The Calm Before The SDN Storm?

stormSoftware-defined networking has been all the rage when it comes to the Internet of Things, Big Data, cloud, and mobility, but a couple of new reports indicate that the approaching SDN storm is calming down — unless you’re Cisco and VMware. It’s hard to find anyone who doesn’t believe that SDN will radically reshape the networking industry — eventually — but just what will be involved, and when, is still very much up in the air.

The first signs of the SDN slowdown showed up in the fourth quarter of 2013, with carriers of all sizes proceeding cautiously with a router and switch spending, in part because they are trialing SDN or just beginning to figure out how to proceed with SDN. That slowdown continued into the first quarter, according to a new report from Infonetics Research.

“Last quarter, we identified the ‘SDN hesitation,’ where we believe the enormity of the coming software-defined networking and network functions virtualization (NFV) transformation is making carriers be more cautious with their spending,” noted Michael Howard, principal analyst for carrier networks and co-founder of Infonetics. “This hesitation reared its head in the first quarter of 2014, where global service provider router and switch revenue increased only 2% from the year-ago quarter.”

Another new Infonetics report added fuel to the fire, according to Andrew Schmitt, principal analyst for optical at Infonetics Research. “No topic has generated more discussion in the past 12 months than software-defined networking (SDN), though most carriers have been publicly silent on their plans for SDN in the transport network. Our latest packet-optical study found that over three-quarters of service providers surveyed plan to deploy transport SDN, but only a third say vendors’ SDN strategies play a critical role in their equipment and vendor decisions today,”

A more positive picture was painted by Rayno Media, which predicted that innovation in SDN will create at least another $20 billion in value — including via mergers and IPOs — by further automating networking and compute platforms with advanced analytics, open APIs, and new networking architectures. “The Software Defined Networking represents the biggest technology shift in networking in 20 years,” says Rayno Report Chief Analyst and Publisher R. Scott Raynovich. “Another $20 billion in value is going to be created, much of it through M&A and IPOs. You are going to see more venture capital investment and more M&A, with big players buying some of the more prominent startups in 2014-2015.”

A recent report from Technology Business Research stated that SDN has moved beyond the hype but obstacles remain to its widespread adoption. Unlike in 2013, when SDN deployments were found only in the data centers of large cloud providers such as Google and Amazon, customers in other verticals such as retail and manufacturing are now using the technology in their production networks, noted Senior Analyst Scott Dennehy.

‘However, TBR believes some significant challenges remain for SDN to proliferate within the broader enterprise market and drive meaningful supplier revenue — namely, the lack of a clear and easily understandable business case and lack of clarity as to which group within the IT organization is responsible for deciding which SDN architecture to implement.’ He said while the evidence is mounting that SDN will lower overall network hardware spend, information is lacking to support a robust business case for the technology.

SDN is also causing concerns among IT leaders, said Dennehy, as the emergence of server virtualization into the network domain has the potential to pit the network and compute against each other. ‘This creates friction within the IT organization, which TBR believes will limit the speed at which SDN is adopted.’

It was back in April that Cisco CEO John Chambers wrote off HP and IBM as pending victims of the upcoming brutal consolidation. Then he got nasty, saying Cisco was going to crush VMware.

In mid-May a cheerful Chambers told Wall Street analysts that his plan to crush his biggest threat, a new technology led by VMware, is working well. Chambers said that “over 50 customers” are testing Cisco’s ACI SDN software and that it has sold 175 of the high-end routers that runs that software, the Nexus 9000 line.

“You might have seen a small startup [Nicira] and VMware combine,” he said. “They’ve been out there for five plus years. We’re taking almost all of those customers back. Momentum feels very, very good. I think you’ll see us knock ’em off one after another.”

VMware CEO Pat Gelsinger called Cisco’s shorts ”good PR”. “Cisco declared us public enemy No. 1, so all of a sudden every customer, every purchasing agent, has to say, ‘What’s going on over there?’”

Gelsinger said NSX’s client base has hit 100. “Some [clients] are in prototypes, some are in full deployment, but they’re paying customers.” He added two older VMware SDN clients, Rackspace and eBay, are “at dramatic production scale,” and that many customers use NSX to create a secure network within a network.

Despite Cisco’s and VMware’s claims — and/or pretensions — SDN is not a two-horse, or even three (i.e. HP, IBM and Dell). There are a host of established and new vendors champing at the bit, and even Oracle has stepped up its SDN efforts, joining OpenDaylight Project in early June. “OpenDaylight allows customers to improve their service quality by taking advantage of Oracle Solaris application-driven SDN and OpenDaylight-compatible networking devices as well as OpenDaylight-compatible SDN applications,” said Markus Flierl, VP, Oracle Solaris.

The bottom line, according to TBR, is that despite the obstacles inhibiting enterprise adoption of SDN, we will see further progress in the form of more use cases, vendor solutions and customer success stories. So feel free to catch your breath, but be very certain you understand that this is just the calm before the SDN storm changes everything.


Image credit: Joshua Artman (500px) /  CC-BY