The SDN movement
Cisco was late in joining the software-defined networking (or SDN) movement, and in 2012, introduced the Cisco Open Network Environment, or Cisco ONE. However, it faced intense competition in the space from the products rolled out by rivals such as Hewlett Packard (HPQ) and Juniper Networks (JNPR), which bought enterprise SDN company Contrail Systems at the end of 2012. There were also a number of startups in the space such as Nicira, which was acquired by VMware (VMW), and Big Switch, Pluribus Networks, Pica8, and Plexxi.
What is software-defined networking?
SDN is an approach to computer networking that is dynamic, manageable, cost-effective, and adaptable, making it ideal for the high-bandwidth, dynamic nature of today’s applications. The SDN architecture decouples the network control and forwarding functions, enabling the network control to become directly programmable and the underlying infrastructure to be abstracted for applications and network services. The Open Networking Foundation (ONF), a non-profit organization, was founded in 2011 by Deutsche Telekom, Facebook, Google, Microsoft, Verizon, and Yahoo! to promote SDN and OpenFlow. The OpenFlow protocol is a foundational element for building SDN solutions.
According to ONF, the explosion of mobile devices and content, server virtualization, and the emergence of cloud services were among the trends that drove the networking industry to evaluate traditional network architectures. Many conventional networks are hierarchical, built with tiers of Ethernet switches arranged in a tree structure. This design made sense when client-server computing was dominant, but such a static architecture is ill-suited to the dynamic computing and storage needs of today’s enterprise data centers, campuses, and carrier environments.
Cisco ONE is an industry standard SDN approach that supported OpenFlow, OpenStack, and other technologies. It included overlay network technology, application programming interfaces (APIs), and network-operation tools called agents and controllers aimed to help customers benefit from trends such as cloud, mobility, social networking, bring your own device (BYOD), and video. OpenStack, a project originally started by NASA and Rackspace, is a global collaboration of developers and technologists producing an open source cloud computing platform for public and private clouds.
In November 2013, Cisco responded to the SDN trend by introducing its application-centric infrastructure (ACI), which is a data center networking architecture designed to deliver business and other applications to end users in a cost-effective manner. Cisco said ACI is the first data center and cloud solution to offer full visibility and integrated management of both physical and virtual networked IT resources. The ACI comprises Nexus 9000 switches, the policy model, and the application policy infrastructure controller (APIC). Cisco’s ACI initiative was built on the technology developed by its spin-in venture Insieme Networks, which was fully acquired by Cisco in December of last year. Cisco had made a $100 million investment in Insieme Networks in April 2012.
Cisco recently offered its new open, standards-based network communication protocol OpFlex as an alternative to OpenFlow, which is traditionally used by SDN vendors. Cisco said it has opened its APIC application policy to a variety of infrastructure providers through the new OpFlex protocol, which will allow customers to simplify the automation and management of multi-vendor networks. Cisco said Canonical, Citrix, Microsoft, and Red Hat plan to support OpFlex. In addition to the Nexus 9000 switches, Cisco plans to support OpFlex with other components, such as the Nexus 1000V, ASR 9000 Series and Nexus 7000 Series switches, Adaptive Security Appliances (ASA), and the Sourcefire security solutions. Cisco also said it is expanding its Application Centric Infrastructure (ACI) solution and launched next-generation InterCloud infrastructure software architected for the Internet of Everything.
Cisco’s ACI initiative saw criticism from rivals who said the company’s “hardware-centric SDN approach essentially locks customers into a Cisco ecosystem.” Critics believe enterprises should have the flexibility to run third party software on any “white box” networking equipment rather than Cisco’s expensive hardware. Cisco sees competition in the SDN space from market leader VMware, with its newly launched NSX network virtualization technology, Nuage Networks, Citrix, Juniper, Arista Networks (ANET), and HP. There is also competition from cheaper white box/bare metal ethernet switch vendors and chip designers such as Cumulus, Big Switch, Pica8, Accton, Intel, Quantum, Broadcom (BRCD), Mellanox, Xpliant and Centec. Dell’Oro Group noted in its Ethernet Switch report that “white box switching continued to gain momentum in 2013, especially among the mega Cloud providers, outperforming the overall market, albeit from a smaller base.” Recent unconfirmed reports said IBM is exploring the sale of its SDN business.
Facebook launched its Open Compute Project for networking hardware last year that brought together different industry participants such as Broadcom, Cumulus Networks, Intel, and Mellanox for development of an open, OS-agnostic top-of-rack switch. The collaboration has resulted in 30 potential contributions, covering most of the network hardware stack and even some of the network software stack. Cisco said it is working with OpenDaylight, one of the leading open source SDN controllers in the industry, to create a 100% open source, ACI-compatible policy model and OpFlex reference architecture.
Analysts have mixed views about Cisco’s foray into SDN, and MKM Partners said Cisco’s ACI architecture is too “too complex and proprietary.” J.P. Morgan downgraded the company on the back of weakness in emerging markets “combined with delayed spending in the switching market driven by SDN.” Analyst Rod Hall published a new pricing comparison of Cisco products to bare metal solutions and found “bare metal to be 47%-52% less expensive per server on an Apples-to-Apples basis.” He added, “We calculate that much of Cisco’s premium is linked to support/license fees which may have to be reduced.” Industry experts believe Cisco may see an impact if SDN replaces its proprietary approaches, as enterprises choose more low cost solutions.
IDC predicts the SDN market is expected to grow to $3.7 billion by 2016 from $360 million in 2013. According to the Data Center Disruptors Advanced Research Report from Dell’Oro Group, the software-defined networking (SDN) market will grow more than six-fold over the next five years. The majority of this market will comprise Ethernet switches and Network Security appliances, which are forecast to deliver 75% of total sales revenue in 2013.
© 2013 Market Realist, Inc.