Why COTS is Important to the Network and Telecom Industry
COTS (Commercial off the shelf) is short hand for industry standard servers (e.g. Intel), operating systems (e.g. Linux or Unix), and middleware.
The enterprise network and telecom industries have been living in a world of purpose built systems for 30+ years. It is standard for Ericsson, Cisco, or Juniper to design their own ASIC chips, develop proprietary operating systems (e.g. Cisco IOS), and integrate it all into highly optimized systems (e.g. base stations, routers, and ethernet switches).
Changes in the telecom world have resulted in some COTS adoption as Huawei, Alcatel, and NSN have moved some of their development efforts to commercial servers or ATCA (a blade server standard for high reliable telecom systems). However, my recent discussions with a range of enterprise and telecom network suppliers indicates a relatively slow migration to COTS hardware and a continued dependence on internally developed middleware.
In the long run, migration to COTS is inevitable given the power of Moore’s Law and proven COTS benefits, namely:
- Faster design cycles
- Less expensive hardware
- Lower maintenance costs
- Benefits of server virtualization
Networking vendors are increasingly finding their value-add is coming from highly specialized software. And given financial pressures most networking suppliers need to reduce the time and engineering costs of their hardware, OS, and middleware developments.
In networking and telecom change can (and usually does) take a long time – systems are designed for 5+ year cycles. Migration to COTS generally occurs when a new equipment design cycle is required (e.g. 4G, 100GB) or in response to specific transformative industry trends (e.g. Software Defined Networking or SDN).
There is significant market opportunity for IT players with targeted programs to deliver COTS to the network/telecom industry. For server hardware only, the telecom industry represents 8-10% of the total server market. ATCA represents a $1B+ market opportunity (internal and external development) for COTS. Additional market value is available in software (OS, middleware, and applications). Key IT players here are IBM, HP, Intel/Windriver, Oracle, and Radisys.
The key questions are which parts of the telecom industry are ripe for COTS, for example base stations represent a very large opportunity with little to no COTS penetration today. The price and margin challenges now impacting the large network equipment suppliers will work to accelerate COTS – see the recent financial results for Ericsson, NSN, and Alcatel. Over time, adoption of SDN will bring the very large Ethernet switch and router markets into COTS scope.