One thing I love about Google is they don’t do things traditionally and their Out of the Box thinking and implementation leads to Disruption in the market and eventually leads to innovation. Though Google didn’t go all out to commercialize Software Defined Networking [SDN] but they were the first ones to adopt by building own switches for years and just started building its own analog-to-digital converters last year. Recently, Facebook pivoted its Open Compute project to focus on opening up networking; and Cumulus Networks launched its switch operating system that runs on “white box” top-of-rack switches from original design manufacturers (ODMs).
While we believe software defined networking (SDN) and its loose carrier equivalent network functions virtualization (NFV) could change the complexion of several of the hardware markets (switches, routers, application delivery controllers, WAN optimization solutions, etc.), we believe it is premature to gauge the impact to specific companies in contrast to the recent hype cycle. However, architectural changes in carrier and enterprise networks take years to transpire. We do expect SDN/ NFV architectural changes to occur more quickly this time, and we believe that many enterprises and carriers are actively considering how SDN and/ or NFV fits into their organizations strategically.
SDN doesn’t pose a big risk to the Ethernet switching market yet, because it moves value out of the switches and into a separate software controller layer, making the switches dumbed-down hardware which are then subject to risk of commoditization and white box competition, following a fate similar to that of the server market over the past several years. This theory came into vogue in July 2012 when VMWare staked its claim in networking with the acquisition of software-based network virtualization startup Nicira for a notable $1.26 billion
The reality is that even highly virtualized networks still need physical switches to connect virtual networks to physical networks and move data across both networks, and these switches need to support the new emerging software control layer as well as support high speeds due to the sheer volume of traffic making its way through the network at a latency low enough to be useful – a task we believe it still very difficult to do. VMWare is partnering with Arista, Juniper, Brocade and others as further evidence that hardware still should have an important role in the network.