IBM has signed two significant deals with telecoms companies as it continues to expand its presence in the cloud and ramp up its involvement in fledgling 5G networks. It is a sign that Big Blue’s open hybrid-cloud strategy is helping it gain ground on its rivals as the role of the cloud changes to cater for increased processing of data from the edge which can be enabled by 5G.
IBM announced two major cloud deals with telecoms companies at this week’s MWC 2021 show in Barcelona. (Photo by Irina Anasova/Shutterstock)
The deals, announced at the Mobile World Congress (MWC) trade show in Barcelona, will see IBM working with US-based Verizon and European counterpart Telefonica. Verizon will use technology from IBM and its open-source subsidiary Red Hat to build an open cloud platform that will underpin its 5G network. The Telefonica/IBM tie-up will involve developing an open cloud for the telco’s customers which will allow them to take advantage of IBM’s advances in AI and blockchain. It will focus on areas such as customer experience.
Arvind Krishna, IBM’s CEO, is, perhaps unsurprisingly, confident this approach will pay dividends, and used his keynote speech at MWC on Monday to state that he believes “the winners in 5G and edge together will be those who embrace an open hybrid-cloud approach”. Krishna went on to say: “This is why telcos need to adopt open software platforms to remain in control of where and how they deploy network services, edge computing and enterprise offerings.”
As reported by Tech Monitor, the open networking movement – the idea that communications networks like 5G can be built on open standards rather than expensive proprietary technology – remains in its infancy, and Krishna and his team will be hoping IBM has jumped on the bandwagon at the right time.
What is the IBM open hybrid cloud strategy?
Since acquiring Red Hat in 2019 for $34bn, IBM has pursued an open hybrid cloud strategy which reflects the expanding definition of “hybrid” cloud. “Previously, hybrid clouds were considered a duality: a combination of on-premises and public cloud resources,” explains Dave McCarthy, VP for cloud and edge infrastructure services at research firm IDC. “Now, hybrid clouds include infrastructure and workloads deployed in multiple public cloud providers and edge locations such as factories, warehouses, and retail stores.” Red Hat’s leadership in open source software “underpins this open hybrid cloud vision,” he adds.
This commitment to an open, hybrid way of doing cloud is partly born out of necessity, says Yugal Joshi, vice president of digital, cloud, and application services research for Everest Group. “IBM realizes it has probably missed the public cloud bus which is now dominated by the three hyperscale vendors (AWS, Microsoft Azure and Google Cloud Platform),” he says. “Therefore, hybrid cloud, which is also a preferred way for enterprises to consume workload, becomes extremely critical for IBM.”
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Indeed, businesses are increasingly embracing bigger hybrid cloud strategies, with 43% of those polled by Flexera in its State of Cloud 2021 report saying they use multiple public and private cloud deployments.
What can IBM achieve in 5G and at the edge?
Telecoms companies are prime targets for cloud providers. "Telcos spend massive amounts of money on technology, almost as much as all enterprises combined," Joshi says. "Therefore, it is a strategic market for all cloud vendors, including IBM."
It is expected the superfast nature of 5G networks will allow more data generated at the edge to be processed in the cloud, and this will present opportunities for providers such as IBM, Joshi explains. "As large parts of [data] generation happen at the edge, 5G can allow this generation to be moved to a distributed cloud in near real time for analysis," he says. "Though edge devices will continue to process faster than a distributed cloud, this offloading of more data to the cloud will help developers to build edge solutions that are currently not possible." Cloud providers "can play on both end of the spectrum", by offering both edge and cloud services, he says.
Indeed, at MWC, IBM also launched a new product, Cloud Pak for Network Automation, a set of tools for telcos to help build and scale networking and cloud tools for their customers. "While previous Cloud Paks have been focused on foundational needs like security, business process automation, and integration, Cloud Pak for Network Automation is the first targeted at a specific industry," explains IDC's McCarthy. "It will help accelerate the ability for communications service providers to virtualize network operations."
Which cloud provider has the best offering for 5G?
Other cloud vendors also have an eye on communications and 5G networks as a growing opportunity. Incoming AWS boss Adam Selipsky used his MWC keynote speech yesterday to make his new company's pitch to telcos. "We are really excited to be able to bring the cloud model to telecom operators, allowing them to get rid of CapEx in favour of OpEx and deploy flexibly and on very short notice, and to have elastic capacity depending on what’s going on with customers,” Selipsky said. He also revealed that AWS has signed up Switzerland's national telecoms company, SwissCom, as a client. SwissCom will use AWS as the platform on which it builds its 5G capabilities.
So what can IBM offer to help it stand out? Everest's Joshi says Red Hat may hold the key. "Though other cloud vendors can also work with Red Hat and even outside it can bring open source offerings, IBM has doubled down on open source and that helps," he says. "In addition, IBM’s understanding of [the] telco industry and 5G technologies probably is best in the class; its enhanced understanding of complexity of telco workloads, its credibility in network security, and open-source focus are key differentiators."
Inking deals with companies like Verizon and Telefonica will also help build IBM's credibility, McCarthy adds. "The fact that Verizon has chosen IBM and Red Hat as technology partners is significant," he says. "Many other IT-oriented suppliers have been targeting communications service providers as well, and the Verizon partnership gives IBM a vote of confidence in its ability to compete and win in this industry."
