Hyperscalers and telcos at the industrial edge – a royal couple or a battle royale?

The kaleidoscope has been shaken, and the pieces are in flux; it is a quote from when British politics was supposed to change forever. But it captures very well an even more seismic upheaval, which promises indelible change for global industry – and will go further and faster, in more unnoticed ways, than a parochial promise about political modernisation. Because, one way or another, business is about to change across the whole planet.

The spur for this earth-quaking industrial ‘change’ is new ‘digital’ tech, of course, rendered in cause-and-effect as ‘digital transformation’; a phrase that is deployed to the point of cliché as a catch-all for the move to more powerful and more flexible compute processing, and the digital pyrotechnics it sets off. The trend to spread (‘distribute’) specialised cloud resources nearer the workplace is enabled by spiralling advances in hardware and software.

In other words, compute hardware is ever-more capable, in line with the rule-of-thumb (Moore’s Law) that microchips double-in-power and halve-in-cost in a breathless pattern of exponential power, and that compute software is ever-more accessible (open source) and repeatable (virtualized; containerized), in line with the decade-old maxim from Silicon Valley’s favourite son, Marc Andreessen, that ‘software will eat the world’.

But (without wishing you to suck eggs), all this change-componentry has to be connected; the internet needs an engine in-back, a pilot in-front, and an axle to go between. It is the same for the ‘internet of things’ (IoT), except the engine is geared differently, almost-infinitely, and distributed further into the vehicle, and the pilot is perhaps not required at all. And the hands-off controls connect to every motorised industrial function.

Roads? Where we’re going we don’t need roads. In this analogy, the vehicle – society, industry, enterprise, plant, robot, line, process – goes into new non-physical dimensions, with Level-5 autonomy somewhere along the way. This is the future that new digital tech promises; the metaphor translates exactly with autonomous vehicles, but works the same with smart buildings, smart factories, smart ports, smart farms, smart cities, and so on.

Lights-out industrial venues will be intelligent and automated, the theory goes, so operating costs are reduced and business revenues are multiplied in as yet unknowable ways. Human resources will be liberated – likely let-go, sometimes replaced – to drive this change and reinvention. Politics has a role and an interest to drive economic productivity and, increasingly, to legislate for environmental change as part of it, if not as a priority.

But business will make the dream work; the question is how it will make the team work, in support of this grand endeavour – and how the pieces will fall into place after the kaleidoscopic shake-out. This report considers certain of these pieces; it looks at the foundational compute and network functions – the engine room and steering column in the analogy – and how they are being meshed together with the distribution, also, of 5G into the workplace.

Why is this digital fabric so important, and its weave so intriguing? Firstly, as discussed, because the distribution of computing and connectivity at the edge, closer to the action, is the architectural springboard for industry-wide digital change. This progressive combination affords enterprises certain advantages: faster processing, higher security, tighter control – table stakes in this change-game, effectively, for the control freaks of Industry 4.0.

Secondly, because it makes 5G instrumental to the cause; so the promise goes. Which gives the old telecoms sector another shot at redemption, to play a deeper role with enterprises in the new digital ecosystem. Lest we forget; mobile operators misfired the last time battle-lines were drawn, as 3G turned to 4G, the internet went mobile, and Big Tech took the flag. Have they learned from the experience? Can they be more than ‘dumb pipes’ with private 5G?

Can they be pipes at all, even? Because the intrigue with enterprise 5G – commonly ‘private 5G’ – at the industrial edge, is that operators have been robbed of their monopoly on radio spectrum, variously annexed for industrial usage in most major economies, and disarmed of their radio knowhow, as networks are standardised in open cloud-based systems and simplified and stripped-back in special-purpose change-platforms.

These points are contentious, of course; licensed spectrum will be ‘sliced’ for enterprise usage, as an alternative or a compliment to private 5G, and available nationally for wider-area monitoring and tracking cases. And radio knowhow is too easily under-valued, especially when paired with network planning and design; the question should be whether these services will be provided by operators or vendors, or both together – or in some combination.

Plus, open RAN looks better on paper, for now, and ‘industry’ is an amorphous beast; the notion of a ‘cookie-cutter’ 5G model, of easy plug-and-play 5G for industry, will not work, probably, for critical and/or regulated use cases. So there will be a role for operators, for sure; the question is just how much of one. And the intrigue is, arguably, most acute now, as the distributed compute-network foundation is going in, and as the big compute vendors circle.

Because the move to the edge – from centralised general-purpose change platforms to localised special-purpose change platforms, engineered with the same ‘elastic’ compute economics – looks like an easy gig for well-heeled hyperscalers. Microsoft, Alphabet, and Amazon – the parents of Microsoft Azure, Google Cloud, and Amazon Web Services (AWS), the ‘big three’ – are the second, fourth, and fifth biggest companies in the world.

Their combined market capitalisation is over $6 trillion. And they all have designs on private 5G, as it intersects with their cloud computing interests. Microsoft’s market-cap is $2.429 trillion, only a little shy (about five AT&Ts, about 10 Deutsche Telekoms) of the total value of the top 112 (!) telecoms firms in the world ($2.652 trillion). Which gives a sense of how the deck is stacked, as private 5G is up for grabs with enterprises.

But what’s their game, and how should telcos play their hands? Let’s look again, and hand the narrative back to the industry…

Look out for the new editorial report from Enterprise IoT Insights on The Role of Hyperscalers in 5G and Edge, out next week. Enterprise IoT Insights and RCR Wireless are hosting a free webinar with Google Cloud on (this) Thursday December 9 (8am PT / 11am ET / 4pm GMT / 5PM CET) on the same subject, with panellists also from AT&T and Telecom Argentina. Sign up for the webinar here, or by clicking on the image below; a link to the report will be sent to all registrants.