The HPE CMS virtual analyst day presented a potpourri of products and solutions across a wide swath of CSP and industry needs.  The good news for CSPs is that HPE has a solid portfolio of solutions, all with customer deployments.  The not-so-good news is that CSPs may find it difficult to locate compelling differentiators in a portfolio that spans so many domains with limited focus. This breadth complicates having an identifiable “USP” and spreads investments more thinly.  At the end of the day I was left without a clear summary of what made HPE special. I’m not saying that they are not doing a good job – but rather that the overview was necessarily broad and shallow, so any such judgement would be premature.

A strong installed base to leverage

Appledore believe that HPE CMS  has a strong installed base to leverage, and there is some evidence of significant modernization – yet the message seems cloudy, and we also don’t see market progress commensurate with so many investments.  We believe that HPE CMS would benefit from more focus and clarity- both in out bound messaging and ideally with internal investments to establish and maintain differentiation in those niches.

. . . and abroad range of modernized solutions in those niches

Summarizing their portfolio, Appledore sees the following areas of focus for HPE products and solutions:

  • Service and NFV/resource orchestration including 5G and edge
  • 5G core for both private and public networks
  • IMS core and Subscriber data solutions
  • Cloudified Service Assurance
  • Video management solutions
  • AI driven fraud management

Many of these build on long-standing HPE businesses, such as assurance, HLR, fraud management, and fulfillment – moving them to modern cloud-based software architectures and employing more modern logic such as “intent” / declarative orchestration.  Given time constrains we did not have opportunity to dig in and substantiate any of the claims.

It’s not unique to have a broad portfolio that is difficult to summarize – Nokia, Ericsson, and Huawei have even broader portfolios – but therein lies the rub. CMS’s’s portfolio is broad yet not nearly as complete as those of the large NEPs.  They need to establish a clear brand identity, strengths and differentiation.  “We do a lot of cool stuff” just doesn’t cut it in today’s hypercompetitive world.

Everyone’s challenge: a hypercompetitive market on the telecom supply side

And hypercompetitive it is.  Not only is the telecom supplier space historically over-served with the legacy of national suppliers from days gone by, but virtualization and cloudification have brought in entire new sets of powerful competitors from IT (HPE is in some ways one of those, despite its long history in core telecom), to hyperscalers.  A successful competitor must therefore both establish its telecom chops, while showing that it is not a legacy dinosaur.  hyperscalers struggle with point #1, while traditional NEPS and ISPs often struggle with point #2. Pick your poison.

The bottom line: seemingly solid product assets that appear to be under-performing

Market evidence, as presented supports our concern, with the external impression being one of very modest new net gains.  Possibly actual gains are masked by confidentiality covenants, yet our concerns are supported by financial performance.  HPE’s stock is trading at roughly half its 2019 price, even with a lofty P/E. Note that HPE does not break out performance by CMS.

What’s needed: A common theme with a very few proven differentiators

So how can HPE CMS get its message out above the noisy competition?  One method is to concentrate one’s (messaging) fire.  The good news is that there is evidence that CMS may already have much of the heavy (and costly) lifting complete and in place; they are saying many of the right words about their orchestration portfolio, replacing hand-coding and brittle logic with declarative, intent based methods (no we have not seen the details, btu the words are right).  CMS have also claim to have largely re-written their venerable assurance stack as a cloud native, loosely coupled and open set of services – and then added an analytics-driven automation layer.  This too hits all the right notes.  They are focused on video, 5G and automation.  Good.

5G is, of course, front and center on nearly every operator’s and supplier’s mind. HPE CMS is concentrating on delivering the cloudified core, and integrating with suppliers of RAN, both cloud RAN and O-RAN vendors, and has opened a 5G integration/test lab to support these efforts.  They seem to have a very loose association between this lab and their Aruba managed Wifi and Wifi6 offers, complementing 5G with handoff/load-sharing.

Yet I felt like I had to drag this clarity out of the data, and I was often left wondering about basics such as “whose radio is in your 5G offer?” (eventually clarified: answer anyone who integrates via HPE CMS’s 5G lab).  There is nothing wrong with being open to integrate with many, so long as one shows its multi-vendor chops and integration/ normalization capabilities.

Appledore suspects that there are several, maybe many, bright spots in the HPE portfolio; yet we also believe that HPE/CMS and their potential customers would be better served by clearer themes underscoring how they differentiate, and where they deliver value. A clear identity backed up by proven, easy-to-consume differentiation.  It’s a complex world – simplify it and help potential customers understand your true strengths and differentiators.

Grant Lenahan – Partner and Principal Analyst, Appledore Research

For more research on 5G and Edge, see
For more research on Orchestration and Cloud Native, see
Image courtesy of Photo by Sabine Simon from FreeImages