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After attending Cisco Live in Vegas just two weeks ago, I returned to Las Vegas this week for HPE’s Industry Analyst Summit at HPE Discover 2024. It was HPE’s showcase to catch the AI lightning in a bottle, highlighting their ambitions and innovations in the rapidly evolving AI landscape. Below are three things that stuck out to me: HPE’s ambitious AI vision, cautious networking strategies, and the balance between Atmosphere and Discover. 

HPE’s Ambition: Becoming the Enterprise AI Hardware Provider of Choice

Like many other vendors, HPE has overpivoted on AI. Labeling everything as AI dilutes genuine AI advancements. However, HPE’s effort to be the go-to enterprise hardware vendor for AI server hardware and solutions is noteworthy.

The newly announced NVIDIA AI Computing by HPE aims to accelerate the generative AI industrial revolution. This collaboration includes NVIDIA’s powerful GPUs, DGX systems, and software, combined with HPE’s advanced water-cooling from the high-performance computing world. The stack leverages NVIDIA’s Ethernet and InfiniBand solutions for internal networking. While HPE played it safe by using NVIDIA’s networking, it must sting the HPE networking folks to be sidelined in favor of NVIDIA’s components. This approach contrasts sharply with Cisco’s, where they ensured Cisco networking had a prominent role in their joint hardware stack with NVIDIA. Nonetheless, Jensen Huang, NVIDIA’s CEO, showing up at HPE Discover but not Cisco Live might signify stronger backing for HPE.

Playing It Safe in Networking Amidst Strategic Shifts

HPE Aruba Networking played it relatively safe at Discover 2024, likely influenced by the ongoing Juniper acquisition. When Juniper arrives, strategy and tactics will undoubtedly be up for grabs again. Earlier this year, I wrote a blog about what the acquisition means for HPE’s network security aspirations, and my colleague Sian Morgan wrote a great blog about how the acquisition will change the enterprise market.

Although I anticipated updates on the Juniper acquisition, the timeline remains unchanged, targeting the end of the year or early 2025. Competitors are capitalizing on this uncertainty, generating FUD to steer business away from HPE and Juniper.

Despite no groundbreaking networking announcements, HPE Aruba showcased a broad spectrum of enhancements across its portfolio. During David Hughes’ keynote, Chief Product Officer of HPE Networking, he discussed several key advancements. A highlight was the push into “universal ZTNA” to bridge SSE’s wide-area ZTNA down into the campus with the new Aruba Local Edge. This solution identifies and enforces ZTNA on local traffic. While HPE is not the first in this area, it is far from the last; universal ZTNA is an area of active development in the industry.

Additionally, Hughes demonstrated various AI-ops demos and use cases, including AI-powered network management tools that enhance visibility, anomaly detection, and automated troubleshooting. Networking hardware also received attention with new campus switching, data center switches, SD-WAN hardware, Wi-Fi 7 access points, and even private 5G solutions. Although there were no earth-shattering networking announcements, the range of enhancements underscores that HPE Networking is not standing still or paralyzed by the ongoing acquisition of Juniper.

Balancing Atmosphere and Discover: Networking’s Place in HPE’s Vision

This year marked the first time Atmosphere, HPE Aruba’s dedicated conference, was integrated into HPE Discover. Previously, Atmosphere had a distinct identity, fostering a strong networking-focused culture. However, at HPE Discover, networking seemed to play second fiddle to the larger server and storage businesses. Many attendees lamented the loss of focus on networking and the unique culture that Atmosphere cultivated. The orange shirts of “Airheads” (Aruba’s affectionate term for its customers) were present but overshadowed by the more conservative attire of the broader HPE audience, whose only flare was a pin of HPE’s green rectangle logo.

I hope the Juniper acquisition will restore balance, bringing networking back to the forefront at future conferences. Atmosphere’s unique culture and focus should be preserved and better integrated into HPE Discover, ensuring networking and its innovations receive the attention they deserve.

Conclusion: A Glimpse into the Future

HPE Discover 2024 showcased HPE’s ambitions to lead in AI while navigating strategic shifts in networking. The partnership with NVIDIA highlights HPE’s commitment to delivering cutting-edge AI solutions, even if it means sidelining its networking components. The cautious approach in networking reflects the ongoing Juniper acquisition, with competitors eagerly watching and spreading FUD.

As HPE moves forward with the Juniper acquisition and continues to innovate, there’s hope that the unique culture of Atmosphere and the focus on networking will find a balanced place within the broader HPE and the HPE Discover show. The future promises exciting developments, and I look forward to seeing how HPE navigates these changes, driving innovation and growth in AI and networking.

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I just returned from Cisco’s Press and Analyst Conference at Cisco Live 2024 in Las Vegas, and it was quite the spectacle. The event was a grand showcase of Cisco’s attempts to reinvent itself amidst a saturated market. While there were some genuinely impressive innovations, it was hard not to feel a bit skeptical about some of the grandiose claims. Here are my key takeaways, organized into three major themes: AI Integration, Security Innovations, and The Future of Observability.

AI Integration: A Strategic Embrace

Cisco made it clear at Cisco Live 2024 that AI is central to its future. The event was filled with AI-focused sessions, panels, and keynotes, all highlighting how AI will drive the next wave of innovation at Cisco. In fact, the term “AI” was used over 300 times across 11 presentations, or on average about 27 times per 45-minute presentation. There was no doubt that Cisco wanted to impress the importance of AI, but was it really necessary to use it so often?

Chuck Robbins, Cisco’s CEO, emphasized that while Cisco remains a networking company at its core, embracing AI is essential for staying at the forefront of technology. One of the standout announcements was the AI-powered HyperFabric, developed in collaboration with NVIDIA. This new hardware is designed to support AI clusters, ensuring that Cisco remains a critical player in the infrastructure needed for AI workloads. The practical applications of AI in automating network management and optimizing performance are genuinely beneficial, promising to reduce complexity and improve outcomes.

However, it’s important to temper expectations. While AI holds great promise, the real test will be its implementation and whether it can deliver consistent, tangible improvements. Cisco’s AI strategy is ambitious, but it’s a necessary step to ensure they stay competitive in a rapidly evolving market.

Security Innovations: Promising but Future-Focused

Security was another primary focus at Cisco Live, taking second billing to AI. Cisco is committed to enhancing its security offerings, though many innovations were announcements for future products expected over the next six months.

One of the significant security announcements was related to the upcoming Hypershield, set to launch in August. This initiative, now expanded with AMD DPU integration, aims to provide advanced AI-driven micro-segmentation and threat detection for distributed workloads. Additionally, a new Cisco low-end firewall (1200) is expected in October, reinforcing Cisco’s dedication to the firewall market, where it once was the dominant market share leader but now stands far behind Palo Alto Networks.

A significant part of Cisco’s security strategy involves integrating Splunk, which was acquired earlier this year. Splunk’s capabilities in providing visibility into the internet and cloud are crucial for understanding how external factors impact network performance. While Splunk is still finding its home within Cisco, the integration process is underway and will be pivotal for future security innovations.

Cisco’s security announcements also included the new Cisco Security Cloud Control, the unified management for Cisco Security Cloud, its AI-driven, cross-domain security platform, and partnerships with Microsoft and Google. These partnerships are noteworthy, demonstrating Cisco’s strategy of collaboration to enhance its security offerings without having to build out missing capabilities themselves. However, the true impact of these innovations will be seen once the products are fully rolled out and integrated.

The Future of Observability: Integrating Splunk

Observability and digital experience management were also prominent themes at Cisco Live. These areas are critical as they represent the evolution of traditional network management into more holistic, software-centric solutions. Cisco is positioning itself as a leader in this space, recognizing that as networks become more complex, the need for comprehensive observability tools becomes paramount.

A significant part of this strategy is the integration of Splunk and cross-pollination with standing Cisco products, such as Thousand Eyes. At Cisco Live, integrating Splunk with other Cisco products was a significant highlight, showcasing how observability can lead to better decision-making and improved operational efficiency. However, Splunk feels somewhat separated from the Cisco mothership. Given that the acquisition closed only a couple of months ago, this is understandable. The integration process will take time, and it will be interesting to see how Cisco fully incorporates Splunk’s capabilities into its broader portfolio.

A Networking Giant’s Evolution

Cisco, the blue-blood networking company, had a surprisingly limited number of CEO-caliber network infrastructure announcements. Other than the HyperFabric, there were no major hardware or networking revelations directly from Chuck Robbins or his staff. On the one hand, it’s refreshing to see Cisco focus on innovative technologies beyond the traditional “speeds and feeds.” On the other hand, isn’t that precisely what made Cisco the powerhouse it is today? The lack of significant networking announcements might leave some long-time Cisco followers questioning if the company is straying too far from its routing and switching roots.

Final Thoughts: A Bold Step into the Future

Cisco Live 2024 showcased a company making bold moves to stay relevant and competitive. The emphasis on AI, the continued focus on security, and the integration of observability tools like Splunk are all part of Cisco’s strategy to expand its market reach. While there are valid reasons to be cautiously optimistic, the real challenge will be turning these ambitious plans into concrete results.

The AI initiatives, while promising, need to prove their value in real-world applications. Security improvements, though many are future-focused, show a commitment to staying ahead of threats. Observability, particularly with the integration of Splunk, represents a significant step forward, though it will require time to realize its full potential.

Cisco Live 2024 left me with a sense of cautious optimism. The company is clearly making strategic moves to adapt and innovate. Whether these efforts will pay off remains to be seen, but one thing is sure: Cisco is not standing still. They are actively shaping their future, and it will be fascinating to see how these initiatives unfold in the coming year and beyond.

A correction was made on June 14, 2024: An earlier version of this blog incorrectly referred to Cisco Security Cloud Control as ”an AI-driven platform for unified security management.” Cisco Security Cloud Control is the unified management interface for Cisco Security Cloud, which is Cisco’s unified, AI-driven, cross-domain security platform.

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In a blog post published earlier this week, details were provided on why CommScope unexpectedly decided to acquire the cable assets of Casa Systems for $45.1 million. The primary reasons discussed included strengthening CommScope’s cable presence and achieving the necessary scale for the transition to virtualized Cable Modem Termination Systems (vCMTS).

Another significant factor in CommScope’s decision to pursue this acquisition is the access Casa’s already-deployed Axyom vBNG (Virtual Broadband Network Gateway) platform to complement CommScope’s PON OLT and ONT platforms and provide operators with a more comprehensive fiber portfolio. The Axyom vBNG has already been deployed with Mexico’s Izzi as well as with other tier 1 operators that have not yet been announced publicly.

Similar to the vCMTS market, the vBNG market is still in its early stages of development, though vBNG deployments are expected to increase significantly in 2025 and beyond as operators continue to move away from BNG functions integrated directly on centralized, hardware-based edge routers, and look to separate control and user plane functions.

vBNGs serve as the access point for broadband subscribers, managing the connection between their modem and the service provider’s broadband network. vBNGs authenticate and manage those subscriber sessions, aggregate the sessions, and then route them to the service provider’s network. Additionally, vBNGs offer traffic shaping functions to deliver Quality-of-Service (QoS) features for specific subscribers, such as traffic prioritization and rate limiting.

As Fiber to the Home (FTTH) deployments and subscriber sessions continue to increase, operators will need to scale and distribute their BNGs to enhance network resilience and simplify IP address management and subscriber authentication at the edge rather than backhauling all of that traffic to a centralized BNG. This is as much the case for larger, tier 1 operators as it is for smaller operators who don’t necessarily need a large, centralized BNG. vBNGs running on COTS servers provide all operators with the flexibility to scale their throughout and simultaneous session management with their subscriber base.

Operators such as AT&T, Deutsche Telekom, Telefonica, Vodafone, and Comcast are all active in the standardization and development of vBNGs and there is a growing population of smaller ISPs trialing vBNGs from a group of vendors that include Casa Systems, Ciena, NetElastic, Six Wind, 5X9 Networks, UfiSpace, DriveNets, rtBrick, and Nokia.

Certainly, with the ongoing global subsidization efforts to expand fiber access, now is the right time for operators to begin rethinking how they architect their subscriber management functions. Even beyond fiber, fixed wireless access (FWA) providers are also looking at vBNGs that can provide the Access Gateway Function (AGF) of a 5G core. The AGF provides nearly all the same functionality of a vBNG, but is also focused on facilitating the interworking of wireline devices with the 5G core. For any mobile operator delivering FWA services, the AGF can play a critical role in the management and authentication of FWA CPE and subscriber sessions.

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In a surprise move last week, CommScope emerged as the winning bidder for Casa Systems’ cable assets, edging out Vecima Networks and Harmonic. The winning bid of $45.1M represented a significant premium over Vecima’s initial stalking horse bid of $20M.

The move is interesting because CommScope is known to be exploring a sale of its ANS (Access Network Solutions) Division in an effort to reduce a debt load pushing $9B. CommScope announced its intent to acquire ARRIS in 2018 and completed the acquisition in early 2019 for $7.4 B. From 2018 to 2019, ARRIS’ CCAP revenue plummeted from $739M in 2018 to $442M in 2019, as operators completed their DOCSIS 3.1 upgrades and, more critically, Comcast capped its CCAP purchases in favor of transitioning to Virtual CMTS and Remote PHY. CommScope’s CCAP revenue improved slightly in 2020 and 2021 but has since declined further, reaching $293M in 2023.

Meanwhile, Casa, which from 2014-2018 generated cumulative revenue of just under $1.3B from its C40G and C100G CMTS and CCAP platforms and secured a significant footprint with Charter, Claro, Rogers, and other tier 1 operators, was unable to rebound from the 1-2 punch of a softer market for DOCSIS licenses and Charter’s announcement in March 2023 that Casa would be excluded from its massive network upgrade project. Additionally, Casa was unable to find enough traction for its vCMTS and DAA products to offset declining license revenue for its integrated CCAP platforms, although the company does have some DAA traction with Rogers Communications, Vodafone, Liberty Global, and Claro Colombia.

So, with both vendors seeing declining revenues for their CCAP platforms and an industry that is clearly moving away from integrated CCAP platforms toward vCMTS and Remote PHY, where both vendors have lagged behind their primary competitors, Harmonic and Vecima Networks, why would CommScope make this deal? And, beyond price, why would Vecima walk away from a deal that could have accelerated the market readiness of its own vCMTS platform?

Let’s consider a few different rationales:

  1. CommScope needs to amass and scale vCMTS deployments: We have emphasized this many times, but the industry is still in the early stages of transitioning to vCMTS platforms. However, the addressable market of operators, and the larger DOCSIS and HFC market, are declining as more operators gradually transition to fiber. Therefore, we don’t expect the combined vCMTS and Remote PHY Device (RPD) market to ever reach to revenue levels seen in 2018 and prior for integrated CCAP platforms. With operators pursuing various strategies and combinations of DOCSIS and PON in their access networks, it is imperative for a company like CommScope to roll up as many potential vCMTS opportunities as possible—particularly among those operators committed to a strategy of continuing to rely on DOCSIS and HFC for the bulk of their residential connections. And Casa does count Rogers Communications and Claro Colombia as key vCMTS customers. Back in October 2023, CommScope did announce its first customer win for its vCore platform. However, there has been no follow-up announcement regarding a formal contract or additional wins since then, which leads us to our second reason.
  2. CommScope’s vCore product is perhaps not as far along as it needs to be: Development on CommScope’s vCore vCMTS platform has been on-again, off-again over the last few years. Initially, virtualization of MAC functions was run on the E6000 chassis, ostensibly to support RPD rollouts by Cox Communications, among others. The idea was then to move these capabilities onto COTS servers to scale the CMTS VNFs (Virtual Network Functions) horizontally as new DAA service groups were launched. However, porting existing software, designed to function alongside the dedicated hardware of an integrated CCAP platform, onto servers is a challenging task. There was word throughout this process that CommScope was having a difficult time completing this development. Ongoing personnel and strategy changes certainly didn’t help matters, either.

So, perhaps the addition of Casa’s Axyom vCMTS and current customer base gives CommScope not only the opportunity to scale existing Tier 1 DAA customers but also to potentially rely on the Axyom as its primary vCMTS platform in the short term while it continues to improve the performance of its vCore platform. We speculated in a previous blog that this was the motivation behind Vecima’s interest in Casa, with Vecima announcing the availability of its own Entra vCMTS in the fourth quarter of this year. Ultimately, we expect elements of the Axyom and vCore platforms to be integrated into a single software stack to avoid parallel development efforts that could sidetrack operator deployments.

  1. Casa brings additional short-term revenue opportunities that improve the ANS valuation: Despite the clear trend towards virtualization at the edge, there will also be a DOCSIS 3.1+ software upgrade cycle on existing CCAP platforms that could help to prolong those products’ lifespans and provide a short-term boost to revenue. We assume that the software upgrades necessary to support the additional OFDM channels will be quite a bit less than purchasing full licenses for the additional spectrum. Nevertheless, there will be enough new spectrum and licenses purchased on existing CCAP platforms to support mid- and high-split efforts, as well as DOCSIS 3.1+. This stabilization of short-term revenue, combined with the continuing traction Casa was getting with its vBNG product for FTTH deployments, could be enough to improve the valuation of the ANS Division and make a sale with more favorable terms possible.

Ultimately, CommScope’s decision to spend $45.1M on Casa’s cable assets and Vecima’s decision to walk away almost certainly comes down to how big each company estimates the vCMTS market will grow to and how much of that market can each vendor capture. Our current forecast, published in January, pegs the vCMTS market to grow steadily to $367M worldwide by 2028. That is a meaningful market on an annual basis. For CommScope, which experienced years of $1B+ revenues for its CMTS and CCAP platforms, potentially growing a product to that size is well within their comfort level. For Vecima, scaling to that size would have been very possible, but would also involve a significant amount of risk and potential potholes along the way. Vecima is currently scaling its RPD and R-OLT products to meet increasing Tier-1 demand. Absorbing Casa’s products, customer base, and employees could have siphoned away the momentum the company has already built.

Related blog: CommScope Also has Bigger PON Ambitions with Casa