CEOs of Cisco, Hewlett Packard Enterprise (HPE), and Dell Technologies all touted plans in 2021 to offer almost everything as-a-service in the near future. One of these moves is network-as-a-service (NaaS), which brings network agility and scalability to help organizations deal with the challenges of hybrid workforce, distributed systems, and digital transformation acceleration.

NaaS is essentially a delivery model for networking products. It typically includes on-demand usage, a consumption-based billing model, self-service capabilities, and elements such as network routers, switches, gateways, and firewalls, according to Gartner.

Organizations see freeing up IT resources and improving disruption response as NaaS’ top benefits, according to a recent Cisco report.

Besides Cisco, HPE and Dell Technologies also recently rolled out NaaS platforms.

“They're all at different points in their history, but HPE and Dell got a headstart from this shift happening in computing first,” Zeus Kerravala, founder and principal analyst at ZK Research, wrote in response to questions. “Between the two, Dell has been the most aggressive with utilization-based pricing — but it's easy for them as their market share is minimal.”

Cisco Plus Starts With Hybrid Cloud, SASE

Cisco launched its NaaS platform Cisco Plus in March, putting the networking vendor one step closer to realizing CEO Chuck Robbins’ promise to move the company’s entire portfolio to a subscription model.

It's in the early phase of its NaaS rollout and plans to initially focus on the mid-market, according to Raakhee Mistry, director of product marketing at Cisco. The company saw the need for as-a-service models around areas as cloud and security. That’s why Cisco Plus rolled out hybrid cloud and secure access service edge (SASE) as the first two major offerings at the onset, Mistry explained.

Cisco Plus Hybrid Cloud is now available in six countries with over 20 partners. The vendor recently added a “pay-as-you-grow” payment model and data center networking capabilities. Additionally, the platform will support wireless services such as WiFi and 5G, as well as branch and campus area networking in the future, Mistry said.

However, Cisco faces stiff NaaS competition from HPE GreenLake and Dell Apex.

HPE GreenLake Orders Increase by 46%

HPE first introduced its GreenLake portfolio in 2018. The company’s consumption-based cloud services include compute, container management, data protection, machine learning operations, networking, storage, and virtual desktop infrastructure offerings. 

And under the GreenLake umbrella, HPE’s NaaS offerings include hybrid cloud, campus switching, servers, and storage. Plus, the vendor is expanding its campus networking portfolio.

Through GreenLake, customers “can consume anything from network-as-a-service, subscription to Aruba products to what I call private cloud to data services, which is part of the transformation we are driving in our storage portfolio,” HPE CEO Antonio Neri said on the vendor's most recent quarterly earnings call.

GreenLake added more than 300 new customers during the fiscal year 2021, bringing the total customer count to more than 1,250. In addition, the platform’s orders increased 46% year-over-year, while adding more than $1.5 billion contract value over the last year, bringing the total to more than $5.7 billion, according to Neri.

Neri previously pledged to offer HPE’s entire portfolio via GreenLake by 2022.

Dell Broadens Apex Portfolio

Dell founder and CEO Michael Dell also said in 2019 that his company will offer all of its new products under its on-demand portfolio as well as several existing products.

The vendor unboxed its Apex portfolio of as-a-service offerings in May, which includes Apex Data Storage Services, Apex Cloud Services, Apex Custom Solutions, and Apex Console.

Customers’ interest in Apex continues to accelerate, and Dell is making good progress in broadening the portfolio, co-COO Chuck Whitten said on the most recent quarterly earnings call. Dell didn’t reveal Apex’s financial or customer numbers on the call.

Concerns Over NaaS Adoption

NaaS is still in its infancy stage compared to other as-a-service models such as software-as-a-service or infrastructure-as-a-service. Its market penetration rate is less than 1% of the target audiences, according to Gartner’s recent report.

Analyst Andrew Lerner anticipates that the higher costs of NaaS for enterprise buyers and lack of offsetting value will diminish interest in NaaS to less than 10% by 2024, down from an estimated 30% this year.

Cisco’s recent NaaS report echoed the same concerns. More than a quarter of respondents cited cost and the disruption to existing infrastructure and operations as inhibitors to adoption.

However, Kerravala argued that the agility NaaS provides customers outweighs the cost. “Customers will have the agility to buy what they need, and then scale up or down as needed,” he said.

NaaS Gains Momentum

Despite the concerns, analysts expect NaaS to become more popular over the next few years. 

Lerner anticipates 15% of all enterprises will adopt on-premises NaaS by the end of 2024, up from less than 1% this year. Another market research report also shows that the global NaaS market is expected to increase at a compound annual growth rate of 40.7% between 2021 and 2027. 

The predictions are in line with Cisco’s survey results, which found more than one-quarter of respondents have already deployed NaaS, and 49% considered an infrastructure refresh or upgrade cycles as a prime opportunity for NaaS adoption.