Do you think things will be normal, predictable, and easy to analyze in the communications technology market in 2015? Well then you are some kind of genius.
It’s my belief that the communications industry is undergoing a period of rapid transformation that will shake up the status quo in ways we can’t predict. In enterprise networking, we’ve had about two decades of relative stability and duopoly: Ethernet switching dominated by the likes of Cisco as #1 and some combination of Juniper/HP/others in spot #2.
This is all about to change rapidly.
As Michael Genovese, Managing Director of MKM Partners, wrote in an industry preview earlier in the week, “Secular Change is Profound” in the communications industry. The cloud is shaking up how we once thought of networks, Software Defined Networking (SDN) is changing the way hardware is used, and Open Source is invading.
So what’s it all mean for these established hardware technology companies who have had decades of relative stability, consisting mostly of deciding how has more Ethernet ports to ship? They’re going to have to move faster if they don’t want to lose that market share.
“Network Functions Virtualization (NFV) is the most important secular trend in Comm Equipment,” writes Genovese.
Yes, NFV is going to shake up many of the communications markets and subsectors, including WAN Optimization, Applications Delivery Controllers (ADCs), and firewalls. But the changes brought about by SDN go well behind NFV — you are talking about entire networking architectures. With all of the open software coming to market, I think you’d be hard pressed to think that in five years, the networking hardware market will be dominated by Cisco’s IOS.
I keep going back to the analogy of what the cloud did to servers and data centers. In ten years the data center went from being server-specific to a virtualized cloud infrastructure, and the way technology vendors played in that space changed rapidly. VMware rose to power, the influence of large systems integrators such as Dell and HP diminished, and IBM was forced to buy every data-center startup technology company on the planet.
Who’ll be the big winner with all of this networking “disruption”? Genovese thinks the winners will be the optical players and the losers will be edge routers. I agree on the edge router statement, but I’m not sure about optical. The optical players will need to innovate as well and figure out how to leverage the SDN technologies.
Genovese also says he’s “very worried about Juniper.” So am I. As we wrote here before, the router vendors seem to be more intent on defending their fort rather than expanding into new territory.
Will the optical or any hardware vendors be the victors? I’m not sure. The real action and winners will come in the form of new software and applications: Security, management, and machine learning technologies that allow the system to function more intelligently. SDN and NFV at their core about analytics and intelligence, more than anything.
This has always been the promise of true SDN: Once the entire system is opened up, you can look at more of the parts inside. It’s the same revolution that drove the Internet, and now it’s coming to enterprise networks near you.
It’s going to be an interesting 2015. Change always makes for a better story. Tomorrow, I’m going to announce some Predictions for 2015.