is being deployed. For example, Verizon said it expects to spend $10 billion (annually) above its ordinary capital spending for the next three years. Verizon plans to add 5G in 46 markets serving 100 million people over the next 12 months. 

More importantly, the economic climate in the shadow of the COVID-19 pandemic crisis is favorable for 5G. The global economy is recovering and governments worldwide are pumping in stimulus. Interest rates are likely to remain low for some time, favoring investment. Last year’s crisis also set off a wave of technological evaluation as major industries to adapt to shutdowns and remote work. All this is pointing to an acceleration of investment in digital transformation technologies – in which 5G will play a key part.

What to Expect? Top Services for 5G

In 2021, 5G deployment is expected to accelerate, demonstrated by the recent hundreds of billions of dollars in capital being pledged to 5G infrastructure and services.

As 5G infrastructure gets deployed and cloud computing resources are extended to the edge of the network, cloud infrastructure and communications networks are becoming increasingly integrated and merged, a trend that is likely to continue with the expansion of 5G deployments. 5G means more data — the fuel for cloud applications around the world. Cloud providers and service providers all want to extend infrastructure and services to capture, transport, and process this data.

The most promising applications and use cases for 5G edge cloud that will emerge from edge cloud from 2021-2025 include wireless broadband, streaming media, cloud gaming, connected vehicles, smart anything (Smart X), immersive experiences (VR/AR), Multi-access Edge Compute (MEC) as-a-service, and private wireless networks.

What do these applications have in common? The massive thirst for data and connectivity at the edge, enabled by 5G’s twin characteristics of bigger bandwidth and lower latency.

The arrival of 5G will serve as a catalyst to accelerate cloud architectures built on technologies such as virtualization and microservices. This will benefit providers of software virtualization technology and expertise from the cloud, as well as technology vendors focused on service automation, security, and cloud-native architectures.

Cloud ecosystems will continue to expand as public cloud providers look to extend their cloud footprint to the edge, working with Communications Service Providers (CSPs) and datacenter providers to build out edge infrastructure. Partnerships among cloud providers, CSPs, and datacenter providers are starting to accelerate.

Building Out the Cloud Edge

5G has generated significant interest in the investment community – all you need to do is Google “top 5G stocks” to be assaulted with investment ideas in the media.

Why is everybody excited about 5G? Built on a flexible, digital and virtualized architecture, 5G infrastructure has many new capabilities which can launch a wide range of new services and technology features. Some of the more important characteristics include the following:

• 5G infrastructure has a wide range of spectrum features stretching from Ultra-reliable low-latency communication (URLLC) to cloud virtualization, with improvements including increased bandwidth, better latency, and more flexible cloud-based management. This will massively expand the market for potential applications and services.

• The next-generation wireless infrastructure is the first to be based on cloud-native design principles and virtualization, fostering integration with a wide range of cloud services – as well as introducing techniques for fine tuning application access and performance using techniques such as “network slicing.”

• 5G infrastructure will be more open and “disaggregated,” enabling a faster deployment of infrastructure including into new markets such as enterprise private wireless. This is also expected to reduce the cost of deployment, by driving down the prices of hardware and software.

5G Players to Watch

Futuriom’s recent 5G Catalysts report took a pragmatic look at who will benefit from this large infrastructure investment. We found that the benefits are likely to be broad-based. Vertical industries such as retail, manufacturing, and healthcare will benefit with improved customer experience by reaching their customers with 5G connections. Factories will continue their long-awaited migration to digitization and automation, a trend known as Industry 4.0. This should increase the productivity and profitability across many different industries.

On the network and technology side, all of the infrastructure growth will spur development of the edge infrastructure ecosystem, as CSPs and cloud providers partner to put the cloud and communications network closer to the customer. This includes upgrades to mobile base stations, central offices, and cloud points of presence (PoPs) to deliver advanced 5G infrastructure and build out the virtualized infrastructure to support new services and applications.

Technology areas that will benefit from 5G deployment include public cloud providers, content delivery networks (CDNs), cloud networking technologies, micro datacenters, Internet exchanges, datacenter hosting providers, smart network interface cards (NICs), edge orchestration, security providers, optical fronthaul, optical backhaul, automation software, edge-compute gear, and edge-data management software. And of course, semiconductors are the building blocks of all these devices and services – 5G connected chips are likely to flourish.

For global CSPs, the impact is less clear. The scale and debt loads of the major global service provider makes it difficult for them to moves fast or grow revenue quickly. They will need to get more creative to capture a larger part of the 5G value chain.

Some of the companies I’m watching:

• Key 5G Edge Leaders to Watch (Public Companies). Akamai (NASDAQ: AKAM), Amazon (NASDAQ: AMZN), AMD (NASDAQ: AMD), AT&T (NYSE: T), Ciena (NYSE: CIEN), Cloudflare (NYSE: NET), Dell (NYSE: DELL), Digital Realty (NYSE: DLR), Equinix (NASDAQ: EQIX), Ericsson (NASDAQ: ERIC), Fastly (NYSE: FSLY), Google (NASDAQ: GOOGL), HPE (NYSE: HPE), IBM (NYSE: IBM), Intel (NYSE: INTC), Microsoft (NASDAQ: MSFT), Nokia (NYSE: NOK), NVIDIA (NASDAQ: NVDA), Qualcomm (NASDAQ: QCOM), T-Mobile (NASDAQ: TMUS), Verizon (NYSE: VZ), and VMware (NYSE: VMW).

• Key 5G Edge Leaders to Watch (Private Companies). Many interesting cloud startups have an angle on 5G. Some of the more interesting ones address cloud networking and infrastructure software for the edge. These include Alkira, Arrcus, Aryaka, DriveNets, EDJX, Infiot, Itential, Kentik, Saguna Networks, StackPath, Triggermesh, Vapor.io, Versa Networks, Volta Networks, and Weaveworks.

After years of hype, 5G edge cloud infrastructure is finally being deployed in the real world at a scale. That is likely to have enormous impact for enterprises, service providers (cloud and CSP), and municipal organizations. 5G technology is maturing, cloud providers and CSPs forging partnerships and investments are accelerating, and 5G connectivity is expanding. These factors combined with a recovering global economy and low interest rates set the stage for a boom in new 5G applications and services development.

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