Network Vendors Must Broaden Entryway to Cloud-Native: The Case of Red Hat OpenStack Services on OpenShift

Red Hat released (3Q 2024) a new solution integrating its virtualization platform, OpenStack, with its cloud-native platform, OpenShift. Operators may now use the OpenShift control pane with its extended functionalities to manage virtualized resources. Operators will benefit from advanced features such as automation by Ansible, rich metrics provided by OpenShift Observability, zero-trust security, and a wider set of third-party plug-ins and resources.

The Red Hat OpenStack Services on OpenShift solution was created over the past year in response to Red Hat customer demand. This demand is due to two factors: first, the pervasiveness of virtualization in telecommunications today. ABI Research estimates that even among cloud-based network infrastructure, 60% uses Virtual Network Functions (VNFs) compared to only 40% using Cloud-Native Network Functions (CNFs). If we were account for both cloud- and on-site virtualized network infrastructure, the share of VNFs would exceed 80%. Industry trends are favoring CNF growth in the next 5 to 8 years, but this will be gradual growth coinciding with adoption of the 5G Core. Virtualization is still needed. The second factor underlying demand for this solution is the popularity of Red Hat OpenShift. Even when not provided directly by Red Hat, OpenShift is often the foundation for vendors’ Containers-as-a-Service (CaaS) platforms; to varying degrees, Red Hat OpenShift underpins CaaS solutions provided by Mavenir, Samsung, Nokia, and Ericsson. Meeting operators where they are on their virtualization journey and offering a path to Red Hat’s popular OpenShift platform is sure to make a market impact; but what impact will it have on the market in the short and long term? Will operators use this path toward cloud-native?

OpenStack Services on OpenShift will be used by operators that have existing virtualized resources, but that are ready for a cloud-native platform to usher them into the next phase of technology—not only cloud-native, but intent-based operations and Artificial Intelligence (AI)-powered network autonomy. This is where Red Hat is attempting to fast-track customers through the platform integrations. Operators will be cautious here about which path to follow and whether a premium vendor platform is the right guide to lead them along that path. However, two impacts of this Red Hat solution will speak to the immediate concerns of operators: 1) platform pre-integration reduces the risks and challenges of VNF-CNF management associated with adapting third-party solutions (e.g., KubeVirt); and 2) the solution offers immediate performance benefits for operators’ existing cloud-based virtualized workloads, such as nodes computing 4X faster, or easier streamlining of VNF lifecycle management. These two benefits—risk reduction and a practical business case surrounding network performance—touch upon the bottom line right now for an industry still reeling from the high costs of the transition to 5G, with increased pressure on network modernization projects to offer concrete and measurable steps forward.

On the other hand, the impacts may be limited both by inherent limitations of containerized VNFs and virtualization offerings by market competitors. VNFs may be containerized and orchestrated in a cloud-native environment like OpenShift, but that does not make them cloud-native. They are not as scalable as CNFs, and they cannot benefit from the agility and flexibility of microservice architectures. Moreover, Red Hat still has a key competitor in the virtualization space with its own slice of the market: VMware is an established leader of virtualization solutions and it has also extended its portfolio to cloud-native. VMware’s vSphere with Tanzu is likewise a preceding solution whereby the virtualization platform (vSphere) can operate a Kubernetes control plane on the hypervisor layer, integrating with the cloud-native platform (Tanzu). Red Hat seeks to intervene between VMware’s prominent virtualization solutions and the cloud-native future by adding appeal to the cloud-native side of its platform with features such as automation, policy-based multi-cluster management, and AI-powered analytics. Market opportunities remain wide open for cloud-native, and vendors will compete over platforms features, while still doing the heavy lifting to support migration with services.

The virtualization space is dated. Vendors will have established strategies and experiences to draw from for self-guidance in deepening their own solutions and offerings. However, as Red Hat’s recent release indicates, Communication Service Provider (CSP) demand for virtualization solutions persists. Vendors should register this demand and allow it to serve as a guide for maintaining the virtualization platforms still needed within the industry. In particular:

• Network infrastructure vendors should assess how their virtualization solutions can be extended. There is still a value proposition of virtualization, and that is in addressing how virtualization platforms can onboard CSPs with next-phase technology. A virtualization platform can offer clearer paths toward the latest technologies than other alternatives for network integration. Consider platforms that can run VNF and CNF workloads in parallel, rather than in a single environment. These are already offered within the industry and give operators flexibility, but they are suboptimal because the workloads will not be enriched with the same features and functionalities as the workloads on a cloud-native platform. Another method for network integration lately has been network Application Programming Interfaces (APIs) exposed internally within the network to allow legacy infrastructure to coordinate with modern infrastructure through modern applications. However, this assumes that: 1) operators have already virtualized their networks and made them software-defined for API programmability; and 2) operators would invest in APIs for legacy when most Return on Investment (ROI) comes from 5G Standalone (SA). So, virtualization platforms are not only a viable solution for transitioning from virtual to cloud—they are the optimal solution on the market currently.
• Network infrastructure vendors may need to step back to scale up. Vendors have attempted to persuade operators of the benefits of cloud-native in order to sell the latest technologies, yet cloudification is still proceeding at operators’ gradual pace. Vendors may have more success in stepping back to a common technological reference point in virtualization, and demonstrating the impacts of cloud-native within operators’ financial and technological means. This process is more convincing when it is produced as its own solution to be consumed by operators as needed, rather than as a demo separated from their evolving needs.