Arista Networks released its latest 400 gigabit Ethernet switches designed specifically for large-scale virtualized and cloud networks. The new family of switches, 7800R or R3 series, are the third generation of Arista’s R-Series family of universal spine switches, which includes 7500R and 7280R.
This comes a week after a disappointing first quarter of 2019 earnings report, in which the company reduced its sales guidance for the remainder of the year. However, it wasn’t a particularly bad quarter and Arista continues to gain market share with its switching business.
The 7800R are switch-router platforms that support both 100G and 400G Ethernet with new telemetry and intelligence capabilities that can be embedded into service provider, edge, 5G, and IoT networks, according to Arista. It combines 400G and 100G density with comprehensive network Layer 2 and Layer 3 capabilities.
Additional advanced features for the new platforms will be delivered through Arista’s Extensible Operating System (EOS). This includes updates to routing, security, automation, network monitoring, precision timing, VXLAN network virtualization (NV), and Ethernet virtual private networks (EVPN). The EOS features are also integrated with the company’s hardware resources to “support lasting investment protection,” said a company spokesperson.
In a blog post announcing the new switch-routers, Andreas Bechtolsheim, chief development officer at Arista, wrote that this new generation of R3 series routing platforms are “setting new standards for throughput, density, power efficiency, and price performance.”
Bechtolsheim goes on to say that the packet processing silicon in the R3 Series offers 5 times the throughput of the previous generation and “significant enhancements in route scale, security and telemetry.” Additional enhancements include greater power efficiency and new fixed form factors.
“400G is the most important new Ethernet standard going forward with an estimated volume of 20 [million] ports over the next three years,” he said. “The R3 Series offers high-density 400G ports across all platforms to support these next-generation networks.”
Arista’s Foray Into 400G
This isn’t the networking company’s first foray into 400G. Last October, Arista released its 7060X4 Series of switches with support for 400G Ethernet. According to the company, the main difference is that 7060X4 was designed primarily for use inside of the data center and were based on Broadcom’s 12.8 Tb/s Tomahawk 3 silicon.
During its most recent earnings call, Arista CEO Jayshree Ullal told investors “we’re very excited about our market leadership in 100-gig and we hope we will transform that into market leadership in 400-gig to our technology as well,” according to the Seeking Alpha transcript of the call.
However, Ullal clarified that 400G-ready is not the same as 400G deployed, adding that meaningful deployments won’t begin until next year. Until then, “this is going to be a mix and match of 100 and 400-gig for a long time to come,” she added.
Anshul Sadana, Arista’s chief operating officer, described the 400G transition as “longer than what many of you expect.” And Arista isn’t the only networking vendor dipping its toes into 400G — Cisco, Juniper, and Arrcus all joined the party in the last year.
Lowered Guidance for 2019
Arista reported that its total earnings for the first quarter of 2019 were up 26% year over year, reaching $595.6 million.
While Ita Brennan, chief financial officer of Arista, noted that the company was “well positioned with our key cloud customers and our focus on expanding our presence in the enterprise and other verticals,” she added that there was “some shortfall in demand at the back end of the period primarily from our service provider and cloud verticals.”
Based on this, the company lowered its second quarter guidance and Brennan warned investors that the business is operating under the assumption that it may impact full-year results. The company withdrew its initial sales forecast of 21% growth, but didn’t provide a new number. Some analysts have predicted that sales growth will be 19.5% for 2019.
Bert Hochfield, a research analyst for Seeking Alpha, wrote that the guidance was a “huge surprise and disappointment.” He added that Arista’s problems are not competitive or operational, but are due to the lower demand for its “cloud titans” customer segment, which represents a large chuck of its business.
During the earnings call, Ullal said “cloud titans typically give us one to two quarters of forecast. And this time, we’re seeing a decreased demand in the first half of 2019 compared to 2018.” The segment still represented Arista’s top vertical, and Ullal said it will remain so “in spite of everything… we see strength in products. We’re competitively very strong and superior there.”