Allot Offers NFV-Based TDF and Security Functions Over HP's OpenNFV

The Journey to NFV

Source: HP (here)

Allot Communications announced its participation in the "HP OpenNFV Partner Program ..  As part of the program, Allot will be offering its virtual Traffic Detection Function (vTDF) [see "Allot Enhances DPI Gateway with Standard TDF" - here] and security services on the HP OpenNFV platform. The integration demonstrates service enablement and delivery for virtual security services that are deployed over the HP OpenNFV cloud environment platform. Following the Internet Engineering Task Force (IETF) and 3rd Generation Partnership Project (3GPP) evolving standards, Allot’s vTDF together with Allot’s Element Manager (EM) enables dynamic creation and management of pre-integrated security services such as Allot’s DDoS protection and content-filtering.

[Related post: "Allot and Procera Push NFV-based DPI" - here]

..Allot’s integration with HP OpenNFV components such as HP NFV Director and HP Helion enables onboarding of Allot’s virtual solutions in the HP ecosystem environment. This transition from proprietary equipment installed in a specific topology location to Virtual Network Functions – that can be distributed throughout the network and uniformly managed – enables operators to:

• Simplify and automate service deployment, provisioning and configuration
• Add elasticity to the network for more fluid and efficient allocation of resources
• Leverage distributed cloud infrastructure to implement complex use cases with ease
• Reduce time-to-market for consumer and business services"

See "Allot Communications Offers Robust Security Services on HP OpenNFV Cloud Platform" - here.

Amdocs CEO: "Network Optimization Business is Slow"

In the past two years, Amdocs entered a new space of managing networks' traffic  by acquiring two companies - Celcite (2014, $129M, here) and Actix (2013, $120M, here). See also "Amdocs Integrates RAN Management and Optimization Solutions" - here.

Was this a successful move? 

Amdocs Q3 (June 30) earning call (revenues of $908M, here) provides some insights into Amdocs' network business: 

Question by Amit Singh - Jefferies: " .. you have previously highlighted network optimization as one of the avenue of growth. And I believe a few quarters ago you had even said that it could be about $100 million plus revenue this year. So just wanted to get a sense of how that business or the growth in that business is playing out and what is your expectation going forward from here?"

Answer by Eli Gelman [pictured], President and CEO, Amdocs: "So network software in general, including network optimization, is moving along well. Its lumpy, because the deals there are not so smooth I would say in terms of the deals, the deal flow, not the execution.

So we see progress. We actually expanding the offering, so it’s not only specific in the network optimization, it's not only around that product that we acquired we are now talking about more services, a broader view of the problem, not only the red optimization other network optimization as well. And as we are talk about that we are also trying to make our first moves into the network visualization which is the even the bigger potential in this network software space.

But it’s slow, its – we are executing on some development, we have some dialogue with some customers. But these are completely new topics. So the ones that we have already are progressing well. The new ones are a big unknown. And what we are learning is that it is lumpy as many other projects" 

See "Amdocs' (DOX) CEO Eli Gelman on Q3 2015 Results - Earnings Call Transcript", by SeekingAlpha, here.

Citrix: Bytemobile Business Declined by 50%; "Exploring Alternatives"

 
Along the problems we saw in the past with the optimization market (see related links below), came the next statement from David J. Henshall [pictured], COO & CFO, Citrix during the company's 2015 Q2 earning call:

".. our delivery networking, total revenue decreased 3.5% in the quarter to $173 million. The decline is driven by two factors. First, license contribution from our ByteMobile business declined by about 50% from last year. As we indicated in our release ["The company also announced that earlier this year it engaged a financial advisor to provide strategic advice related to a potential sale of its ByteMobile business. Citrix is currently in active discussions with third parties regarding a potential sale - here], 

.. we've been in the process of exploring alternatives for this business over the past several months, and as you'd imagine, this process has been significantly disruptive to the team and ultimately the results". 

Related posts:

• [Jan '14] Citrix: Traction in Bytemobile Business; Need to Wait for Revenue Recognition - here
• [Oct '13] Citrix: "Bytemobile deals are large and infrequent" - here
• Flash Networks (40%) and Citrix (30%) Lead the Mobile Optimization Market - here

See "Citrix Systems (CTXS) Mark B. Templeton on Q2 2015 Results - Earnings Call Transcript", by SeekingAlpha, here.

MNO Survey: 5G is Still an Unknown; LTE Materializing

A new survey by Stéphane Téral, research director for mobile infrastructure and carrier economics, IHS in which "operators were interviewed about their LTE network deployment plans, challenges and service offerings" finds that many do not know what 5G networks are:

"The 5G debate has started with great fanfare, hype and confusion, but little substance about what it is exactly and what it is not. For now, the mindset is still locked into mobile broadband as we know it with LTE, so it’s good that the ITU has just stepped in to define 5G in its brand new IMT-2020"

"Half of respondents participating in the study say they have already deployed LTE-Advanced (LTE-A) in their LTE networks [see "GSA: 497M LTE Subscriptions Worldwide" - here and "GSA: 360 LTE Networks Launched; 96 in 2014" - here] .. We are slowly but surely moving to true 4G, and that’s good news. However, most users already believe they are on 4G, and that’s the bad news because the experience is far from consistent and is falling short of expectations. How many times does your smartphone display LTE or 4G and you still see the infamous spinning wheel?”

"Ericsson, Huawei and Nokia (in alphabetical order) are perceived by survey respondents as the top LTE equipment manufacturers". 

Source: 5G Concept, by IMT-2020 (5G) Promotion Group - here.

Source: 5G Concept, by IMT-2020 (5G) Promotion Group - here.

See "5G Hype Aside, True 4G Is Finally Materializing, Says IHS" - here.

[Gartner]: MNOs Should: Rethink Their Data Caps; Cache and Optimize Video

A new report by Jessica Ekholm [pictured], research director, Gartner finds that "Global mobile data traffic is set to reach 52 million terabytes (TB) in 2015, an increase of 59 percent from 2014,.. The rapid growth is set to continue through 2018, when mobile data levels are estimated to reach 173 million TB .. New, fast mobile data connections (3G and 4G) will grow more slowly, from 3.8 billion in 2015 to 5.1 billion in 2018, as users switch from slower 2G connections and consume more mobile data. 

Gartner analysts advise communication service providers (CSPs) to rethink their data caps to meet consumer needs and win market share .. CSPs must create and sell data plans with higher caps to increase their share of this growing market. With video usage as a percentage of total data usage set to rise from 50 percent now to 60 percent by 2018, we should expect CSPs to offer the best-of-breed video experience to consumers, This involves using video optimization technologies and caching content closer to the consumer. Contract plans that single out video traffic to allow users to reach a certain cap (without touching their contract data cap) will increase usage and revenue for CSPs and meet consumer demand for more mobile video."

See "Gartner Forecasts 59 Percent Mobile Data Growth Worldwide in 2015" - here.

Allot's Former CEO: "Security is the Right Direction for Allot"

The Israeli financial paper, Globes, interviewed (by Shlomit Lan, here, Hebrew) Rami Hadar [pictured], former Allot Communications' President and CEO about his new activity as one of the 3 managing partners of  Eucalyptus, a new investment fund seeking now $300M investments.

The article also discusses Allot's current situation [see "Is there a Problem in the DPI Market?" - here], providing some remarks from Rami (who is still a member of Allot's board of directors):

• Of the 3 acquisitions made during his CEO term, Rami admits that one, the smallest, in the security space, was successful while the other two [see "Allot Buys Oversi for $16M in Cash" - here and "Allot to Buy Ortiva Wireless" - here] haven't yet shown success
   
• "Every company goes through a crisis each time it doubles its revenues. It happens to Israeli companies when they reach annual revenues of $100-120M and then they standstill till they find the next growth engine, which takes few years"
   
• "Almost half of Allot's revenues comes from 3-5 large customers [see "Allot: Two 10% Customers in 2014" - here] - that creates volatility. Andrei [Elefant, current CEO], understands that, and knows he needs to win more large operators and add complementary solutions. He announced recently that Allot entry into the security market [see "Allot CEO: We Compete Against Security Vendors " - here] - and I think it is the right direction for Allot" 

[Dell’Oro]: Flexible NFV Licensing Causes Modest EPC Market Growth

A new report by Chris DePuy [pictured], VP, Dell’Oro Group finds that "the Wireless Packet Core Equipment market is forecast to reach almost $5.5 billion by 2019. The faster-growing portion of the packet core market, the Evolved Packet Core segment, is expected to grow nearly 25 percent from 2015 to 2019.

.. We expect that as NFV-based packet core systems are adopted by service providers, more flexible licensing terms will emerge that change pricing dynamics icenses that transfer from one system to another and pay-as-you-go licensing are catalysts to adopting annualized billing, which differs from perpetual licensing terms common today .. Alcatel-Lucent, Ericsson, Cisco, Huawei, Nokia and ZTE seen benefitting in the market overall"

See "Evolved Packet Core Revenues to Grow Nearly 25% by 2019, According to Dell’Oro Group Forecas" - here.

Netflix - The New Way of Sharing Media

Years after P2P file sharing built the DPI industry (first for music, later for video), it appears that even paid OTT services are shared, and potentially a large portion of the popular Netflix traffic (see "Sandvine: NA Internet is Concentrated Around 3 Content Providers" - here) is not paid for.

Jason Mander [pictured] reports to globalwebindex that ".. Reed Hastings also announced that Netflix was considering ways of making it harder for people to share passwords – which GWI’s data shows to be a widespread trend. In fact, our new Q2 2015 figures reveal that almost two thirds of users in the USA and UK are currently sharing their account.

What’s perhaps most significant here is that almost a fifth of Netflixers say that 3 or more other individuals use the same account as them. When we’re talking about total audience sizes, that means we need to abandon the notion that 1 paid-for subscription = just 1 user. In reality, there are tens of millions of additional users and the likelihood of people taking this approach will only get more common as Netflix gets more expensive". 

See "Two thirds of Netflixers share their accounts" - here.

[IHS] Software is 80% of the $11.6B (on 2019) NFV Market

A new report by Michael Howard [pictured], senior research director for carrier networks, IHS forecasts that "the global network functions virtualization (NFV) hardware, software and services market to reach $11.6 billion in 2019, up from $2.3 billion in 2015. NFV represents operators’ shift from a hardware focus to software focus, and our forecasts show this. We believe NFV software will comprise over 80 percent of the $11.6 billion total NFV revenue in 2019 .. The software is always a much larger investment than the server, storage and switch hardware, representing about $4 of every $5 spent on NFV,” 

• Service providers are still early in the long-term, 10- to 15-year transformation to virtualized networks
   
• Revenue from outsourced services for NFV projects is projected to grow at a 71 percent compound annual growth rate (CAGR) from 2014 to 2019
   
• Revenue from software-only video content delivery network (CDN) functions for managing and distributing data is forecast by IHS to grow 30-fold from 2015 to 2019

See "NFV Market to Grow More than 5-Fold Through 2019, Says IHS" - here.

AT&T Agreed to Prevent Discrimination Against Online Video Competition

More than a year after Netflix said it will discuss an agreement with AT&T, this seems to be no longer necessary (see "Netflix: First we take Comcast, then we take AT&T and Verizon; How Much it Costs?" - here).

Marguerite Reardon (pictured) reports to CNet that "To win regulatory approval for its $49 billion bid to buy satellite TV provider DirecTV, AT&T has agreed to stricter Net neutrality rules and a promise to expand its fiber-optic-based broadband network to more customers.

..Details of the conditions have not been released. But in a statement, Wheeler said that "the conditions will build on the Open Internet Order already in effect." Specifically, AT&T has agreed to prevent discrimination against online video competition by agreeing not to "exclude affiliated video services and content from data caps on its fixed broadband connections." In other words, if AT&T imposes a data cap, it's not allowed to exclude its own content from these caps while other services are counted in the cap.

To ensure that AT&T is not discriminating against other services like Netflix, which offer similar streaming video service over broadband networks, the company has agreed to submit to the FCC all "completed interconnection agreements." These agreements are commercial arrangements between companies that exchange Internet traffic. Netflix has complained publicly that other broadband providers, such as Comcast and Verizon, have forced it to pay fees to deliver its streaming video service to consumers. In the current Net neutrality order, the FCC for the first time said it would examine these deals on a case-by-case basis if complaints are filed"

See "AT&T agrees to stricter Net neutrality rules to get its DirecTV deal approved" - here.

RADWARE Accelerates HTTP/2 Web Traffic

Radware announced the ".. release of its newest ADC software version which provides a leading web performance optimization and acceleration solution to help maximize the acceleration value for HTTP/2.

Major benefits of HTTP/2 over HTTP 1.1 (Source: Radware)

..Recognizing that HTTP/2 will soon be the standard protocol for access to the Internet, Radware has embedded an advanced HTTP/2 gateway into its Alteon NG application delivery controller. With no upgrade of the front-end web application server or long development and testing cycles needed, Radware’s gateway for the HTTP/2 protocol offers backwards compatibility with legacy servers and browsers that can only support HTTP 1.1.

With the embedded HTTP/2 gateway, HTTP/2-enabled browsers immediately enjoy the following benefits:

• Multiplexing of Transactions – HTTP/2 transactions are multiplexed by nature. An HTTP/2 browser can send any number of requests and receive the responses interleaved and out of order. This translates to fewer total connections, which eliminates setup time latency associated with each additional connection, hence, reduced total latency
   
• Header Compression – HTTP headers have grown significantly over the years. For example, the cookies section transmitted with each request may include multiple cookies, each as long as 4K. With the HTTP/2 HPACK algorithm, recurring headers may be sent only once per client connection and not per request, which translates to reduced bandwidth
   
• Privacy/Security – Encrypted HTTP/2 traffic is required to use only TLS 1.2 and above with ciphers that implement prefect forward secrecy (PFS) such as ephemeral DH and elliptic curves. This implies that HTTP/2 encrypted sessions are harder to break. The use of TLS (over SSL) has also become guidance by the PCI association
   
• Application Flow Control and Prioritization – Since HTTP/2 supports multiple parallel transactions, a method for controlling the amount and preferred order of transferred data is necessary. Radware’s extensive field experience with features that provide resource reordering for best browsing experience, such as deferrals, can now be leveraged to help users benefit from this HTTP/2 capability
   
• Server Push – Radware is the first to offer H2 Push, enabling automated server push. While HTTP 1.1 is a unidirectional protocol, where only the client can request for resources, HTTP/2 is fully bidirectional and allows the server to initiate data transfer to the client. However, this requires a smart server that knows which resources to push to improve page rendering and load time. Knowing which resources to push to each client is not a simple task- it requires deep understanding of the Web application, and awareness of what is already in the browser cache. The automated server push capability can greatly improve user experience, but if the server doesn’t know what’s in a browser’s cashe, the server push capability of HTTP/2 cannot provide a benefit.

See "Radware’s Alteon® NG Helps Provide Fastest Website Acceleration" - here.

[ABI]: 400M Wi-Fi Access Points in 2019

A new report by Ahmed Ali, [pictured] Research Analyst, ABI Research finds that "Service providers and enterprises continue to find new revenue opportunities in Wi-Fi as the number of installed access points ramps up to nearly 400 million commercial and enterprise units by 2019. Emerging technologies like Hotspot 2.0, VoWi-Fi, and 802.11ac in the Wi-Fi space support further development of the current business models and encourage business model innovation"

See also:

• [ABI]: Wi-Fi Offload Traffic Volume will Exceed All Cellular Traffic" - here 
• [Infonetics Survey]: CSPs Expect to "significantly increase"  Wi-Fi Access Point Deployment - here

".. Service providers and enterprises have direct relationships with end-user customers and therefore play an important role in aggregating valuable data and controlling the delivery channels for products like mobile ads and apps. The potential B2C segment is extensive and ranges from small local shops to large international brands ..  Bringing together the supply from hotspot owners with the demand from various businesses creates an expanding B2B ecosystem of innovative solution providers”.

See "Hotspot 2.0, 802.11ac, and VoWi-Fi: Nearly 400 Million Strong Ecosystem to Monetize Wi-Fi" - here.

RADCOM Adds Virtual Manager to its CEM Solution

RADCOM announced the ".. launch of MaveriQ Manager, completing the full virtualization of its MaveriQ solution .. With the launch of the MaveriQ Manager, RADCOM has now completed the virtualization of all layers of its MaveriQ solution, enabling the entire solution to reside on Cloud infrastructure. Many Tier I operators are progressing towards virtual architectures, which are proving to be faster and easier to deploy and maintain than traditional network architectures, while also being more flexible and technology-independent"

Related posts - "RADCOM: $3.6M Order for Customer Experience Solution by Tier1 MNO"  - here

 

"MaveriQ Manager is an ETSI-compliant VNF (Virtual Network Function) manager, responsible for communication between RADCOM’s VNF, the orchestration layer, and the infrastructure layer, providing full lifecycle management of the virtualized solution.

See "RADCOM Bolsters Its NFV-Based Customer Experience Management Solution" - here.

[Analysys Mason]: No Change in the $5.8B SDP Market Leaders

A new report by Glen Ragoonanan [pictured], Principal Analyst, and Gorkem Yigit,Research Analyst, Analysys Mason finds that "The service delivery platform market generated USD5.8 billion in revenue worldwide in 2014, up 11% from USD5.2 billion in 2013. LTE's impact on the overall service delivery platform (SDP) market increased, first in subscriber data management (SDM), then policy management (PM), followed by mobile content management and delivery (CMD), and finally, telecoms application servers (TAS) for mobile data and VoLTE services. Virtualised SDPs were being introduced in 2014.

.. the top-five SDP vendors were unchanged. Amdocs returned to the top six, thanks to a severe decline in Cisco's fixed CMD (FCMD): 

• Ericsson retained its leadership with 9% year-on-year revenue growth – primarily in the content management and delivery (CMD) sub-segment thanks to its acquisitions of Azuki Systems, Fabrix Systems, as well as Microsoft Mediaroom, which forms part of its Media Delivery Network (MDN) solution portfolio. Its other SDP revenue grew, though slower than the overall SDP market
    
• Huawei Technologies achieved the highest organic growth – 30% year-on-year – thanks to strong growth in the number of LTE subscribers in China because all three major communication service providers (CSPs) are rolling out LTE. It continued to win SDP business from other vendors in EMEA
   
• Nokia Networks’ revenue only grew by 5% year-on-year, compared with 11% for the overall SDP market. It remained the SDM leader, enjoying wins worldwide. Its acquisition of Alcatel-Lucent could make it the SDP market leader
    
• Alcatel-Lucent’s revenue growth declined by -7% year-on-year as it restructured and refocused on network virtualisation and VoLTE, which were not significant drivers of SDP spend in 2014
    
• Oracle had low 4% year-on-year organic growth, compared with 35% inorganic growth in 2013, when it acquired Acme Packet and Tekelec
   
• Amdocs’ SDP revenue growth was flat in 2014, which reduced its market share, compared with 2013. It re-entered the top-six thanks to Cisco’s decline in fixed CMD (FCMD).

See "Service delivery platforms: worldwide market shares 2014" - here.

[ACG]: Mobile Core Virtualization Reduces MNOs TCO by 67% Over 5 Years

A new report by ACG Research, sponsored by Affirmed Networks and VMWare finds that "For mobile network operators (MNOs), the decision to delay network virtualization efforts can be a costly one. Every year that MNOs delay the move to network functions virtualization (NFV) cost them millions of dollars in unnecessary capital and operating expenses.

In a five-year cost comparison between MNOs with traditional and virtualized network architectures, ACG found that: 

• MNOs that transitioned to an NFV-based platform began saving money in the first year and realize an investment payback in 3 years
  
• Adopting a virtualized Evolved Packet Core (EPC) solution reduced Capex by 68% and Opex by 67% on average
  
• MNOs were able to turn up a virtualized network much more quickly"

A scenario of a large-scale broadband service, compares virtualizing the following network elements; "Signaling Gateway (SGW), Packet Gateway (PGW), Policy and Charging Enforcement Function (PCEF), Subscriber Firewall, Deep Packet Inspection (DPI) and Web and Video Content Management including caching, image compression, content filtering, TCP optimization, video pacing, header enrichment and gzip compression on text objects" to a traditional best of breed solution:

"the five-year cumulative TCO of the Virtualized solution is 67 percent lower than that of the Traditional solution. Virtualized Capex is 68 percent lower, and Virtualized Opex is 67 percent lower than the Traditional solution"

See "Total Cost of Ownership Study Virtualizing the Mobile Core" - here.

NI Deployments [360]: SK Telecom [Korea] Uses Accedian to Realize QoS Visibility

Accedian Networks announced the ".. deployment of its market leading performance monitoring solution across the SK Telecom mobile network — encompassing 12,000 locations across the six largest cities in South Korea, with plans to extend coverage to all sites serving over 28 million subscribers nationwide. 

SK Telecom operates a sophisticated multi-vendor network, ensuring each supports the RFC-5357 two way active measurement protocol (TWAMP), a vendor-independent, global performance monitoring standard. Accedian’s centralized monitoring solution acts as a uniform instrumentation layer, centralizing a real-time view of network performance throughout the network. Where access equipment lacks TWAMP standards support, SK Telecom installs Accedian’s Nano smart SFP modules to ensure ubiquitous network coverage from end-to-end.

 

With the Accedian solution, SK Telecom improves network performance by:

• Ensuring service performance standards using key KPIs that can proactively mitigate risks to customer experience proactively
• Detecting traffic bursts and optimizing their LTE network to reduce Quality of Service (QoS) impact
• Locating bottlenecks for improved overall capacity
• Identifying and correcting any network mis-configurations immediately
• Optimizing fault failover to eliminate service downtime and improve network quality

 

Having this real-time stream of Quality of Experience (QoE) metrics integrated with SK Telecom’s own performance assurance network management system (NMS) and SDN controllers allows them to optimize end-to-end user experience with performance trending and proactive fault management. Direct reporting to operational and business support systems (OSS/BSS) allows all regions in the SK Telecom network to monitor performance, 24/7". 

See "Accedian Monitoring Solution Applied to SK Telecom’s Network to Assure End-to-End Performance" - here.

Nokia Integrates its Former and Acquired SON Solutions

Nokia Networks announced "Nokia Eden-NET combines the best Self Organizing Networks (SON) functionality from the now-completed Eden Rock acquisition and Nokia Networks iSON Manager in one solution .. The new solution is based on both Eden Rock’s Eden-NET and Nokia Networks iSON Manager.

According to Infonetics, SON and optimization software market forecast October 2014 report [here], The size of the optimization and SON market is expected to exceed 5 bn Euros globally by 2018".

"Key highlights:

• Promotes industry-wide SON innovation by allowing operators to innovate on top of the open framework
   
• Multivendor approach is further enhanced with OSS interoperability agreements with other network equipment vendors
   
• Nokia Eden-NET solution is available today; current Nokia Networks and Eden Rock SON customers are fully supported

Eden-Net Screen

See "Nokia Networks unveils new Nokia Eden-NET product for self-organizing mobile networks" - here.

Allot Wins a 100 GE DPI Project in APAC

A short press release from Allot Communications, announcing it has ".. won a contract with a new Tier-1 fixed operator in the Asia-Pacific (APAC) region. The operator is deploying Allot Service Gateway Tera [see "Allot Softly Launched a New High-end Product (Service Gateway Tera)" - here] with 100GE interfaces and capacity 

.. The Tier-1 operator is also benefiting from Allot WebSafe, a carrier-class security solution enabling regulatory compliance, which is integrated with the platform so that no additional hardware or configuration changes are required". 

See "Allot Communications Delivers High Performance 100GE Solution to a New Tier-1 Fixed Operator in APAC" - here.

[Survey]: Huawei, Ericsson and Alcatel-Lucent are the Top IMS Vendors

  

Diane Myers [pictured], research director for VoIP, UC and IMS, IHS (Infonetics Research): "conducted in-depth interviews with global service providers that have IP multimedia subsystem (IMS) core equipment in their networks or will by the end of 2017 and discovered that only 8 percent are running IMS network elements in a network functions virtualization (NFV) environment today .. more are on the path by starting to utilize software running on commercial off-the-shelf hardware as a stepping stone to full NFV. One of the biggest drivers for NFV is the ability to scale services up and down quickly and introduce new network services more efficiently and in a timely manner, which makes IMS a good early fit for NFV".

"80 percent of service provider respondents indicated that parts of their IMS elements will be running in an NFV environment by 2017, which IHS believes is somewhat optimistic. In an open-ended question asking respondents who they consider to be the top three IMS infrastructure vendors, operators most often named Huawei, Ericsson and Alcatel-Lucent"

See "Service Providers Optimistic about Moving IMS Networks to NFV, Rate Vendors" - here.

Sandvine: Many of the [Many] 50 PCRF Vendors have Dead Roadmaps

Sandvine's SDE

After showing success in the PCRF market (see "Sandvine Wins 3 PCRF Deals" - here), Sandvine's CEO, Dave Caputo, provided his insights for the market and opportunity during the 2nd quarter earning call:

• We see a PCRF replacement cycle occurring as the demand of voice-over-LTE overwhelmed earlier generation products. That plays extremely well into the strength of Sandvine's PCRF .. the win was the mix of new and existing customers
   
• Sandvine has the only PCRF that supports mobile and cable standards as well as other interfaces that facilitates deployment in any mobile, fixed, or converged network
   
• We happily would work with any existing PCRF vendor that a service provider has deployed
   
• we've seen is there has been some consolidation in the space notably Oracle has made some moves here. And as people are renewing their support and maintenance for as aspects of roadmaps might being abandoned
   
• And there were many, many players, there is as many as may be 50 PCRF vendors [here] out there. And lot of them only had success with one, two or three customers with the exception of a couple of the top players .. and so you could imagine there are some very dead roadmaps out there on those 50 vendors that only had one, two, three, four wins

See "Sandvine's (SNVNF) CEO Dave Caputo on Q2 2015 Results - Earnings Call Transcript", by SeekingAlpha, here.

Is there a problem in the DPI Market ? (Part 3)

After wondering (here) if the revenues misses for Sandvine and Allot were just a matter of longer sales cycles and acceptance processes or a market problem, I thought I'd look at my historical posts (I am doing this for more than 5 years) and see what analysts were predicating then and recently:

• My very first post (Jan 31st, 2010, here) showed Infonetics' Research predicting that " .. the market for standalone DPI products to grow rapidly, reaching $1.5 billion worldwide by 2013"
   
• The latest report from Infonetics showed that the DPI market size for 2014 was  ~$900M - see "Infonetics Reaffirms DPI Market CAGR: 22% ('13'-'18); Driven by LTE" (here)

• ABI Research had similar predictions in June 2010 "Deep Packet Inspection (DPI) will lead the field of mobile network test and optimization solutions by 2013 and is expected to generate equipment revenues of $1.3 billion in 2015" (here)

Conclusion? Analysts tend to be positive about the markets they cover, and the vendors they speak to are even more optimistic. 

Is there a problem in the DPI Market? (Part 2)

Dave Caputo [pictured], CEO of Sandvine, provided his views on the growth of the DPI market, in the company's Q2 earning call (revenues were $28.6M, as pre-announced, see "Sandvine Reports Q2 2015 Results" - here):

Q (by Richard Tse - Cormark Securities): Dave, can you give us a sense of the growth rate in the DPI market. We've seen only a competitor's sort of announced similar pull back or slowdown there. Maybe a tougher criterion so clearing these deals is there -- just a broader slowdown of market or just something else that sort of triggered all these requirements both getting other incremental and technical sign offs?

A: "well, I think this is the key question here. Based on a lot announcement in the past few days and are slower than expected start to the first half of the year. It's hard to imagine that the market or the market will likely not grow as quickly this year. And while we don't give guidance, we can say it will be a challenge to grow revenue as quickly as we did last year. But there are still opportunities for Sandvine to grow faster than the market .."  

Q (by Alex Henderson [pictured]- Needham and Company):  ". talking with the folks over at [Allot] it seemed quite clear in the way they discussed the trajectory of their business that they are seeing significant pressure on the growth rate particularly around the optimization portion of their portfolio whereas the service enablement functionality is actually still reasonably healthy. And they are talking about pivoting their strategy towards security because of that. They are really describing that is sort of change in the nature of the market as opposed to something they think is temporary. Now I know you guys have always focused more on the service enablement side but would you concur with that view of the world that the service enablement is the primary driver of the business going forward and that optimization is becoming less important?

A: "Yes. I would certainly agree with the idea of service creation and business intelligence has been the key drivers of our business for the past three and may be in four years. If I recall last year the traffic optimization and other part of our business was around 30% of our business back from -- if you back five years ago it had been 100% of our business. Although I do believe we grew at last year as well. And so I would say in general traffic management especially blunt force traffic management shaping and throttling, you could do increasingly available switches and routers out there .." 

See "Sandvine's (SNVNF) CEO Dave Caputo on Q2 2015 Results - Earnings Call Transcript", by SeekingAlpha, here.

Comviva Enhances PCRF with Shared Devices and Users Data Plans

Mahindra Comviva has introduced its "latest version of the Smart Policy Controller Ver.5.0 .. the new version is capable of handling over 100 million subscribers on single server and support Convergent Data Plans – Single subscriber identification, shall allow subscriber to have one data plan that can be used across multiple networks of the operators such as 3G, LTE, Wi-Fi, fixed broadband, Wi-MAX regardless of the number of devices. It is also very flexible in allowing individuals to share their data bundle with other subscribers. The solution has extensive technical and engineering advances that would significantly improve the performance of its policy function.

.. With over 800+ million end-users, Mahindra Comviva’s end-to-end Internet & Broadband Solutions help service providers Manage, Optimize and Monetize their broadband infrastructure in the most efficient manner".

See "Mahindra Comviva unveils its all new Smart Policy Controller version 5.0" - here.

Sandvine Wins 3 PCRF Deals

 

Sandvine announced that in the "second fiscal quarter of 2015, three mobile operators selected Sandvine’s universal Policy Charging and Rules Function (PCRF) to enable a diverse set of use cases for their networks [see "Sandvine Will Compete on PCRF Projects" - here]

• Two of the orders received came from regional North American mobile operators:
  
• one of which plans to use Sandvine’s PCRF as an essential component of their upcoming VoLTE rollout to provide guaranteed quality of service (QoS) for voice calls [see "Sandvine Enhances PCRF w/VoLTE and VoWiFi Support"- here]
   
• the other regional operator will be using Sandvine’s PCRF to enforce data quotas for their prepaid subscribers.

 Sandvine's ServiceDesigner interface

• The third order received was from a tier-1 operator in Eastern Europe who will be using Sandvine’s PCRF for a number of use cases focusing on service creation. Some of these include application-based plans that allow subscribers to purchase access to individual applications of their choosing, a “turbo boost” button which will allow subscribers to temporarily increase the speed of their LTE connection, and family plans to enable an account to share monthly data usage between multiple users" 

See "Sandvine’s Universal PCRF Selected By Three Mobile Operators To Enable A Diverse Set Of Use Cases" - here.

Is there a Problem in the DPI Market?

Note the similarity. Both Allot Communications and Sandvine issued 2 press releases each, just after their 2nd quarter has ended. A bad one and an $8M optimistic one (see below). Also, for the first time since it became a public company, Allot provided revenue guidance, expecting "revenues to range between $100-$105 million for full year 2015", compared to $117M in 2014, a decline of close to 9%, meaning also they expect the revenues for H2 2015 ($49-54M) will be similar to H1 ($51M).

Based on the similarity, it seems that the problem is with a declining market, rather than sales execution. The basic technology and solution (DPI based traffic management) is not as attractive today as it was several years ago, when mobile networks started to see strong demand for data without having the proper infrastructure in place and Net Neutrality was just a proposal.

There are no "bandwidth  hungry" applications anymore you can, as an operator, control or throttle without customers noticing and switching.

The transition to other solutions (analytics, security, VAS, charging) offered now by the DPI players is either not a complete solution (security), generates smaller deals (analytics, as it may be enough to analyze smaller portion of the network) or attractive just in limited regions (monetization).

• Sandvine said on June 8th that "it has received an expansion order for more than $8 million" (here). and
  
   " it expects revenue for its second quarter to be between $28.0 and $28.5 million .. The timing of closing certain large deals created variability in our quarterly results but we believe that these opportunities will close soon. Also, as we have discussed on previous conference calls, we are seeing more customer acceptance tests in contracts .. [however!] Sandvine’s book-to-bill ratio in the second quarter was greater than one"
  
• Allot announced on July 6th that "three strategic wins across the globe in the second quarter (Q2) of 2015. The new sales, summing approximately $8 million  .. A multi-million dollar order from a new Tier-1 mobile operator in Asia Pacific .. A multi-million dollar order from a new multinational, Tier-1, mobile operator based in Latin America .. A multi-million dollar order from a new Tier-1 Mobile operator in EMEA" (here). And it
  
  "expects revenues in the second quarter of 2015 to be in the range of $21-$22 million. The Company also expects to generate a net operating loss in the quarter .. [however!] Allot’s book to bill ratio in the second quarter was above 1 and cash reserves comprise of cash, cash equivalents, bank deposits and marketable securities as of June 30, 2015 were approximately $120 million" (here)

iiNet [Australia]: Popularity Of Zero-rated Netflix Costs us too Much

Few months ago the title was "iiNet [Australia] Offers Zero Rated Netflix" [here]. Was that a good idea?

David Ramli reports to The Sydney Morning Herald that "iiNet chief executive David Buckingham [pictured] says the massive popularity of internet services like Netflix means current broadband plans will not be sustainable under the national broadband network unless the company building it drastically slashes prices .. Internet service providers like Singtel-Optus and iiNet are not charging customers for the data used by Netflix as both a marketing tool and a way to prevent bill shock for users.

But the service consumes a huge amount of data because it offers constant streaming of high-definition videos to several devices simultaneously – an issue some claim would make it unaffordable under the NBN's current pricing arrangements.

..The main complaint for telcos is a fee charged by NBN called the connectivity virtual circuit charge (CVC), which costs $17.50 per 1 megabit per second. iiNet chief technology officer Mark Dioguardi in April warned that users could be forced to pay a "Netflix tax" of $26 a month extra for moderate HD streaming, and $60 a month for the ability to watch occasional 4K streams". 

 

See "Netflix popularity requires NBN price rethink, says iiNet boss David Buckingham" - here.