Why HPE bought Athonet

The push for the private enterprise mass market, deploying at scale, and "destroyed" marketing collateral. When HPE bought Athonet.

HPE AthonetHPE’s acquisition of Athonet took its rival Dell so much by surprise that Dell had to “destroy” a load of marketing material it had prepared around its own recently-announced partnership with Athonet. At least, that’s according to HPE’s Richard Band, Head of Mobile Core and 5G, Communications and Media Solutions, HPE.

On 24 February, just before MWC, HPE announced that it was acquiring private network core software company Athonet. But just two days prior to that announcement, Dell had itself announced that it was adding Athonet as a partner within its “private wireless portfolio” to help “small and medium businesses quickly deploy their choice of network architecture, radio vendor or spectrum band for an affordable, easy-to-use private wireless solution”.

“Dell Private Wireless with Athonet is available globally beginning today,” the press release said. However, two days later, HPE – Dell’s fierce rival – announced that it would, in fact, be buying Athonet for its own private wireless offer.

“Dell put out an announcement,” said HPE’s Band, “Their mistake.”

It doesn’t seem like there will now be any Dell partnership with Athonet. At least, it would surprise Band if that were the case.

“I mean, if Dell wants to sell Athonet we’re perfectly happy for them to give us money. I have no problem with that. My understanding is that they destroyed all their marketing collateral, right, so I’m assuming they don’t want to,” Band laughed.

Jokes aside, though, what is the reason for HPE’s acquisition of Athonet?

It starts two to three years ago with a decision by HPE to pivot away from trying to sell its pre-integrated cloud-native 5G Core Stack (core network software functions) mainly to mobile operators.

“We launched [Core Stack] about three years ago, and then we very quickly identified the market opportunity and focused it on private networking.” That switch was made because HPE identified that although it does have a handful of telco operators using its Core Stack elements, most telcos were not switching incumbent vendors between 4G and 5G core.

“The marketing side of the house has not been driving a very strong demand to the core network teams to do things differently, which has led them down the pathway to simply renew with existing suppliers, rather than making changes,” Band said.

Some operators – like Orange with its experimental Pikeo network that has HPE Core Stack elements that it will use for the enterprise – are making ground,  but “generally speaking” telco operators are on a slightly slower trajectory than enterprise customers. The bigger market traction has been to sell direct to the enterprise – predominantly so far in defence, oil and gas , with some in manufacturing and healthcare.

And that takes us to Athonet, because although HPE had a solution it was happy selling to large enterprise customers, it didn’t have a solution that could fit the deployment model of medium and smaller sized businesses.

“I think what you’re seeing is that Core Stack, similar to what most competitors have done, is fundamentally a scaled down version of the full telco core. So it’s very feature rich, but it is also more complex to deploy than something that has been specifically designed for the enterprise,” Band said. “So while that was suitable for early adopters where HPE has a high touch engagement and a fairly large investment, if you want to go from early adopters to mass market, you need something simpler, something that is more compact, easier to deploy.

“And I think this is where Athonet really fits in. They bring that single minded business for the enterprise, and it’s super-optimised for enterprise capability sets.”

For Band, HPE is now positioned to go to market with a unique proposition, and one that it will work through all its channels, including mobile operators.

“Our view is we will build the best enterprise connectivity proposition out there, combining cellular, Wi Fi [via HPE’s Aruba portfolio], our automation capabilities, and our Green Lake consumption model. We will combine all of those elements together and then our go- to-market and enterprise connectivity is for channel partners. We have about 8000 on the Aruba side, but the telco operators are as relevant and as credible a channel for us in this market as anyone else – and definitely are a target for us.”

With HPE’s acquisition, does Band think that we’ll see further consolidation in this market? Ericsson had previously bought Quortus to add to its business for example, leaving companies like Druid, Attocore and handful of others still independent.

“I think that if you want to be able to go to the mass market, you need a capability that was designed specifically for this. We’ve evaluated all the suppliers out there and we believe we’ve picked the right one. But of course, people are welcome to help themselves to what’s left,” Band said.