More than $600 million has been invested in at least two dozen software-defined networking (SDN) startups so far, according to Rayno Report research. You can expect that to continue to climb. With the SDN ecosystem starting to take hold with a broad range of alliances and distribution partnerships, we’re just getting started.
The Arista IPO will help build visibility for next-generation, software-driven networking. But Arista is selling its own hardware and is not an SDN pure-play. A new line of SDN startups, with a more radical approach to software-based networking, is building momentum. These newer SDN startups are just getting their gear into customers’ hands and starting to build sales channels, so you can expect a long revenue ramp.
This excitement is boosting startup valuations, according to Rayno Report research. There are now at least ten SDN startups with valuations over $100 million. As I reported in April, a recent investment in Cumulus Networks pushed up the valuation of the private company north of $300 million, according to industry sources. Big Switch, which did a deal in 2012 valuing it near $170 million, took money from Intel in 2013, most likely boosting its valuation to over $200 million, according to several sources.
As we enter the next phase, there are now enough robust SDN startups with different components of the system to build an SDN “ecosystem.” These components include a network OS, controller, network functions virtualization (NFV) platform, orchestration software, and analytics software, according to the SDN taxonomy discussed in my new report, “SDN Revolution: An Ecosystem Report.“
If you think about all of this functionality, what it does is break down traditional networking elements into open components that can be loaded on top of any hardware platform. This is the so-called “bare metal” or “white box” strategy. But it goes beyond this: The goal of true SDN is to get all of this software to talk to each other and move bits across the network in a faster and intelligent way. The end game is to coordinate a suite of smart software that drives the automation and efficiency of applications.
The customer expectation is that all of this functionality can be stitched together on top of a robust hardware platform to deliver a full solution — a powerful, open suite of networking tools that can dynamically monitor and automate the network.
This is where the larger hardware players come in: Some of them are aiming to become the mega integrators of the SDN world. Dell is one good example. It has already formed partnerships with Cumulus and Big Switch, and it will deliver this software to customers on its own hardware platform.
Cisco is working on its own SDN ecosystem based on the purchase of Insieme. Cisco is driving its Application-Centric Infrastructure (ACI) to rival the SDN world of the startups, but if Cisco does not maintain an open platform that can provide adequate interoperability with the innovation provided elsewhere in the community, it risks turning SDN concept into a proprietary walled garden.
Another example is the recent important deal between Pluribus Networks and Supermicro. This takes Pluribus’ OS and analytics technology and merges it with a server platform, creating an scalable server that also functions as a Layer 2/3 switch.
The dynamic and creative nature of these approaches demonstrates the power of the SDN ecosystem. We are leaving the world of distinct, purpose-built networking boxes and entering a universe of powerful, distributed software that will result in smarter, more dynamic networking platforms.
Read about the details of the SDN ecosystem in “SDN Revolution: An Ecosystem,” a comprehensive, 30-page industry review that includes detailed information about more 24 startups, the position of leading incumbents, and a ranking of the top companies. It is available now from the Rayno Report for $899.