- AWS's VP for EC2 gave Fierce the lowdown on its telco strategy
- He also talked challenges it is facing in getting legacy telco vendors to embrace the cloud-native life
- The exec shared that AWS is also seeing momentum among customers looking to shift away from VMware
AWS RE:INVENT, LAS VEGAS – AWS has been on something of a hot streak in the telecom market. Already this year it has inked at least four mobile core deals with operators ranging from O2 Telefonica in Europe to Comcast in the U.S. And to hear AWS EC2 VP Jan Hofmeyr tell it, there could be many more on the way.
“We’re seeing a lot of PoCs, a lot of interest as companies get to refresh cycles in their infrastructure of their existing core, existing hardware,” he told Fierce in an exclusive interview, though declined to say exactly how many operators it is engaged with.
Hofmeyr added that mandates in the U.S. and elsewhere requiring operators to replace Huawei gear in their networks have also been a tailwind for its business in the segment. That’s because it forces operators to think about what they’re replacing that kit with and consider new options. “We see most of those customers engaging with us,” he said.
“There is definitely momentum,” Hofmeyr added. “And I think you’ll see more of that at Mobile World Congress in February.”
AWS’ success in the telecom segment is interesting given rival Microsoft’s apparent lack thereof.
Hofmeyr (who graciously didn’t dunk on Microsoft by name) said the key to AWS’ winning formula is that it didn’t try to do too much. That is, it didn’t acquire assets and seek to build its own core software. Instead, it focused on what it does best – cloud infrastructure – and partnered with traditional telecom vendors – the Ericssons, Nokias and Samsungs of the world – to supply the services operators need. Basically, it’s not trying to sell itself as something it’s not.
“I want to stay to the core of my business that I’m good at,” he explained. This approach is “starting to resonate” with telcos, Hofmeyr added.
While he’s confident that AWS has built top-tier cloud infrastructure, the challenge now is getting legacy telecom vendors to adopt a cloud-native mindset. It’s no different than how big old software suppliers had to pivot from bespoke products to the cloud, but it takes time and it requires a cultural shift for both vendors and their telco customers alike, Hofmeyr said.
From the vendor perspective, they need to throw away the old paradigm of year-long development cycles. And telco customers need to start demanding that vendors be more agile, he said. That’ll help move the needle in the right direction and maybe – just maybe – allow both sets of companies to start seeing some of the many unrealized benefits of 5G.
“The whole idea of 5G was agility, that I can move faster, I can bring new features and capabilities to my customers,” Hofmeyr said. “If it takes an ISV 12-18 months to bring a new feature, then they didn’t become agile. I think that’s the opportunity.”
VMware woes
Speaking of areas where Amazon is seeing momentum, Hofmeyr pointed to VMware migrations as another on the upswing.
VMware notoriously angered many of its customers following its acquisition by Broadcom in late 2023 by, among other things, changing its licensing scheme in such a way that prices for many soared. From Hofmeyr’s perspective, the customer angst represents a “huge” opportunity for AWS.
“For all industries, cost is a really important thing. And to suddenly be faced with a 200% increase? There’s no company that planned for it. So that’s a real problem and a driver,” he said. “There was a big reaction to what happened and we see momentum as a result of that.”
He said a lot of customers are asking for the company’s help migrating off VMware and have expressed particular interest in its Outpost product, which basically lets them run AWS on-premises. He said while it’s true some industries – ahem, telecom – are large VMware estates, the interest in migration spans across all verticals.
One major deal AWS has already signed on this front is with British American Tobacco, which tapped the cloud giant to help it transition all 47 of its U.S. factories off VMware.
“We have several others exactly like that that are either in the PoC phase or in the migration phase,” Hofmeyr said.
All of that said, Hofmeyr isn’t counting his eggs before they hatch. “This still needs to play itself out,” he concluded.