100% of Cisco 5G revenue flows from enterprise to CSP
Service providers, their traditional infrastructure vendors and increasingly, hyperscalers, are working independently and collaboratively to capture new 5G revenue by providing solutions in high-value vertical industries such as manufacturing, logistics, retail, etc. The big picture here is to move away from transactional sales in a consulting sales strategy, focusing on hiding the technical complexities and delivering the business results behind setting up a Bespoke private 5G network.
Shawn McCarthy, vice president of Cisco Worldwide Sales, compared it to the cult-classic film Fight Club. Speaking with Daniel Newman, Futuram’s founding partner and chief analyst Six Five Summit This week, McCarthy said, “The first rule of private 5G is not to talk about 5G. Customers don’t worry about 5G. What they think about is building the factory of the future. They care about launching new services on smart ports. They care about the safety of the workers in the mine. We are working closely with service providers, a focused effort to help them meet these goals. ”
While acknowledging that carriers are not going to make money from consumer-oriented 5G, at least not in the near future, McCarthy rightly pointed out that 5G is not the solution to all business problems that can be conceptually addressed via wireless. Technology “Most of these things are half Wi-Fi, half 5G,” he said. “Or should I say, in fact, they’re probably 75% Wi-Fi, 25% 5G. There are some things that 5G really does bring to the table to enable the factory of the future. Wi-Fi is still going to play a role in that and, in fact, consumers Don’t worry … they’re just thinking about providing the results they’re looking for. ”
And carriers are well aware of this paradigm shift. Outgoing Verizon Business CEO Tami Erwin told me in February that enterprise customers are investing in digitization to reduce costs and improve the customer experience as well as be more responsive. To address the broad set of enterprise needs and align the technology with the desired business outcomes, he said Verizon has changed how salespeople are trained and added compensation and quotas to customer outcomes.
This pivot of consulting enterprise sales has “moved us away from a business that is a transaction-focused partner that enables the outcome of a different kind of solution for our customers,” Erwin said.
Return to Cisco. McCarthy said their vision is driven by two extreme goals: to help operators raise revenue and reduce costs – a goal in line with what Erwin said is 5G for Verizon’s goal ventures. Part of the revenue growth, to a degree, is a reflection of the 4G era where app providers use carrier networks to deliver end-to-end services and capture new revenue without investing in cellular networks; Part of the cost efficiency can be addressed through many years of network strategy.
“App developers,” McCarthy said, “are based on their successes, their ability to develop it once and access all these eyeballs.” He says the old Field of Dreams (a second movie reference) method of “if you make it they will come” doesn’t work. What works, he said, is adopting a federated approach that allows app developers to build with the knowledge once and for all that their solution will work on any network. “Although we are an infrastructure provider,” he said, “we feel it is our responsibility to bring apps to the table.”
In this context, McCarthy calls for more interactive live sports streaming, content delivery more generally, as a near-term income opportunity. From a 5G perspective, it relies more on providing bandwidth than providing single-millisecond latency কিছু something that has long been part of the 5G hype cycle but something that isn’t really available today with any kind of scale. “Latency is really important and apps that require delays are really important,” he said. “But the reality today is that while 5G radio networks have promised 1 milliseconds of latency, you know, it’s been a tough 10 years. Today it is about 20 milliseconds. Like a public cloud or edge cloud outside of a service provider network. To host a Google or a Microsoft or an Amazon, you are only adding 2 more milliseconds. So Latency is probably not the killer app, at least for now. I think it will be in the end. But reconsidering bandwidth costs is, I think, really important. ”
That revenue growth piece. The other is taking the cost of setting up the network. “The way we build networks is based on estimates from 20 years ago,” McCarthy said. “Here we come 20 years later and we ask ourselves, ‘Is the router the most expensive component of the network?’ The answer is no. ” Over the past two decades, advances in silicon photonics and other fields have simplified optical transport, and software has enabled high-level network abstraction. The net result is that more efficient networks can be set up in a more cost-effective way by breaking down routed optical and IP networking into a single, flat layer.
“We’re working along the way with all of our customers to take them to the next level,” McCarthy said. “It simply came to our notice then. It can even involve a restructuring between customers. “Talking about the possibility of a 50% cost reduction,” this is something we talk about with a single customer today, “he said.