Hats off to TMN for highlighting this end-of-life product announcement from Cisco in April that had been generally overlooked by the media. We summarise the announcement, discuss some of the history/reasons behind it and comment on implications for the industry.
End of life and end of white labelling announcements
Cisco posted this product end-of-life statement for their small cell products in April, with last orders due by 27 July. It covers their USC3000, 5000 and 7000 series products and supporting management/provisioning systems but not their Small Cell gateway. There appears to be a fairly orderly closedown process in place, with software maintenance releases for a year and service-and-support contracts available through 2022.
TMN also reports (although I couldn’t find any other online confirmation) that Cisco will no longer be white labelling SpiderCloud’s Clip-On products (marketed as USC 8718 and USC 8818). Instead SpiderCloud will sell its own branded products direct to end users (which presumably could also include this Clip-On module). It was said that the additional profit margins selling through the Cisco channel reduced the price competitiveness over DAS alternatives.
Cisco’s three Small Cell product sets
Cisco has worked with three different vendors for their small cell products in the last decade:
- Originally reselling ip.access 3G residential femtocells with their own 3G small cell gateway into AT&T, branded as AT&T Microcell. This project involved a lot of Cisco professional services rather than being a generic product development and was never replicated or resold elsewhere, despite extensive support and product maturity from ip.access. Well over a million units have been sold and still selling on the AT&T website. This isn't affected by the end-of-life notice and I've not heard of any intention to change that
- Acquiring Ubiquisys and reselling their 3G residential and enterprise femtocell products. Many of these had been installed to work with the NEC gateway and continue to do so, with reasonable ongoing incremental shipments. I’m unaware of any new network operator customers after the acquisition. Existing customers included SFR France, Softbank Japan amongst others. This is the product set affected by the notice.
- Partnering with SpiderCloud including custom development of a Clip-On module for their Aironet Wi-Fi access points. Although these share the same physical box and Ethernet cabling, all the small cell and local controller functionality is SpiderCloud. Both 3G and 4G modules are available, connecting to Cisco or NEC gateways.
I'd estimate that Cisco's own femtocells (i.e. the middle of the three options above) now account for less than 10% of the today's market shipments by volume, with a lower percentage of the market when measured by revenue. It will affect only a handful of network operators but still a significant installed base of end users.
Confused market strategy
Cisco spent over $1 billion acquiring various companies as part of a Cisco’s future Small Cell strategy. In 2013 alone, they bought both Ubiquisys (a standalone femtocell vendor) for $310 million and Intucell (a SON technology startup) for $475 million.
They have little if any return to show for such exuberance.
Although Ubiquisys had a 4G LTE product development project, I don't believe this ever came to market and only 3G residential and enterprise Femtocells were sold through the Cisco catalog. Based on Broadcom’s chipset, which has also now been discontinued from future development, there seemed no appetite to invest in migrating to another platform and adding the 4G capability.
Intucell was a highly scripted and custom SON orchestration solution which Cisco appeared to lack the sales capability to upsell into operators. Intended to be a key that unlocked the chokehold which the large RAN vendors were perceived to have on many operators, perhaps there is much more to winning business as a new RAN supplier than this feature alone. I’m unaware of any new operator sales of the Intucell platform post acquisition.
It quickly became apparent that Cisco focus on selling higher value deals to fewer larger enterprises whereas Ubiquisys Femtocells were more suitable for larger numbers of smaller to medium sized companies. They then chose to partner with SpiderCloud who developed a custom format of their radio node that can be plugged into Cisco’s high end Aironet 8000 Wi-Fi access points. Both 3G and 4G modules have been commercially produced and sold both directly and through Cisco channels.
Some success includes that at AT&T which now offers the SpiderCloud solution to its Enterprise customers.
In order to sell their small cells to any new operator, it would first be necessary to sell and integrate their small cell gateway. This requires a concerted approach – there is a high integration cost with professional services needed to customise the provisioning and management systems with those of individual operators. Cisco has few direct relationships with the infrastructure teams who would be involved, although they did hire a few specialist sales people for specific accounts. There has been relatively little visible impact.
Cisco’s partnership with Ericsson
In 2015, Cisco entered a high level strategic partnership with Ericsson which was reaffirmed again this year while recognising ongoing issues. It doesn’t appear to have yet delivered on the relatively unambitous $1 billion joint sales figure.
As part of the overall business for each partner, the small cell business is fairly trivial and easily overlooked. But there is clear competition between SpiderCloud and Ericsson Radio Dot, where more generally Ericsson would expect to supply any cellular radio products.
More likely the decision to withdraw is based on the relatively low level of revenue and return on investment. Cisco likes to see high margins and strong opportunity for profit growth. It acts decisively once it chooses to exit a market.
Next steps for the installed base
Those with installed and operational equipment can expect it to continue to work as before for at least the next year, probably more. Some operators may pay for longer term support contracts which could see the lifetime of existing deployments through until 2022. A few may have bulk purchased stock to allow them to continue to sell Femtocells for some time ahead but industry rumours indicate that that hasn't happened (yet).
Not all Cisco femtocell customers installed the Cisco small cell gateway – Ubiquisys originally used the NEC product which continues to be available and has evolved to support both 3G and 4G. There are plenty of compatible femtocell products available to source instead. I’d guess that this applies to larger customers such as Softbank and SFR although I cannot confirm that.
Those operators with the Cisco small cell gateway may be considering more radical options. Cisco haven’t specifically stated withdrawal of their small cell gateway, only the 3000/5000/7000 series Femtocells and associated provisioning/management system. It boils down to three choices:
- It may be possible to source compatible 3G and 4G Femtocells from other small cell vendors and continue to use the Cisco gateway
- Install an alternative gateway, such as NEC or Parallel Wireless, migrating existing installations to use it for the short to medium term. Approve and ship alternative vendor Femtocells to new customers, possibly with a medium to long term program to upgrade and replace older devices.
- End-of-life existing Femtocells on a published date, which could be from one to five years. Unless there is a suitable alternative in place, this could cause huge disruption and bad press.
Within that assessment, the chance to introduce 3G/4G multimode or 4G only residential and/or enterprise femtocells should be evaluated.
A brighter future for SpiderCloud customers
No end-of-life issues for them, with SpiderCloud continuing to develop and evolve their product with the latest CBRS and LAA features. It is supported by both Cisco and NEC 3G and 4G small cell gateways.
It is still possible for Cisco’s Aironet Wi-Fi customers to buy and install SpiderCloud E-RAN clip-on modules directly, they will just no longer be white label branded with a Cisco logo. There’s even a hint that Cisco sales teams would resell them if pushed, but you’d probably get a better deal by going direct or perhaps just buying separate standalone E-RAN radio nodes.
Cisco continues research activities with the Small Cell Forum
Meanwhile Cisco has been leading the work within the Small Cell Forum to define interfaces that would enable various RAN functions to be split between the radio node and a central controller. A specific architectural model defined the nFAPI interface which leaves much of the heavy-duty processing in the radio node but moves some of the intelligence normally found in a standalone small cell into a local or central controller. This work is initially targeted at 4G LTE.
The general concept has also been used in several proprietary small cell architectures in different formats, such as CommScope OneCell, SpiderCloud E-RAN, Huawei Lampsite and others. Cisco’s stated intention is to work with the OpenSource community to develop generic radio node hardware platforms that could support multiple vendor software in a single box. The idea would be to be able to provision it by downloading and hosting different software modules for each network operator from Huawei, Ericsson, Nokia, any small cell supplier and/or approved OpenSource modules.
However the 3GPP standards body has decided not to adopt nFAPI as the standard interface and is developing its own. There are already commercial dual radio Small Cell products that could support two separate network operators available today, with more flexible solutions such as Huawei Lampsite 3.0 becoming available shortly.
So it remains to be seen how and where Cisco will re-enter the Small Cell market in the future.
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