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‘The first rule of private 5G is don’t talk about 5G,’ Cisco sales exec says

Cisco sees 100% of 5G revenues flowing to CSPs from enterprise

Service providers, their traditional infrastructure vendors and, increasingly, hyperscalers, are working independently and collaboratively to capture new 5G revenues by delivering solutions to high-value vertical industries like manufacturing, logistics, retail, and so forth. The big picture here is hiding technological complexity and moving away from transactional selling to a consultative sales strategy focused on delivering business outcomes on the back of bespoke private 5G network deployments. 

Cisco Vice President of Worldwide Sales Shaun McCarthy likened this to the cult-classic film Fight Club. Speaking to Futurum Founding Partner and Principal Analyst Daniel Newman during The Six Five Summit this week, McCarthy said, “The first rule of private 5G is don’t talk about 5G. Customers don’t care about 5G. What they care about is building the factory of the future. They care about turning on new services at smart ports. They care about worker safety at mines. We’re working with service providers in a very verticalized, focused effort to help them deliver on these goals.” 

In addition to acknowledging that carriers aren’t going to make money off of consumer-facing 5G, at least not in the near-term, McCarthy rightly noted that 5G isn’t a panacea to all business problems that could conceivably be solved through wireless technologies. “Most of these things are half Wi-Fi, half 5G,” he said. “Or I should say, actually, they’re probably 75% Wi-Fi, 25% 5G. There are some things that 5G really brings to the table to enable the factory of the future. Wi-Fi is still going to play a role in it and, actually, the customer doesn’t care…They just care about delivering the outcomes they’re looking for.” 

And carriers are well aware of this paradigm shift. As outgoing Verizon Business CEO Tami Erwin told me in February, enterprise customers are investing in digitization to be more responsive while reducing cost and improving customer experience. To address the wide set of enterprise needs and align technology with desired business outcomes, she said Verizon has made changes to how salespeople are trained, and tied compensation and quotas to customer outcomes.

This pivot to consultative enterprise sales “has moved us from being a business that focuses on transactions to really being a partner that enables a different kind of solution outcome for our customers,” Erwin said.

Back to Cisco. McCarthy said their approach is driven by two overarching goals: helping operators grow revenues and reduce costs—an exact parallel of what Erwin said Verizon’s goal is with regard to 5G for enterprises. The revenue growth piece is ,to degrees, a reflection on the 4G era wherein app providers used carrier networks to deliver end services and capture new revenue while not actually investing in cellular networks; the cost efficiency piece can be addressed through multi-year network strategies. 

“The app developers,” McCarthy said, “these successes that they’ve had, it’s been based on the ability to develop once and access all of these eyeballs.” He said the old Field of Dreams (a second movie reference) approach of “if you build it, they will come,” doesn’t work. What does work, he said, is taking a federated approach that lets app developers build once with the knowledge that their solution will work on any network. “Although we’re an infrastructure provider,” he said, “we feel it’s incumbent on us to bring the apps to the table.” 

In this context, McCarthy called out more interactive live sports streaming, content delivery more generally, as a near-term revenue opportunity. From a 5G perspective, this hinges more on delivering bandwidth than it does on delivering single-millisecond latency–something that has long been part of the 5G hype cycle but also something that isn’t really available with any sort of scale today. “Latency is really important and the apps that require latency are really important,” he said. “But the reality today is, while 5G has the promise of like 1 millisecond latencies on the radio network, you know, that’s a solid 10 years out. Today it’s about 20 milliseconds. To get outside of a service provider network to a public cloud or sort of an edge cloud that…a Google or a Microsoft or an Amazon hosts, you’re only adding another 2 milliseconds. So latency is probably not the killer app at least for now. I think it will be eventually. But rethinking bandwidth consumption, I think, is a really important thing.” 

That’s the revenue growth piece. The other one is taking costs out of network deployment. “The way we build networks is based on assumptions from 20 years ago,” McCarthy said, noting the institutional inclination to avoid routers at all costs, including the cost of building parallel optical layers to avoid routers. “Here we are 20 years later and we ask ourselves, ‘Is the router the most expensive element in the network?’ The answer is no.” In the past two decades, advancements in silicon photonics and other areas have simplified optical transport, and software has enabled higher layer network abstraction. The net result is more performant networks can be deployed in a more cost-effective manner by collapsing routed optical and IP networking into a single, flat layer. 

“We’re working with all of our customers on journeys to get them to that next level,” McCarthy said. “It’s probably a five-year journey. It might even involve reorgs within customers.” Calling out a potential for 50% cost reduction, “It’s something we talk about with ever single customer we’re engaging with today,” he said.

ABOUT AUTHOR

Sean Kinney, Editor in Chief
Sean Kinney, Editor in Chief
Sean focuses on multiple subject areas including 5G, Open RAN, hybrid cloud, edge computing, and Industry 4.0. He also hosts Arden Media's podcast Will 5G Change the World? Prior to his work at RCR, Sean studied journalism and literature at the University of Mississippi then spent six years based in Key West, Florida, working as a reporter for the Miami Herald Media Company. He currently lives in Fayetteville, Arkansas.