Cisco’s primary revenue has been its hardware with custom silicon and software that provides highly scalable networking for enterprises, data centers and telecommunication industries. That threatens to change with networking vendors using off-the-shelf silicon to build commodity hardware, with only software differentiating offerings from competitors. Hardware from these vendors not only provides near parity performance with established ASIC-centric products but is more affordable, threatening Cisco‘s market share.
The threat from SDN
Adding to the threat is that non-proprietary hardware actively encourages and supports software defined networking (SDN) as a differentiator. With datacenters getting bigger, operators seek hardware that is not only inexpensive but is also easy to manage and quickly reconfigurable when changes have to be made. SDN delivers that promise, providing flexible networks at lower costs than established vendors. Using SDN, datacenter operators can separate the physical network from the control plane, enabling easier programming and quicker management of their network. Enterprises with huge data centers, such as Google, Amazon, Apple, Facebook, etc., have already moved to in-house developed SDN using commodity hardware.
VMware – Friend or Foe?
VMware, like Cisco, offers proprietary solutions that work well within its own ecosystem. They are also Cisco’s partners, like with the 1000v. But VMware changed this relationship with the acquisition of Nicira, a pioneer in SDN, for $1.2 billion. After seeing the advantages of server virtualization, enterprises and network admins are looking to run their entire datacenter offers on a compelling alternative. VMware NSX takes a software-centric approach, a path different from Cisco’s hardware-centric solutions.
NSX network virtualization, though it separates the control and data plane, is not the same as SDN. According to Martin Casado, OpenFlow creator and chief architect of networking at VMware, “Network virtualization and SDN are two different things and somewhat incomparable. SDN is a mechanism and network virtualization is a … solution”. Something else about NSX is that it can work on any hardware, be it custom silicon hardware like those from Cisco or general purpose hardware and that I believe gives NSX an advantage over SDN. SDN requires hardware that supports OpenFlow or similar SDN protocols, which means capex for upgrades or new hardware.
Some might believe that competition from NSX vs. SDN is good for Cisco by changing the conversation away from open standards SDN. But after watching an NSX demo, VMware’s claims it can provide large datacenters the ability to bring up a scalable network in minutes leveraging on existing hardware was impressive. And existing hardware includes both proprietary and open solutions. Rather than simply knocking SDN out of the picture, this approach also cuts directly at Cisco’s proprietary SDN-alternative vision. To add to this, many of Cisco’s rivals such as Juniper, Dell, Arista and Brocade are eagerly supporting integration with VMware’s NSX network virtualization platform.
For many years it has been Cisco vs. everyone else. NSX and SDN are now out to change that and provide alternative platforms. But Cisco has an answer, let’s look at that in part 2 this coming Tuesday.