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Facebook leading webscale network R&D

  • ID: 5459548
  • Report
  • October 2021
  • Region: Global
  • 15 Pages
  • MTN Consulting, LLC
All webscalers spend heavily on network infra, but FB is a step ahead: R&D spend >20% of revenues, network innovations shared more widely than peers


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  • Keppel T&T
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The webscale sector of network operators spent nearly $1 trillion on R&D in the last decade. A rising portion of that R&D has targeted innovations in how their networks are built and operated. As a group, webscalers invest an average of 10% of revenues into R&D, not far below pure play network-focused vendors like Cisco (12.9%), Ericsson (17.1%), and Nokia (18.7%), who, by design, are in the business of creating products for others to deploy.

For years there has been speculation about whether webscalers would eventually commercialize their innovations and sell them to third parties. In general, this has not happened. The biggest webscalers are rivals in cloud services and other areas, and view their network technology as a key differentiator. They have spent lavishly to build out their R&D teams, and that has produced innovations in multiple areas. The most important ones relate to data center chips, servers, and power/cooling; others involve streaming platforms, network automation, traffic analytics, LEO satellites, IoT operating systems, artificial intelligence, autonomous driving technology, cloud gaming and subsea cable networks. Some webscalers discuss these innovations at conferences, in part to get industry support for furthering their advances. However, while webscalers spend as much as vendors on tech development and have developed loads of IP, most have not functioned as vendors. They keep their secret sauce in house. Amazon’s self-developed network switch is just one of many examples.

There is one partial exception to this rule: Facebook. It spends about 20% of revenues on R&D, twice the webscale average, and has long been more open to sharing innovations. This is not altruism. It’s partly due to the company’s interest in lowering costs and standardizing platforms, and also to its primary goal of rapidly increasing the reach of its network to more users. Facebook was the early driver behind the Open Compute Project (OCP) and the Telecom Infra Project (TIP). A good chunk of Facebook’s R&D budget has targeted network connectivity-related projects. In early October, Facebook’s Connectivity group had a briefing for media & analysts to discuss several of these: Terragraph, a wireless technology; subsea cable and remote powering innovations; and, a robotic fiber installation device called Bombyx. Facebook’s usual practice with such innovations is to license them for free to third party manufacturers.

R&D budgets are the most visible metric of innovation, but webscalers can advance network infra technology in several ways: create new innovations for their own network, which are often then picked up by the rest of the industry (even telcos); share innovations with open source bodies like the OCP; license innovations for free to third parties; use their buying power to influence vendors to conduct R&D on their behalf; acquire promising startups; engage in joint development with other companies. Facebook does all of these.

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  • 2Africa cable
  • Baicells
  • Echo cable
  • Keppel T&T
  • Oracle
  • stc
  • Summary 
  • Webscaler R&D averages 10% of revenues, many targets 
  • Data center chips are central focus for webscaler R&D 
  • Webscalers pushing the envelope in optics
  • Facebook’s net infra contribution is important and growing
  • Conclusions
  • Appendix
    • About the publisher
    • Terms of Use

List of Figures & Charts

Figure 1: R&D to revenue ratio for key webscalers, 2Q21 annualized period
Figure 2: Tech-related spending avenues for Tencent
Figure 3: Data center server layout
Figure 4: Webscalers’ backward integration in chip design
Figure 5: Optical transceivers in Google data centers
Figure 6: DCI today – open and disaggregated
Figure 7: Evolution of optical interconnect
Figure 8: Facebook’s OCP contributions through 2020
Figure 9: Facebook’s 10 year roadmap, circa 2016
Figure 10: Facebook-developed aerial fiber installation robot, Bombyx
Figure 11: Facebook-driven 2Africa cable system map

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  • 2Africa cable
  • AceAxis
  • Airspan
  • Alcatel Submarine Networks
  • Alibaba
  • Alphabet (including Google Cloud Platform, and Google Fiber)
  • Amazon (including Amazon Web Services, or AWS)
  • AMD
  • Amdocs
  • Ampere Computing
  • Apple
  • Apricot cable
  • Arista Networks
  • Axiata
  • Baicells
  • Baidu
  • BiFrost cable
  • Broadcom
  • Cambium
  • China Mobile
  • Ciena
  • Cisco Systems
  • Dent
  • Deutsche Telekom
  • Dunant cable
  • Echo cable
  • Edgecore Networks
  • Ericsson
  • Fabrinet
  • Facebook (including Facebook Connectivity)
  • Goldman Sachs
  • HPE
  • IBM
  • Inspur
  • Intel
  • ITU
  • Juniper Networks
  • Keppel T&T
  • MAREA cable
  • Mavenir
  • Microsoft (including Azure)
  • MikroTik
  • Mirantis
  • MTI
  • MTN Group
  • Nokia
  • NTT Data/Everis
  • Open Compute Project
  • Oracle
  • Orange
  • Parallel Wireless
  • QCT
  • Qualcomm
  • Quanta
  • Rackspace
  • Radwin
  • Siklu
  • SK Telecom
  • Slamcore
  • stc
  • Telecom Egypt
  • Telecom Infra Project
  • Telkom Indonesia (Telin)
  • Telxius
  • Tencent
  • TSMC
  • ULC Technologies
  • University of Alabama
  • Vertiv
  • Vodafone
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