Softwarization: Red and Blue Scenarios

Softwarization: Red and Blue Scenarios – Guest Blog from Antonio Manzalini Telecom Italia

Softwarization will bring risks and opportunities for Telecom Operators and Technology Providers.

We could imagine two main scenarios which we may call Red and Blue by taking inspiration from the so-called Red and Blue Ocean Strategies.

Red oceans actually concerns known market spaces, where roles boundaries are clearly defined and accepted, and the competitive rules of the game are known. As the market spaces are becoming more and more crowded, profits and growth are going to be reduced. Products and Services will become commodities, and the competition turns the ocean bloody.

Blue oceans, in contrast, refer to enabling new market space, creating new demands, and the context for a new growth. In blue oceans, competition is less relevant. New Service paradigms will be created and new ecosystems will emerge.

For example, in this very interesting interview A. McAfee is pointing out that certain “advancement of technologies falls in like with an economic phenomenon called creative destruction, a theory of economic innovation developed by Austrian-American economist Joseph Schumpeter during the 1940s.

A basic summary of creative destruction is as follows: as innovation occurs and revolutionary new technologies are introduced, former industrial structures will be dismantled with new ones constructed to take their place”.

In line with above reasoning, a Softwarization Red Scenario concerns pursuing a gradual introduction of SDN-NFV onto the legacy Telco infrastructures: e.g., starting from virtualizing some functionality.

Main challenges will interoperability of SDN-NFV with legacy systems, need of standardized interfaces (a long way) and above all need of updating, enhancing of the legacy operational processes, e.g. OSS/BSS, to cope with SDN-NFV (quite challenging and complicated). The rules are the ones of the Red oceans.

On the other hand, a Softwarization Blue Scenario is about exploiting SDN-NFV full innovation, even if creating a disruption, a point of discontinuity. In fact, we need considering that some Telcos (or even new Players) may have the possibility of exploiting full potential of “Softwarization” much faster than the gradual evolution of legacy Telecom infrastructure (scenario Red); if so, they will jumps ahead in the markets, as fully Virtual Operators, adopting faster operational processes (IT-style) dramatically shortening the time-to-market a la OTT. And this will change the rules of the game, systemically. Sooner or later markets will decide.

So, my personal take is that’s exactly what’s likely to happen with the combination of Softwarization and Machine Intelligence. The “creative destruction” will open new Blue ocean opportunities changing the rules of the game, and impacting the value chain of several Industries.

Guest blog provided by Antonio Manzalini, Telecom Italia – Innovation & Industry Relations / Future Centre

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