Samsung Networks and Verizon announced the first fully virtualized, end-to-end 5G data connection, ... [+] highlighting the growing opportunity for Open RAN technology in 5G networks.

It is not an easy task to make sense of 5G wireless networks. Not only are there a wide variety of complicated individual pieces needed to create a network, theres also the manner by which those pieces interconnect, the software used to control them, the standards and protocols they need to support, and, well, yeahits a lot.

Of course, most people dont really have to worry about how a wireless network of any kind works, as long as it does what its supposed to do. However, if you want to make sense of the growing applications for 5G and what may or may not be possible at any given time or place, then you should understand at least some of the basic principles behind how it works.

One of the most interesting capabilities promised for 5G, for example, is network slicing. The idea with network slicing is that you can virtualize and then isolate a given set of data traffic or a specific application all within a single shared physical network. So, for example, if you want to separate time-sensitive IoT traffic for manufacturing-based sensors from the data traffic on a consumers smartphone or even provide a private VPN-style connection for a companys employees, network slicing can provide this and much, much more.

In order to do these types of tasks, 5G networks need more compute power and more sophisticated software than previous generations of wireless networks have required. As a result, theres been a lot of discussion about changing the overall architecture of the infrastructure used to power 5G networks. Traditionally, most of the equipment used in cellular wireless networks comes from a few dedicated vendors, notably Ericsson, Nokia, and more recently, Samsungs Network division. (Huawei has also been a significant player in the network equipment infrastructure, but recent geopolitical challenges have begun to reduce its impact outside of China.)

For decades, the traditional network equipment vendors have primarily made very sophisticated, but essentially proprietary, pieces of equipment that are used at the heart of cellular networks around the world. Over the last few years, however, there have been industry-wide movements to open up these proprietary boxes, particularly because of the expanding compute requirements for 5G. In particular, theres been a growing call to open up the RAN, or radio access network, portion of the network infrastructure. The RAN is the part of the mobile network that sits between your smartphone or any other end-user device (including things like IoT sensors, connected cars, etc.) and the core telecom network. The RAN handles the reception and transmission of the wireless signals used to communicate between devices and the main network (and then out to the cloud), so it plays a critical role for applications like network slicing.

The reason for this interest in moving to more flexible, open standards is, in many ways, analogous to the move to virtualization in servers and then the migration to cloud computing models. More sophisticated application demands, along with greater overall demand for bandwidth has put traditional telecom markets under a great deal of strain. The ability to virtualize and share resources more efficiently, along with the standardization around more general-purpose hardware, has much of the same appeal to modern wireless networks as it did to enterprise data centers and cloud computing providers more than a decade ago. Toss in the increasingly sophisticated software used to manage all these resources, and the comparisons to cloud computing, as well as the seeming inevitability of the change for wireless networks, seems undeniable.

But it turns out things arent quite as simple as that in the telco world. First, while uptime and reliability are incredibly important for cloud-based computing services and the applications that run on them, the utility-like service of wireless networks demands even more reliability. Think about it this wayhaving Zoom go down for a few hours this week was bad, but if your entire internet (or mobile) connection went down for the same amount of time, it would be much worse. Indeed, to their immense credit, wireless (and broadband) networks have been impressively resilient throughout the course of the pandemic and, thankfully, have proven to be incredibly reliable under tremendous strain.

Part of the reason for this is that the RAN portion of wireless networks are significantly more distributed. While that makes it harder for larger portions to go down at the same time, it makes it much more challenging to upgrade all the different pieces that need to be upgraded in order to make this transition to an open, software-controlled, virtualized environment. Directly related to all of this is that the mindset of many telco network providers is more like that of a utility than it is a cutting-edge cloud computing service. At times, the methodical, conservative pace at which many telcos make changes to their networks can be frustrating to those whove become accustomed to the lightning-fast pace at which other aspects of the technology industry move. When it comes to reliability, however, and the dependence we all have on these networks, a more measured pace of change does start to make sense.

Even within these constraints, weve started to see some important movements towards a more open, virtualized network environment. In fact, just this week Verizon teamed with Samsung Networks and Intel to announce that they had completed what they claim is the worlds first fully virtualized end-to-end 5G data session over an Open RAN. In particular, the company created a service that provided access for mobile developers to AWSs Wavelength edge computing platform over Verizons 5G network. As simple as that may sound, it actually required a great deal of effort across a host of different elements, such as Samsungs new virtual CU (Central Unit) and virtual DU (Distributed Unit) components, which replace traditional proprietary network infrastructure hardware with software that runs on general-purpose computing hardware.

There has also been growing interest in Open RAN technologies from a number of other places. Not surprisingly, traditional computing and data networking hardware and software vendorscompanies like Intel, Cisco, Microsoft, IBM and others, as cloud providers like Amazon and Google (in addition to Microsoft) have been eager to see telcos move into technologies and platforms for which they have a wide range of capable offerings. Interestingly, weve also seen traditional network equipment vendors start to get behind Open RAN. In addition to Samsung Networks efforts, Nokia has also come out as a strong supporter of the concept, believing that certain aspects of the RAN could benefit from more flexible options.

Carriers have also started to talk more about the potential for Open RAN. In addition to this Verizon announcement, AT&T has publicly discussed its own support for Open RAN on several other occasions. In Japan, Rakuten has built a completely virtualized 5G network, relying heavily on Open RAN and other modern network technologies. Of course, Rakuten had the huge benefit, at least from an architectural perspective, of not having any existing legacy network infrastructure to upgrade or replace. As with the first enterprise data centers that started making the move to cloud computing many years back, the big US carriers have a huge installed base of legacy equipment that they cant just easily switch out. As a result, even though theres strong interest in moving to more modern network infrastructures, the move to Open RAN is clearly going to be a multi-year process.

At the same time, there can be challenges to moving to new environments as well. Some of Rakutens well documented early issues centered around trying to piece together a wide range of different components from many different vendors. Glitches and delays are fine for a carrier that everyone understands is starting from scratch, but not really acceptable for large, established telcos.

The bottom line is that the drive to adopt Open RAN and other more modern, software-defined, virtualizable network topologies is unquestionably moving forward, but the ultimate pace at which it occurs is going to be dependent on how easily network equipment vendors can make the transition possible for carriers. Given the incentive of speeding up the delivery of new 5G services, like network slicing, as well as improving the overall efficiencies and costs of running those networks, the appeal to move to Open RAN is strong. At this point, its just a question of practical realities and how motivated all the various participants are in making it happen.

Disclosure: TECHnalysis Research is a tech industry market research and consulting firm and, like all companies in that field, works with many technology vendors as clients, some of whom may be listed in this article.

The rest is here:
Will 5G Networks Move To Open RAN? - Forbes

In 2019, Gartner forecasted that global public cloud revenue would nearly double from $182.4 billion in 2018 to $331.2 billion in 2022. However, that failed to take into account the outbreak of COVID-19. Now, we can expect cloud revenues to well more than double as organizations embrace the new normal.

But, why? To understand public cloud adoption and usage in 2020, one needs to journey back to the more stable climate of 2012. Thinking of what existed and of what was to come, the National Institute of Standards of Technology (NIST) published the five essential characteristics of cloud computing which both define public cloud to this day and explain why public cloud is the perfect match for these unstable times. These principles are as follows: on-demand self-service, broad network access, resource pooling, rapid elasticity and measured service.

On-demand self-service is the principle that a cloud customer can quickly adjust their service needs immediately through an online portal rather than through a drawn-out process. When the international danger of COVID-19 became apparent, many enterprises realized they would need to make rapid adjustments to adjust for massive demand. On-premises or colocation solutions take months to implement and would result in months of lost business. With public cloud, self-adjustments can instead be made on the fly in a way completely transparent to users.

Broad network access is the principle that computing resources and services can be accessed from anywhere on any kind of device. Once lockdowns started happening, the enterprise world was upended by the fact that its workforce could no longer be on site. Virtual private network (VPN) solutions were suddenly beyond maximum capacity for far longer than a normal continuity of operations scenario, leaving organizations unable to support the immediate influx of remote workers. Since public cloud is easily accessible over the internet, enterprises can jump on it instantly to surmount access challenges, making it the perfect solution to a pandemic-induced problem.

Rapid elasticity is the principle that capabilities can be scaled up or scaled down quickly. Once the pandemic occurred and capacity for things like remote work had to be added, many organizations needed to account for major capacity swings such as going from a workforce that was 10% remote to one that was 90% remote. Since rapid elasticity allowed for public cloud providers to add thousands of servers nightly to organizations, the public cloud providers were able to absorb such a massive shift while their customers were able to maintain continuous operations that would have otherwise gone dark.

Resource pooling is the ability for a service provider to serve multiple customers within the same infrastructure. This became crucial during the pandemic because it allowed for organizations of various sizes to leverage the cloud. With on-premises or colocation scenarios, providers would have only been able to service blue-chip companies since the waiting list would be too long and the onboarding process too complicated to be able to service small businesses and nimble start-ups. With resource pooling, however, public cloud providers had the spare capacity and a repeatable onboarding process to account for all organizations that needed to address COVID-19 disruptions, not just the major corporate players.

Measured service is the principle that a cloud provider prices its offering as discrete measured units of service as opposed to indiscrete all or nothing offerings. This approach offers a more efficient pricing model during unpredictable times, providing customers with consistency and reliability amidst uncertainty. With unpredictable pricing, large customers would be deterred by cost uncertainty and smaller customers would not be able to afford enterprise solutions. However, with measured service, pricing is extremely consistent with usage, which helps organizations of all sizes look out for their bottom line.

In 2012, it was known that the enterprise landscape was on the cusp of major change. However, few envisioned that the five principles of cloud computing that were put forward then would define how enterprises would thrive or die in 2020s trying times. And, for the enterprises that do thrive thanks to the cloud, the new normal that will exist post-pandemic will be vastly different than the one before.

Go here to see the original:
Cloud Computing: The Solution to a Pandemic-Induced Problem - DevPro Journal

(Photo Illustration by Budrul Chukrut/SOPA Images/LightRocket via Getty Images)

On Aug. 5, the Office of the Comptroller of the Currency (OCC) handed down a cease and desist order to Capital One for its failure to establish effective risk assessment and management processes before migrating its information technology operations to a cloud operating environment.

While we hear about data breaches on a nearly weekly basis, the Capital One incident is noteworthy because it involved the banks migration to cloud computingsomething that many banks are either in the process of doing, or will be doing in the near future.

The $80 million fine Capital One must pay to the US Treasury is pocket change for the bank.

The compliance actions the bank will be required to take will likely prove to be the bigger headache. The OCCs consent order requires Capital One to:

Its hard to believe, but bank executives concerns regarding cybersecurity are declining (that isnt a typo).

According to Cornerstone Advisors Whats Going On in Banking studies, nearly half of bank executives put cybersecurity on their list of top three concerns for 2018. That percentage declined to 36% in 2019 and dropped even further to 21% in 2020.

Financial Institutions Citing Cybersecurity as a Top Three Concern

Whats going on here?

Operational integration is lulling banks into a false sense of (cyber) security.

Cybersecurity policy is becoming business as usual for banks. As a result, bank execs are more confident today than they were three years ago that cybersecurity policies are well-designed and being well-executed.

Its a false sense of security, however, because banks have yet to feel the cybersecurity impact of cloud computing.

Three data points highlight the growth of cloud computing in banking:

As cloud computing within banking grows, the prevalence of cyber breaches for cloud services is growing significantly as well. According to a Verizon study:

Cloud assets were involved in about 24% of breaches this year. Cloud breaches involved an email or web application server 73% of the time, and 77% involved breached credentials.

A new report from Cornerstone Advisors, commissioned by DefenseStorm, Cloud on the Horizon, identifies emerging cloud-related cybersecurity challenges facing banks including:

1) Over-reliance on providers. There is an over-reliance on providers to complete cybersecurity checklists from banks during due diligence. It would be pretty easy for them to dupe us, said one Chief Information Security Officer (CISO) interviewed for the report.

There is also over-reliance on just a few providers.

Richard Harmon, Managing Director at Cloudera, calls this cloud concentration risk and writes, the consolidation of multiple organizations within one cloud service provider (CSP) presents a more attractive target for cybercriminals.

2) Reporting problems. Bank CISOs have discovered incorrect completion of due diligence cybersecurity requests for third party risk management from the providers.

Transparency has become an issue, as well. CISOs stated a lack of willingness to show any of the providers security policies or audits.

One CISO mentioned that when his bank asked a provider for a SOC-2, the vendor produced Amazon Web Services SOC 2. When the CISO questioned the vendor as to whether it had its own SOC 2, the provider was unaware it even needed to do its own.

3) Technical limitations. Many cloud vendors have cybersecurity limitations. For example, they cannot IP-restrict or require multi-factor authentication for third parties. Configuration is a challenge, as well.

Its not just the vendors fault. According to Bill Glasby, Chief Technology Officer of Heritage Bank, one issue around cloud security is operators' inability to configure the tools. The problem is that its all home-brew today.

Banks migration to the cloud will necessitate changes to how they govern IT from three perspectives:

1) Contractual. Migrating to the cloud requires switching from traditional security testing to a contractual-based model for security testing. Banks cant move to the cloud without caring about and dealing with the contractual clauses with their service providers. In particular, banks should negotiate the reversibility clause with their cloud providers.

One problem, however, according to a CIO interviewed by Cornerstone, is that many cloud providers dont even know what should be written in a reversibility clause.

2) Organizational. Business departments and lines of business end-running IT and buying cloud solutions directly from cloud providers will become more prevalent with a migration to the cloud. IT will have to reinforce its IT governance policies and procedures in order to minimize the risks caused by the solutions implemented by the different business departments.

3) Strategic. Business departments want flexibility and innovation. However, migrating to cloud services typically involves a shift from highly customized to mostly-standardized services. This can cause friction between IT and the businessfriction that must be resolved with strategic clarity and direction.

To handle the coming wave of cloud-related cybersecurity issues, Cornerstone and DefenseStorm recommend that banks:

For a complimentary copy of the Cloud On The Horizon report click here. To register for the Cloud On The Horizon webinar on August 20 at 2:00pm ET click here.

See original here:
Cloud Computing And Cybersecurity Need Better Oversight Now - Forbes

Source: ParkMyCloud.com

The First Trust Cloud Computing ETF (SKYY) isn't as heavily weighted in the stocks of companies that first jump into most investors' heads when they think of "the cloud". Most investors would assume a cloud-focused ETF or mutual fund would be over-weighted in the holdings of the "Big-3" leading cloud providers Microsoft (MSFT) for its Azure platform, Amazon (AMZN) for its AWS business, and Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) for its Google Cloud ("GCP").

Regardless, SKYY - which seeks to track the "ISE CTA Cloud Computing Index" - is up 26% YTD and 150% over the past 5 years (not counting dividends).

And to be sure, SKYY holds the Big-3 companies in the fund, just not to the level you might have thought - or perhaps desired. Let's take a look at the top-10 holdings as of last week (8/14/2020):

Source: First Trust

As can be seen from the graphic above, SKYY's top-10 holdings have an aggregate 36.76% total allocation. Within that group, the Big-3 have an aggregate weighting of ~13%. That might surprise some investors, considering the relative market share the Big-3 have in the cloud. As the graphic below shows, in Q1 2020, the Big-3 providers accounted for a whopping 55% of total global infrastructure spending:

Source: Canalys.com

Alibaba (NYSE:BABA) had a 6% share and is the second biggest holding in the SKYY ETF with a 4.6% weighting, much more in line with its market share as compared to the Big-3. This relative weighting might indicate the SKYY portfolio managers may be thinking:

Investors should ponder these issues and consider what their comfort level is with various valuation levels, growth expectations, regional considerations, and the associated risks.

Regardless of the relative weighting of the biggest cloud service providers, one thing is clear: growth in global cloud service revenue is nowhere near slowing down. As the graphic below demonstrates, virus or no-virus (note this was a July 2020 forecast), cloud service revenue is expected to grow 19% next year and another 18% in 2022 versus 2021. Or, looking at it in raw numbers: revenue in 2022 is expected to be ~$106 billion higher than full-year 2020 expectations.

Source: Gartner July 2020

Note that the "Others" category in the previous market share graphic held a 38% slice of the global cloud service pie. That, combined with Gartner's growth projections, means that some of the smaller players held in the SKYY ETF will have plenty of opportunities to grow.

Oracle Corporation (ORCL), the #5 holding, and its cloud-related revenue was relatively flat year over year (see Q4 and FY2020 EPS report). The stock is also flat YTD. So, it's clearly been an under-performer while yielding ~1.8%. But Oracle is up nicely in the pre-market today due to speculation the company is teaming up with private equity to challenge Microsoft's (MSFT) bid for Tik-Tok.

Fastly Class A (FSLY) is the #7 holding and is up a whopping 280% this year on the heels of fast growing revenue and market acceptance of its security and cloud products. VMware (VMW), the #8 holding, is down YTD and is the technology much of Oracle's cloud-based solutions are tethered. Interesting that both those companies are relatively flat this year.

Arista Networks (ANET) holds down the #9 position and has also been a relative laggard with poor YoY comparisons.

The downside risks should not be sugar-coated (just look at the chart at the end of the article for what happened in March):

Alibaba may face some headline risks due to the ongoing trade battle between the US and China. That said, Alibaba's position in China is not going to be affected much, and if the company needs to remove its US exchange listing, there are a number of other exchanges that would be happy to host the company.

Upside risks include continued big-tech domination in the overall market, acceleration of the work- and school-from-home trends that could lead to more cloud-related activity, and an acceleration of digitization in general due to the 5G rollout, which should be rapidly accelerating over the next 2-3 years, at a minimum.

While SKYY holds solid positions in the Big-3 cloud service providers, they are under-weighted in comparison to their cloud market share. But that might be just fine for investors who feel they are over-valued in today's market. Alibaba is more equally weighted in the fund as compared to its cloud market share, and that might be exactly what an investor who thinks China may grow faster than the US wants to see. Regardless, the global cloud market is set to grow by over $100 billion over the next two years, and that gives the ~60% of the companies that aren't in SKYY's top-10 holdings plenty of opportunities to grow.

Bottom line: SKYY has an excellent 1-year and 5-year track record (see chart below) of performance and is well worth the 0.60% expense ratio.

Source: Seeking Alpha

Disclosure: I am/we are long AMZN, GOOG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am an engineer, not a CFA. The information and data presented in this article were obtained from company documents and/or sources believed to be reliable, but have not been independently verified. Therefore, the author cannot guarantee their accuracy. Please do your own research and contact a qualified investment advisor. I am not responsible for the investment decisions you make.

Visit link:
SKYY: A Cloud Computing ETF Not Overly Concentrated In The Big-3 - Seeking Alpha