According to The Information, Cisco is working on a project to separate its networking hardware from its networking software. However, Cisco claimed that the story is “unsubstantiated” but did not provide further details.

Citing two un-named sources, The Information (subscription required) said Cisco is planning to sell its operating system software for network switches on a standalone basis. That software could then run on cheaper switches made with chips from other companies. The Information also said the standalone operating system might also run on some low-end Cisco routers.

Reportedly, Cisco has branded this project “Lindt.” But a Cisco spokesman today told SDxCentral, “While we are not commenting on Lindt, I will say that the vast majority of our customers see huge value from the power and efficiency of our fully integrated networking platforms. This tight integration of hardware and software will continue to be the basis of the networking solutions we offer our customers.”

Cisco has resisted the trend toward disaggregation of software from hardware because it forebodes a decline in revenues for its switching and routing businesses. But many of its competitors have already begun to move in this direction, including Juniper Networks and Arista Networks.

In November 2015, Juniper announced it was disaggregating its Junos operating system from its switches. And just this month, Arista introduced a version of its Extensible Operating System (EOS) written to run on any white box server. Previously, EOS had run exclusively on Arista hardware.

“I have not seen the evidence of Cisco disaggregating their switch OS and offering it as a software-only module that runs on third party hardware,” said IDC analyst Rohit Mehra. “Without categorically saying it’s untrue, I have not seen evidence or even roadmap discussions.”

Cisco is doing some things with network functions virtualization (NFV) in its Enterprise business segment in terms of routing, such as software-defined wide area networking (SD-WAN). But in terms of Ethernet switching in data centers “that is where the market has bifurcated,” said Mehra. “The highest growth segment is with Facebook, Amazon, Google, and the big Chinese guys. All of them have embraced, either completely or partially, white-box switching coupled with third-party network operating systems.”

Mehra put some numbers to white-box switching.

He said according to IDC, the worldwide ODM direct Ethernet switch (white box market) was $677 million in 2016 and is expected to exceed $900 million in 2017. “It’s a high growth market,” he said.

What companies are benefitting from this revenue growth? Mehra said, “These are the top four ODM Ethernet switch providers who sell directly to the cloud providers,” in this order: Celestica, Accton, Quanta, and Delta. Celestica is based out of Canada and the other three are headquartered in Taiwan.

Delta recently launched two new switches for open networking at the Open Compute Project (OCP) summit.

In terms of the software running on white-box hardware, some of the big hyperscale players write their own operating systems. Others use operating systems from the likes of Broadcom, Cumulus, IP Infusion, and Big Switch.

The trend toward disaggregated hardware and software has driven Cisco competitors such as Juniper, Arista, Brocade, Dell, and HPE to make changes to their portfolios to try and address the evolution.

“What we haven’t seen is any of these strategies meet with success,” said Mehra. “It’s yet to be seen how the market pans out for this disaggregation.”

But Cisco's traditional routing and switching markets are dipping. For its second quarter 2017, Cisco’s routing product revenue was down 10 percent from the previous year, while switching product revenue was down 5 percent, and data center product revenue was down 4 percent.

If a large customer wants to go with white-box, would Cisco accommodate that to retain the customer? Cisco won’t say. But that’s the situation Arista finds itself in with its big customer Microsoft. The Redmond, Washington-based company has contributed its Software for Open Networking in the Cloud (SONiC) to OCP. And Arista has allowed Microsoft to run SONiC on Arista switch hardware without Arista’s EOS operating system.

But the disaggregated model still seems to be relevant only for the big Webscale titans that have the chops to support white-box switch vendors and to deal with disaggregated data center software.

Cumulus Networks is one of the companies doing open data center software. Josh Leslie, CEO of Cumulus Networks, said, "We’re at 600 customers now. And probably three-quarters to two-thirds of those were previously buying Cisco."

Of its 600 customers, Leslie estimates that about 25 percent belong to the Fortune 100, including Verizon and some of the world's largest banks.

"Cisco may not be aware that those customers are on a trajectory to eat into the Cisco environment," said Leslie. "It's not necessarily a dramatic rip and replace."

But aside from huge companies, the disaggregated model is probably not appealing to most enterprises. There are many elements of the networking stack around control, orchestration, and management that all need to tie together. Most enterprises would rather leave all of that to a networking vendor.