 theCUBE's live coverage is made possible by funding from Dell Technologies. Creating technologies that drive human progress. Welcome back to the FIRA in Barcelona. This is Dave Vellante with David Nicholson. Lisa Martin is also here. This is day two of our coverage of MWC23 on theCUBE. We're super excited. We're in between hall four and five. Stop by if you're here. Dennis Hoffman is here as the Senior Vice President and General Manager of the telecom systems business at Dell Technologies. And he's joined by Yusef Halidi, who's the Corporate Vice President for Azure for Operators from Microsoft. Gents, welcome. Thanks, Dave. Thank you. So, we saw Satya in the keynote. He wired in. We saw TK came in. No AWS, I don't know. They're maybe not part of the show, but maybe next year they'll figure out. Indeed, indeed. Lots of stuff happened to the telecom, but the Azure Operator Distributed Services, the big news you guys got here, what's that all about? Well, first of all, we changed the name. Oh, you did? Oh, yeah, we have a real name now. It's called Azure Operator Nexus. Oh, I like Nexus better than you. That's much better. You named it. The engineer's named it first time on the AWS long story. Thank you for our marketing team. But seriously, not only did we rename the platform, we expanded the platform. So it now covers the whole spectrum from the far edge to the public cloud as well, including the near edge as well. So essentially, it's a hybrid platform that can also run network functions. So all these operators around you, the network platform which combines cloud technologies with the choice we're doing around optimized for the network. Okay, and so we've talked about the disaggregation of the network and how you're bringing kind of engineered systems to the table. We talked about, we've seen this movie before, but Dennis, there are differences, right? I mean, you didn't really have engineered systems in the 90s. You didn't have those integration points. You really didn't have the public cloud. You didn't have AI. So you have all those new powers that you can tap. So give us the update from your perspective, having now spent a day and a half here, what's the vibe, what's the buzz, and what's your take on everything? Yeah, I think to build on what Yousef said, there's a lot going on with people still trying to figure out exactly how to architect the telecom network of the future. They know what's got to have a lot to do with cloud. It does have some pretty significant differences. One of those being, there's definitely got to be a hybrid component because there are pieces of the telecom network that even when modernized will not end up centralized. They're going to be highly distributed. I would say though that we took away two things yesterday from all the meetings. One, people are done, I think the network operators are done questioning technology readiness. They're now beginning to wrestle with operationalization of it all. All right, so it's like, okay, it's here. I can in fact build a modern network in a very cloud native way, but I got to figure out how to do that all. And another big part of it is the ecosystem and certainly the partnership longstanding between Dell and Microsoft, which were extending into this space, is part of that, making it easier on people to actually acquire, deploy, and importantly support these new technologies. So a lot of the traditional carriers, like you said, they're sort of beyond the technology readiness. Jose Maria Alvarez in the keynote said there are three pillars to the future telecom network. He said low latency, programmable networks, and then cloud and edge, kind of threw that in. You agree with that? No, in principle, yes. I mean, we've been for years talking about the cloud and edge. Satya for years had the same graphic, we still have it. Today we have expanded the graphic a bit to include the network as well. Because you can't have a cloud without connectivity as well, but this is very, very, very much true. And so the question then, Dennis, is okay, you've got disruptors, we had dish on yesterday. Oh, did you get? Yeah, yeah, and they're talking about what they're doing with O-RAN and all the applications, really taking a kind of, what I see is a developer friendly environment. You've got the carriers talking about how they're going to charge developers for APIs. I think they've published eight APIs, which is nowhere near enough. So you've got that sort of inertia, and yet you have the disruptors that are going to potentially be a catalyst to cross the chasm, if you will. So put on your strategy hat. How do you see that playing out? Well, they're trying to tap into three things, the disruptors. I think the thesis is, if I get to a truly cloud native communications network first, I ought to have greater agility so that I can launch more services and create more revenue streams. I ought to be lower cost in terms of both acquisition cost and operating cost, right? And I ought to be able to create scale between my IT organization, everything I know how to do there, and my telecom network. You know, classic, right? Better, faster, cheaper. If I embrace cloud early on. And people like Dish, you know, they have a clean sheet of paper with which to do that. So innovation and rate of innovation is huge for them. So what would you do? We put your Clay Christensen hat on now. What if you were at a traditional telco? Who's like complaining about- You're going to get me in trouble. Come on, come on. No, help them out. Help them out. They're complaining about CapEx, they're highly regulated, right? They want net neutrality, but they want to be able to sort of dial up the cost of those using the network. So what would you do? Would you try to disrupt yourself? Would you create a skunkworks? Would you kind of spin off a disruptor? That's a real dilemma for those guys. Well, for mobile network operators, the beauty of 5G is it's the first cloud native cellular standard. So I don't know if anybody's thrown these terms around, but 5GSA standalone, right? Yeah, yeah. It's not a skunkworks, they're just literally saying, I've got to have a 5G network, and some of them are deciding I'm going to stand it up all by itself. Now, that's duplicative expense in a lot of ways, but it creates isolation from the two networks. Others are saying, no, it's got to be NSA, I've got to be able to combine 4G and 5G, and then you're into the brownfield thing. That's the hybrid. It is, not hybrid as in cloud, but hybrid as in, you know, it's the verge network. So, you know, I would say for a lot of them, they're adopting probably, rightly so, a wait and see attitude. One thing we haven't talked about and you've got to get on the table, their higher order bit is resilience. Yeah, totally. Right? Can't go down. It's national secure infrastructure, first responder. Indeed. Anytime you ask them to embrace any new technology, the first thing that they have to work through in their minds is, is the juice worth the squeeze? Like, can I handle the risk? But you're saying they're not questioning the technology, aren't they questioning O-RAN as terms of the quality of service, or are they beyond that? They're questioning the timing, not the inevitability. Okay, so they agree that O-RAN is going to be open in over time. At some point, RAN will be cloud native, whether it's O-RAN the spec, open RAN, the concept, virtual RAN. But yeah, I mean, I think it's, it seems pretty evident at this point that the mainframe will give way to open systems once again. Ecosystem RAN. Any RAN. You don't have to start with the O-RAN, with the RAN side of the house. So as you probably know, our partner AT&T started with the core. They almost all have. And we've been on the virtualization path since 2014 and 15. And what we are working with them on is the hybrid cloud model to expand all the way, if you will, as I mentioned, to the far edge or the public cloud. So there's a way to be in the brownfield environment, yet jump on the new bandwagon of technology without necessarily taking too much risk. Because you're quite right. I mean, resiliency, security, service assurance. I mean, for example, AT&T runs the first responder network for the US on their network, on our platform. And I'm personally very familiar of how high the bar is. So it's doable, but you need to go in stages, of course. And they've got to do that integration. That's what they do. And you just have to make a great point. Like, out of the top 30 largest telcos by CapEx outside of China, three-quarters of them have virtualized their core. So the cloudification, if you will, software definition, run on industry standard hardware, embrace cloud-native principles, containerized apps, that's happened in the core. It's well accepted. Now it's just a ripple down through the network which will happen as and when things are faster, better, cheaper. So as implemented, what does this look like? Is it essentially what we used to loosely refer to as Azure Stack software running with Dell optimized telecom infrastructure together, sometimes in a BBU, out in a hybrid cloud model, communicating back to Azure locations in some cases? Is that what we're looking at? Approximately. So you start with the near edge, okay? So the near edge lives in the operators' data centers, edges, whatever the case may be, built out of off-the-shelf hardware. Dell is a great partner there, but in principle it could be different mix and match. So once you have that true near edge, then you can think of, okay, how can I make sure this environment is as uniform? Same APIs, same everything, regardless what the physical location is. And this is key. Key for the network function providers and the NAPs because they need to be able to port once, run everywhere. And it's key for the operator to reduce their cost. You want to teach your workforce, your operations folks, if you will, how to manage the system one time, to automation and so forth. So NAPnet is actually an expansion of the Azure capabilities that people are familiar with in the public cloud projected into different locations. And we have technological arc which basically models everything. So if you have trained your IT side, you are halfway there how to manage your new network, even though of course the network is carrier-grade, it has different gear. So yes, what you said is a lot of it is true, but the actual components, whatever they might be running, are carrier-grade. Highly optimized Linux images. And our solution is not a DIY solution, okay? I know you cater to a wide spectrum here, but for us, we don't believe that the TCO, the proper TCO can be achieved by just putting stuff by yourself. We just published a report with analysis mission that shows that our approach will save 36% of the cost compared to a DIY solution. What percent? 36% of the cost. Compared to DIY, which is already cheaper than classical models. And there's a long history of fairly failed DIY, right? That preceded this as in the early days of public cloud, the network operators wrestled with, do I have to become one to survive? Yeah, right. So they all ended up having cloud projects and by and large they've all dematerialized in favor of this. And it's hard for them to really invest at scale. Let me give you an example. So your biggest tier one operator without naming anybody, okay? How many developers do they have that can manage, can build and maintain an OS image? Or can keep track of the container technology? Or build monitoring at scale? In our company, we have literally thousands of developers doing it already for the cloud. And all we're doing for the operator segment is customizing it and focusing it at the kind of great aspects of it. But so I don't have a dozen container experts. I literally have a building of developers who can do that. And these are being literate here. So it's a skill thing. Once you have a product that you can give to multiple people, everybody benefits. Yeah, and the carriers are largely, they're equipment engineers in a large... Oh, I do have a tough job. I have also a lot of respect for what they do. Totally. Yeah. And a lot of the work happens, you know, kind of underground and they are network operators. And don't touch their business. Right, absolutely. And they're good at it. They're really good at it. You know, you think about it. We'd love to, you know, make folk fun at the big carriers, but think about what happened during the pandemic. When they had to shift everything to remote work, landline, traffic went through the roof. You didn't even notice. I mean, that's for example, however, in the future, where there's innovation and it's going to be driven by developers, right? That's where the open ecosystem comes in. And that's the hard transition for a lot of these folks because the developers are going to win that with new workloads, new applications. Right. And a lot of it is because, if you look at the fundamental strategy hat back on, fundamental dynamics of the industry, forced investment, flat revenues. Yeah, right. Every few years a new G comes out and man, I got to retool this massive thing and where I can't do towers, I'm dropping fiber or vice versa. And meanwhile, most diversification efforts into media have failed. They've had to unwind them and resell them. There's a lot of debt in the industry. And so they're looking for that next big adjacent revenue stream and increasingly deciding, if I don't modernize my network, I can't get it. Can do it. Right. And again, what I heard from some of the carriers in the keynote was we're going to charge for API access because we have data in the network. Okay. But I feel like there's a lot more innovation beyond that that's going to come from the disruptors. Yes. You know, that's going to blow that away, right? And then that may not be the right model. We'll see. You know, I mean, what would Microsoft do? They would say here, here's a platform, go develop. No, I tell you, we are actually working with Kamata and GSMA on the whole API layer. We actually announced a service as well as part of it. Yeah, yeah, right. And the key there, frankly, in my opinion, are not the disruptors as an operators, is the ISV community. You want to get developers that can write to a global set of APIs, not per telco APIs, such that they can do the innovation. I mean, this is what we've seen other industries and any vertically can think of. This is the way they get a slice of that pie, right? The recent history of this industry is one where 4G LTE begot the smartphone and app store era. A bevy of consumer services and almost every single profit stream went somewhere other than the operator, right? So they're looking at this saying, okay, 5G is the enterprise G and there's going to be a bevy of applications that are business service related based on 5G capability. And I can't let the OTT over the top thing happen again. They'll say that, we cannot let this happen again. Okay, but how do they make that not happen? Eight APIs, Dave. The answer is eight APIs. No, I mean, it's this approach. They need to make it easy to work with people like Youssef and more importantly, the developer community. And people like Youssef and his company have found a way to harness. And by the way, they need to be part of that developer community themselves. And they're not today. They're not speaking that developer language. It's hard, you know, hey. Hey, what's the fastest way to sell an enterprise a business service? Resale Azure, Teams, something, right? But that's a resale. Yeah, this is a resale site. See, they also need to free the resources from all the plumbing they do. And we are plumbers, okay? We are proud plumbers. We are proud plumbers. I'm a plumber, I can keep telling people this thing. We had the same discussion with banks and enterprises 10 years ago, by the way. Don't do the plumbing. Go add value on the top. Retool your workforce to do applications that work with ISVs and verticals, as opposed to either reselling, which many do, or do the plumbing. You'd be surprised, traditionally, many operators do it. I want to plumb this thing to get the small interrupt per second. Like, who cares? Well, they don't. Because they've made money on connectivity. Yes. And we've seen this in the world without telephone poles. Yup, yup, yup. Cables, what? Well, you have the hammer, everything's a nail, right? Right. And we sell connectivity services. And that's what we know how to do. And that, both build and sell. And if that's no longer driving, a revenue stream sufficient to cover this forced investment march, not to mention Huawei RIP and government initiatives to pull infrastructure out and accelerate investment, they got to find new ways. I mean, the regulations have been tough. Right? They don't go forward and ask for permission. They really can't. Right? They have to be much more careful. It is tough. So, we don't mean to sound like it's easy for these guys. No, it's not. But, it does require a new mindset, new skill sets, and I think some of them are going to figure it out and then the wave. And you guys are going to be riding that wave. We're going to try. Definitely, definitely. As a veteran of working with both Dell and Microsoft, specifically Azure on things, I am struck by how you're very well positioned in this with Microsoft in particular. Because of Azure's history coming out of the on-premises world that Microsoft knows so well, there's a natural affinity to the hybrid nature of telecom. We talk about Edge, we talk about hybrid. This is it, absolutely the center of it. So, it seems like a... Indeed, actually, if you look at the history of Azure, from day one, and I was there from day one, we always spoke of the hybrid model. But to a clear point, we came from the on-premises world. Right. And don't get me wrong, I want people to use the public loud, but I also know due to physics, regulation, geopolitical boundaries, there's something called on-prem. There's something called an Edge here. I want to add something else. Remember our idea of how we are partner-centric? We do applying the same playbook here. So, for every dollar we make, so many is being done by the ecosystem, same applies here. So, we have announced partnerships with Ericsson, Nokia, Mavinir, all the names, and of course with Dell and many others. The ecosystem has to come together and customers must retain their optionality to run whatever they want to run. So, this is the same playbook. And enterprise technology companies are actually really good at decoding the customer, figuring out specific requirements, making some mistakes the first time through, and then eventually getting it right. And as these trends unfold, you're in a good position, I think, and as are others, and it's exciting time for enterprise tech in this industry, you know? It really is. Indeed. Guys, thanks so much for coming on. Thank you. It's great to see you. Have a great rest of the show. Thank you Dave. Thank you Dave. All right, keep it right there. John Furrier is live in our studio. Breaking down all the news, go to siliconangle.com to go to thecube.net. Dave Vellante, Dave Nicholson, and Lisa Martin. We'll be right back from the theater in Barcelona, MWC 23, right after this short break.