The webscale sector of network operators spent nearly $1 trillion on R&D in the last decade.
A rising portion of that R&D has targeted innovations in how their networks are built and operated. As a group, webscalers invest an average of 10% of revenues into R&D, not far below pure play network-focused vendors like Cisco (12.9%), Ericsson (17.1%), and Nokia (18.7%), who, by design, are in the business of creating products for others to deploy.
For years there has been speculation about whether webscalers would eventually commercialize their innovations and sell them to third parties. In general, this has not happened. The biggest webscalers are rivals in cloud services and other areas, and view their network technology as a key differentiator. They have spent lavishly to build out their R&D teams, and that has produced innovations in multiple areas.
The most important ones relate to data center chips, servers, and power/cooling; others involve streaming platforms, network automation, traffic analytics, LEO satellites, IoT operating systems, artificial intelligence, autonomous driving technology, cloud gaming and subsea cable networks.
Some webscalers discuss these innovations at conferences, in part to get industry support for furthering their advances. However, while webscalers spend as much as vendors on tech development and have developed loads of IP, most have not functioned as vendors. They keep their secret sauce in house. Amazon's self-developed network switch is just one of many examples.
There is one partial exception to this rule: Facebook. It spends about 20% of revenues on R&D, twice the webscale average, and has long been more open to sharing innovations. This is not altruism. It's partly due to the company's interest in lowering costs and standardizing platforms, and also to its primary goal of rapidly increasing the reach of its network to more users.
Facebook was the early driver behind the Open Compute Project (OCP) and the Telecom Infra Project (TIP). A good chunk of Facebook's R&D budget has targeted network connectivity-related projects. In early October, Facebook's Connectivity group had a briefing for media & analysts to discuss several of these: Terragraph, a wireless technology; subsea cable and remote powering innovations; and, a robotic fiber installation device called Bombyx. Facebook's usual practice with such innovations is to license them for free to third party manufacturers.
R&D budgets are the most visible metric of innovation, but webscalers can advance network infra technology in several ways: create new innovations for their own network, which are often then picked up by the rest of the industry (even telcos); share innovations with open source bodies like the OCP; license innovations for free to third parties; use their buying power to influence vendors to conduct R&D on their behalf; acquire promising startups; engage in joint development with other companies. Facebook does all of these.
Key Topics Covered:
Webscaler R&D averages 10% of revenues, many targets
Data center chips are central focus for webscaler R&D
Webscalers pushing the envelope in optics
Facebook's net infra contribution is important and growing
Alcatel Submarine Networks
Alphabet (including Google Cloud Platform, and Google Fiber)
Amazon (including Amazon Web Services, or AWS)
Facebook (including Facebook Connectivity)
Microsoft (including Azure)
Open Compute Project
Telecom Infra Project
Telkom Indonesia (Telin)
University of Alabama
For more information about this report visit https://www.researchandmarkets.com/r/7izueg
View source version on businesswire.com: https://www.businesswire.com/news/home/20211206005471/en/
Laura Wood, Senior Press Manager
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