Monday, June 5, 2017

Fast growth continues in the big clouds

Over the past few weeks, the world’s biggest public cloud companies released their quarterly financial reports and not surprisingly, cloud services remain red hot, with several companies continuing to report triple digit growth rates. Here is a round-up of the latest numbers from Alibaba, Amazon Web Services, Google, Microsoft and Tencent.

Alibaba

For its March quarter, Alibaba reported that its Aliyun cloud business grew 103% YoY to RMB 2,163 million ($314 million). The business recorded an adjusted EBITA margin of 8%. For all of FY 2017, Aliyun had an 121% growth rate. Many expect that Aliyun's future growth will be propelled by the parent company's amazing ecommerce operations. For the 3 months ended March 2017, Alibaba reported overall revenue RMB 38,579 million ($5,605 million), an increase of 60% year on year. In addition to the Aliyun cloud revenue, Alibaba also recorded revenue from digital media and entertainment of RMB 3,927 million ($571 million), up 243% year on year. Annual active buyers on Alibaba's China retail marketplaces reached 454 million, an increase of 11 million from the 12-month period ended in December 2016.

Alibaba Group's Daniel Zhang, CEO, stated that it had another outstanding quarter and fiscal year, demonstrating its ability to engage and monetise the half a billion consumers across its platforms. He added that core commerce segment continued its significant growth and strong cash flow at large scale, enabling aggressive investment in cloud computing, digital media and entertainment to drive the digital transformation of the economy and high-quality consumption across China.

AWS

For Q1 2017, Amazon Web Services recorded net sales of $3.661 billion, up 43% from $2.566 billion a year earlier. Operating expenses rose 41% from $1.962 billion a year earlier to $2.771 billion, while operating income rose 47% from $604 million to $890 million.

During the quarter, AWS announced it will open an infrastructure region with three Availability Zones in Sweden in 2018. The company currently operates 42 Availability Zones across 16 infrastructure regions worldwide, with another five Availability Zones across two AWS Regions in France and China expected to come online this year.

Google

Ironically, Alphabet is the least transparent of the major players in disclosing the progress of its cloud initiatives. Google's mission consists in organising all of the world's information, and this data about its own operations would be very useful to investors and for the industry. The Q1 2017 quarterly report merely states that revenue from businesses other than search/advertising amounted to $3.1 billion, up 49% year on year. The other category could include anything from cloud operations, to self-driving cars or Internet balloons. This unit scored a faster growth rate than the core advertising revenue, which grew at an 18.8% annual clip to reach $21.4 billion.

Microsoft

Selected figures for Microsoft’s commercial cloud revenue (includes commercial cloud, Azure, Office 365 commercial, Dynamics 365 and some other properties):

FY15 - $5.8 billion, 44% gross margin.

FY16 - $9.5 billion, 45% gross margin.

FY17 (estimated) - $14.8 billion, ~50% gross margin.

Breaking out specifically for Azure, on the quarterly financial call Microsoft reported that Azure revenue grew 93% YoY, with Azure compute usage more than doubling compared to Q1 2016. Azure Premium services grew even faster, at a triple digit rate, although the company did not elaborate.

In the investor Q&A session, company CFO Amy Hood said she is 'extremely confident' in the Azure business and that with its growth rate it will become an increasing percentage of the company's overall revenue. A slide in her presentation showed a pie chart of revenue for Server products and Cloud Services revenue. In 2015, Azure revenue was only a thin slice, perhaps about 10% (hard numbers not posted). For 2018, the chart showed Azure revenue representing about 28% of the pie.

Microsoft is not guiding to an acceleration in capex next year and has stated that capex rate will remain the same to meet growing customer demand. So, one can assume that Microsoft will be 'sweating' its cloud infrastructure more and more over time. Though the capex budget may not be accelerating, the current levels have enabled Microsoft to rapidly build new data centres around the world while investing in some interesting (and expensive) assets, such as the shared transatlantic cable system with Facebook.

In a Microsoft investor update presentation on May 10, Satya Nadella said he is looking at Azure as a $4.5 trillion opportunity. This very big number represents far more than the cumulative total of moving all IT spending to the cloud. By ensuring that the Azure stack is built into the backend of applications across vertical industries, Microsoft is betting that it will be able to capture value from businesses ranging from autonomous vehicles to precision medicine.

Tencent

On May 17th, China's Tencent Holdings reported Q1 2017 total revenue of RMB 49,552 million ($7.182 billion), an increase of 55% over the first quarter of 2016; operating profit was RMB 19,27. Meanwhile, Tencent's social platforms are booming, with QQ IM now on 860.6 million users, Mobile QQ with 678.0 million users, and Weixin and WeChat with 937.8 million users (up 23% YoY). It is also interesting to note that during the quarter, Tencent's capex was RMB 2,108 million, down 49% YoY.

Mr. Ma Huateng, chairman and CEO of Tencent, said that it delivered a strong set of operating and financial results for the first quarter of 2017, noting that smart phone games, payment related services, digital content subscriptions, PC games and social advertising businesses all contributed to broad-based revenue growth.

Infinera's New Cloud Xpress 2 DCI Platform Enters GA

Infinera announced the general availability of the new Infinera Cloud Xpress 2 data center interconnect (DCI) platform. The Cloud Xpress 2 has already been deployed in major internet content provider (ICP) networks.

The Cloud Xpress 2, which delivers 100 Gigabit Ethernet (GbE) services between data centers, is the first platform deployed in live networks featuring the Infinera Infinite Capacity Engine (ICE4), powered by Infinera’s FlexCoherent Processor and fourth-generation photonic integrated circuit (PIC).

Infinera cited the following key capabilities for the Cloud Xpress 2:

  • Simple, open, automated. Like all models in the Cloud Xpress Family, the Cloud Xpress 2 is designed for plug-and-play installation with simplified provisioning and support for data center automation using open software-defined networking (SDN) application programming interfaces (APIs), zero-touch provisioning (ZTP) and streaming telemetry.
  • Plug-and-play capacity-reach. The Cloud Xpress 2 is based on ICE4, which incorporates Infinera’s unique PIC technology to deliver a 1.2 terabits per second (Tb/s) super-channel output. Also, offering extended reach without external amplification, the Cloud Xpress 2 delivers the highest plug-and-play capacity-reach of any compact DCI platform, simplifying system design, deployment and operations.
  • High density and low power. With 1.2 Tb/s of line-side capacity in a single rack unit, and very high power-efficiency, the Cloud Xpress 2 is designed to fit easily into space and power-constrained data center environments.
  • Instant Bandwidth. The Cloud Xpress 2 incorporates Infinera’s unique Instant Bandwidth technology, the industry’s only software defined capacity (SDC) solution, allowing customers to software-activate line-side bandwidth in 100 Gb/s increments as and when needed in minutes, aligning with their bandwidth demands.
  • Built-in encryption support. The Cloud Xpress 2 supports built-in hardware-based data encryption employing advanced industry standards and enabling 100 percent encryption of data transmitted between data centers. Built-in encryption support is an increasingly critical requirement for many DCI operators.

“Infinera has taken optical transport to the next level, by integrating ICE4 technology into Intelligent Transport Network platforms,” said Stuart Elby, Senior Vice President of Cloud Network Strategy and Technology at Infinera. “Major ICPs are deploying the Cloud Xpress 2 for its extreme simplicity, multi-terabit scalability and efficiency. The early adoption of the Cloud Xpress 2 underscores our customers’ need for a purpose-built DCI solution to enable continued rapid growth in their hyperscale networks.”

https://www.infinera.com/infinera-cloud-xpress-2-now-generally-available-deployed-internet-content-provider-networks/

See video: https://youtu.be/f2Cg1qBhp0U

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Ericsson selects Verizon managed SD WAN for IT transformation program

Ericsson announced that as part of its ongoing enterprise IT transformation initiative, the company has selected Verizon's Managed Services offering to accelerate the transformation of its corporate IT environment.

Ericsson stated that the initial implementation will focus on the deployment of Verizon's Managed Software Defined WAN (SD WAN) service, integrated with virtualised security services and Managed Enterprise RAN (E-RAN) solutions.

Verizon’s Managed SD WAN and Managed E-RAN solutions are part of the company's Network-as-a-Service offerings. The management layer supporting these services is a joint development effort that incorporates Ericsson's Dynamic Orchestration, Closed loop service assurance and Automated Validation and Onboarding Platform (AVOP).

Under the agreement, Ericsson will consume virtualised network functions (VNFs) as a utility via a pay-as-you-go, usage-based model. The solution will enable Ericsson to expand the global reach of its corporate IT infrastructure utilising Verizon's Global IP network for public and private networking solutions.




  • Ericsson unveiled its Dynamic Orchestration solution in May. The solution is designed to facilitate the introduction and closed-loop automation of services across physical and virtual networks as part of the company's strategy to enable IT transformation for its customers. Dynamic Orchestration offers a flexible, modular solution for the management of existing technologies, while also enabling the provision and control virtualisation capabilities.

Danish ISP Stofa and DOCOMO Pacific select ARRIS

ARRIS, a global supplier of communications and entertainment solutions, announced that Danish TV and Internet service provider Stofa has selected the company to transform its cable broadband network to enable gigabit broadband speeds and introduce new, enhanced services including future ultra HD TV channels, streaming and digital services.

The strategic collaboration between Stofa and ARRIS centres on a technology migration across Stofa's sites in Denmark. For the project ARRIS is delivering a new headend-to-home network solution based on DOCSIS 3.1 technology and a distributed architecture designed to increase network capacity, allow operational efficiencies and deliver faster connectivity and next-generation services to subscribers.

The ARRIS solution specifically includes its latest generation E6000 Converged Edge Router and NC2000 nodes with RemotePHY (R-PHY) modules to enable support for DOCSIS 3.1. In addition, performance management is supported by ARRIS ServAssure suite, enabling Stofa to monitor the network in real time, optimise performance and prevent or resolve outages.

Stofa, part of the SE Group, an energy and telecoms group providing electricity, energy optimisation, broadband fibre and cable TV services to more than 700,000 consumers.

Separately, DOCOMO PACIFIC, a subsidiary of Japan's NTT DOCOMO, announced it is partnering with ARRIS International for a program to offer an advanced whole home TV service that will feature live, on demand and streaming capabilities for customers in Guam and the Mariana Islands.
DOCOMO PACIFIC has selected ARRIS' MG1 video gateway to enable the new services. The MG1 solution is designed to allow subscribers to stream the same content to multiple IP devices as well as the main TV, while DVR functionality enables recording and playback at home and on the go.

The operator will also deploy ARRIS' E6000 Converged Edge Router to deliver its newly launched 100 Mbit/s high-speed broadband service and establish an upgrade path to offering gigabit speeds.


DOCOMO PACIFIC provides TV, online, mobile, phone and enterprise solutions in Guam and the Marianas. The company provides services to over 70 million mobile customers in Japan.

Extreme to acquire Avaya networking for $100m with winning bid

Extreme Networks announced that, having entered into an asset purchase agreement under which it would serve as primary bidder in a sale under the bankruptcy code to acquire Avaya's networking business for approximately $100 million, it has been approved as the winning bidder to acquire the Avaya business.

Under the bidding process, the assets of Avaya's networking business unit will be sold to Extreme for approximately $100 million, in accordance with the terms and conditions of the asset purchase agreement entered into on March 7th. The final agreement has been approved by the U.S. Bankruptcy Court for the Southern District of New York and is expected to close on or soon after July 1, 2017, subject to customary closing conditions and regulatory approvals.

As previously announced, Extreme anticipates that the transaction will be accretive to cash flow and earnings for its fiscal year 2018 starting July 1st, and expects to generate over $200 million in annualised revenue from the acquired networking assets. Extreme noted that the announcement builds on the strategy to expand its portfolio of data centre, core, campus and edge networking solutions via strategic acquisitions.

In mid-May, Avaya reported second quarter revenue for the period ended March 31, 2017 of $804 million, compared to first quarter revenue of $875 and prior year second quarter revenue of $904 million. For the second quarter it reported a net loss of $6 million, versus a net loss of $102 million in the first quarter and a net loss of $103 million in the 2106 second quarter.

For the third quarter ended march 31, 2017 Extreme reported revenue of $149 million, versus second quarter revenue of $148 million and revenue of $125 million for the prior year third quarter. The company reported net income of $11.6 million versus $12.7 million in the second quarter and net income of $3.5 million in the third quarter of 2016.

Avaya filed voluntary petitions under chapter 11 of the U.S. Bankruptcy Code in January this year, and in March entered into an asset purchase agreement under which Extreme would act as primary bidder in a section 363 sale under the bankruptcy code to acquire Avaya's networking business for approximately $100 million.

Avaya announced on January 19th that it was filing under chapter 11 of the U.S. bankruptcy code in the U.S. Bankruptcy Court, stating that its foreign affiliates were not included in the filing and would continue normal operations.

Extreme noted that in October 2016 it closed its acquisition of the wireless LAN business from Zebra Technology, which is expected to generate over $115 million in annualised revenue in fiscal year 2018. In March, Extreme announced an agreement to acquire the data centre switching, routing and analytics business of Brocade Communications Systems from Broadcom on closing of Broadcom's acquisition of Brocade. The Brocade transaction is expected to result in $230 million in annualised revenue.


Regarding the transaction, Ed Meyercord, president and CEO of Extreme Networks, said, "This strategic acquisition will be a further milestone in the execution of Extreme's growth strategy and establishes Extreme as the third largest competitor in its enterprise markets and the only company exclusively focused on delivering… end-to-end, wired and wireless enterprise IP networking".


Ixia to demo 400 GBE PAM4 OSFP and QSFP-DD

Ixia, a provider of network testing, visibility and security solutions, announced that as part of efforts to illustrate the readiness of the emerging technology it is showcasing for the first time a series of advanced 400 Gigabit Ethernet live demonstrations at Interop Tokyo in June at Makuhari Messe in Chiba, Japan.

During Interop Tokyo, leveraging its forward error correction (FEC) and physical coding sublayer (PCS) Ixia will showcase 400 Gigabit Ethernet technology via eight pulse amplitude modulation (PAM4) electrical lanes, defined as 400GAUI-8 within IEEE802.3bs, utilising third party direct attached copper cable solutions, including:

1.         What Ixia claims is the first public showcase of a 400 Gigabit Ethernet PAM4 OSFP test solution in partnership with TE Connectivity.

2.         A 400 Gigabit Ethernet PAM4 QSFP-DD demonstration in collaboration with Cisco and Foxconn Interconnect Technology (FIT).

Ixia is also demonstrating its 400 Gigabit Ethernet CFP8 interface using the MSA-compliant LR8 extended reach transceiver module from Finisar operating over single mode fibre. The Ixia CFP8 test system is compliant with the IEEE802.3bs 400GAUI-16 electrical interface.

Ixia noted that it is supporting and collaborating with multiple multisource agreement (MSA) development groups to help improve the operation and efficiency of 400 Gigabit Ethernet technology, notably:

  • Octal Small Form Factor Pluggable (OSFP), a new pluggable form factor featuring eight high speed electrical lanes that can support 400 Gbit/s rates and addresses the higher power requirements of 400 Gbit/s optics.

  • Quad Small Form Factor Pluggable Double Density (QSFP-DD), a new pluggable form factor that offers backwards compatibility with QSFP28 while quadrupling aggregate switch bandwidth and maintaining port density.


* In March of this year, Ixia announced that at OFC 2017, in collaboration with Cisco and FIT, it would demonstrate 400 Gigabit Ethernet with QSFP-DD over PAM4 electrical lanes.

CenturyLink appoints Level 3's Jeff Storey as president

CenturyLink, which in October 2016 entered into an agreement to acquire Level 3 Communications for approximately $34 billion, has announced that upon closing of the CenturyLink-Level 3 transaction Jeff Storey, currently president and CEO of Level 3, will become CenturyLink president and chief operating officer.

The company noted that, as previously announced, after the closing of the transaction Glen F. Post III will continue as CEO of CenturyLink. It is expected that Mr. Storey will succeed Glen Post as CEO of CenturyLink effective January 1, 2019, at which time Mr. Post will then become executive chairman of the company's board.

In addition to the appointment of Jeff Storey as COO, Glen Post's direct reports after the closing of the Level 3 acquisition will be as follows: Stacey Goff, EVP, general counsel and chief administrative officer; Sunit Patel, EVP and CFO; and Scott Trezise, EVP, human resources.

CenturyLink also announced that Harvey P. Perry, formerly vice chairman of the board of CenturyLink, has been appointed board chairman, effective immediately, replacing William A. Owens, who retired from the board as of May 24th. In addition, W. Bruce Hanks, a member of the CenturyLink board, has been named vice chairman, also effective immediately. Mr. Storey is one of four Level 3 board members who will join the CenturyLink board at closing of the transaction.



  • In early May CenturyLink named the senior leadership team following the acquisition of Level 3, which includes: Clay Bailey as SVP, transformation; Aamir Hussain as EVP, CTO and network operations; Dean Douglas as EVP, North America enterprise; Maxine Moreau as EVP, consumer; Girish Varma as EVP, IT and managed services; Laurinda Pang as EVP, global accounts management and international; and Gary Gauba as SVP and chief relationship officer.
  • The two companies stated that they continue to expect the transaction to close by September 30th this year.

Keysight and UC San Diego demo phased array link in 28 GHz

Keysight Technologies, a supplier of test and measurement technology, and the University of California San Diego announced a demonstration of what they claim is fastest bidirectional phased-array link in the 28 GHz 5G band.

The demonstration jointly carried out by Keysight and UC San Diego included a 64-element array that achieved a data rate of 12 Gbit/s operating at 0 degrees centigrade and over 8 Gbit/s over all scan angles at up to +/-50 degrees centigrade in azimuth and +/-25 degrees centigrade in elevation over a link distance of 300 metres. The array also delivered data rates of up to 18 Gbit/s over shorter distances.

Keysight stated that the bit-error-rate achieved during the demonstrations was less than 10-7 at maximum scan angles. Additionally, it noted that the results did not rely on calibration on the 64-element phased-array, thereby helping to reduce implementation costs.

The 64-element phased array, based on a low-cost PCB, consumed approximately 7 to 11 W of DC power in both transmit (Tx) and receive (Rx) modes leveraging UC San Diego system-on-a-chip (SoC) designs that utilise a third-generation silicon germanium (SiGe BiCMOS SBC18H3) process from TowerJazz.

For the demonstration, UC San Diego used Keysight's Signal Studio software to define and generate the 16QAM and 64QAM waveforms with both single and multiple carriers. In addition, Keysights 81199A Wideband Waveform Center software enabled the team to link Tx and Rx units, as well as improve error vector magnitude (EVM) performance. The team also used Keysight’s 89600 VSA software to perform demodulation, channel equalisation and analysis of advanced signals.

To speed the prototyping process, the Keysight M8195A arbitrary waveform generator, E8267D PSG vector signal generator and DSOS804A high-definition oscilloscope, were used, also supporting link equalisation and performance measurements across modulation bandwidths at up to 3 GHz frequencies.



  • Previously, last December Keysight and UC San Diego announced they had demonstrated what was claimed as the longest bidirectional phased-array link in the 60 GHz band. At a link distance of 300 metres, the 32-element array achieved a data rate of greater than 2 Gbit/s over all scan angles up to +/-45 degrees ,with data rates of 4 Gbit/s at 100 metres and 500 Mbit/s at 800 metres over most scan angles.
  • It was noted that the phased array consumed 3 to 4 W of DC power in transmit (Tx) or receive (Rx) modes using SoC designs developed by UC San Diego and also based on the third-generation SiGe BiCMOS SBC18H3 process from TowerJazz.

See also