Applications hold the key to SDN adoption in the enterprise

A key promise of SDN technologies is the potential for a vibrant market for “applications” that leverage SDN protocols to address physical network resources. It is SDN’s ability to decouple network logic and policies from the underlying network equipment that allow for a more programmable network. The way to create SDN applications is to give broad population of independent software vendors (ISVs) and other developers the training and tools to leverage open SDN APIs. It is these applications that will deliver the value of SDN to the IT community by allowing greater levels of flexibility, innovation, and control in the network.

The “traditional” network market has struggled to create a broad ecosystem of network-aware application software. ISVs have been challenged by a large number of proprietary network protocols. Several network vendors have promoted efforts to create an ISV community around their specific network environments – most notably Cisco and Juniper- with relatively limited success.

The introduction of OpenFlow brings an open source strategy (e.g. Linux) to the networking market. OpenFlow is offered by a large number of incumbent network vendors including Cisco, HP, Juniper, Brocade, IBM, Dell, and NEC and a variety of start-ups, including Big Switch. There are also a number of open source options for OpenFlow. OpenFlow technology has been widely seeded in leading universities. In order for OpenFlow to achieve broad market acceptance, it must enable a sizeable community of network ISVs.

There are a number of SDN offerings that are not OpenFlow centric that also hope to enable a broad network ISV community. Cisco has announced its Open Network Environment (ONE) with a common set of APIs across its broad product line. VMware with its Nicira acquisition is also creating an SDN application community. Other interesting SDN start-ups with the potential to enable SDN applications include ADARA, LineRate, and Midokura.

2013 will see further standardization of south-bound and north-bound SDN interfaces – this will allow leading-edge ISVs the ability to develop more SDN specific applications. The OpenFlow ecosystem including R&D centers, universities, open-source, and vendor community will see further SDN application development. And, Cisco’s release of open API’s common to all its switch/router platforms (ONE) will enable ISVs and its broad channel community to develop SDN applications.

Development of a broad ISV community to leverage SDN technologies to tie applications to the underlying physical network is critical to the long term success of SDN. Enterprise IT customers want to buy SDN “solutions” that bring specific business value and a wealth of SDN applications will be the catalyst to broad SDN adoption in the business community.

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Big Switch Announces Commercial OpenFlow Controller and New Applications

Company Overview

Big Switch is an OpenFlow pioneer and one of the leading platform-independent software-defined networking vendors. Big Switch was founded in 2010 by Guido Appenzeller, who led the Clean Slate lab at Stanford. The company’s Open SDN platform leverages industry standards and open APIs that enable customers to deploy flexible networking applications, including data center network virtualization. It released its Floodlight controller as open-source in early 2012 and has over 7,500 downloads to date of its controller and APIs.

New Funding

On October 31, 2012 Big Switch received $25 million in Series B funding from new investors Redpoint Ventures and Goldman Sachs. The Palo Alto-based company will use the cash to add to its engineering staff. Existing backers Index Ventures and Khosla Ventures also participated in this round.

Ecosystem

Big Switch has a broad ecosystem of partners to insure interoperability with existing network infrastructure and to help develop new applications to leverage its OpenFlow development.
Big Switch has broad interoperability support with network products including Arista, Brocade, Dell, Extreme, HP, IBM, Juniper and hypervisors including VMware, Microsoft, Citrix and Red Hat.
Security and Layer 4-7 partners include F5, Palo Alto, Radware, Fortinet, V-Armour, A10, and Coraid.

New Product Announcement

On November 13, 2012, Big Switch made 3 product announcements:

• Commercial availability of its OpenFlow Controller (Big Network Controller)
• An OpenFlow application that dynamically provisions virtual network segments (Big Virtual Switch)
• An application that improves monitoring and management of OpenFlow (Big Tap)

Impact on the SDN Market

The Big Switch announcement brings the concrete benefits of OpenFlow to enterprise IT. It provides both CAPEX (e.g. increased VM densities) and OPEX (e.g. improved network monitoring capabilities) benefits for enterprise networks and cloud data centers.

Doyle Research believes that SDN adoption will be driven by the applications that provide specific improvements to customer networks. Big Switch introduced 2 applications that clearly demonstrate the value of SDN/OpenFlow. Big Virtual Switch will reduce the time to provision public and private data center networks and allow for increased VM densities. Big Tap offers much needed virtual monitoring of OpenFlow switches.

Big Switch has a strong ecosystem that will deliver many more valuable OpenFlow applications to its customers, including security (e.g. firewalls), server load balancing, WAN optimization, and network management. Its partnership with many leading universities is likely to yield many more diverse OpenFlow applications. Big Switch’s ability to work with a wide range of VM environments, legacy switch infrastructure, and the emerging OpenFlow ecosystem make it a strong supplier for those organizations looking to implement OpenFlow.

SDN Market Opportunities: How Large is the Market for SDN?

There is no question that the SDN arena is a hotbed of new ideas, well funded start ups, and established vendor SDN plans. However, there is a significant question about how big (in terms of revenue) the SDN market will be in the future.  VMware’s $1.2B acquisition of Nicira (an SDN start with minimal current revenues) speaks volume about the potential market size.

Definitions

The 1^st challenge of sizing any market is defining what is and what is not included in the market.  For some markets (e.g. PCs), this may be relatively straightforward.  For SDN, definitions are complex and evolving.  For example, everyone includes OpenFlow controllers in SDN – but they tend to disagree on the rest.

Here is my short list of market factors for a SDN forecast:

• Enterprise vs. Telecom.  These are 2 very different markets with enterprise SDN focused on public and private cloud data centers.  SDN’s impact on the telecom market will include a wide range of optical, 4G wireless, and OSS/BSS technologies.
• Software, Hardware, and Services.  Everyone includes software as part of software defined networking.  And this software needs to run on specialized or general purpose (new) hardware that supports SDN (e.g. OpenFlow controllers).  But what about Ethernet switches or routers that now support OpenFlow?  Services is another important market in terms of size (over 20% of the enterprise network HW market).  Professional and support services will no doubt be a big part of the SDN opportunity in the future.
• Layer 2-7.  Ethernet switches, routers, server load balancers, WAN optimization, SSL acceleration, IP VPNs, firewalls, etc. are all part of a potential SDN stack.  A sizing must define which of these functional markets to include.

Related Markets

Growth in public cloud services is a primary driver of the massive expansion of hyper-scale data centers (and the resulting need for SDN technology).  Enterprise adoption of private clouds in their data centers will likewise impact the need to change the underlying network to SDN technology.  Therefore, any SDN forecast will need to identify specific assumptions related to the growth of public and private cloud.

Conclusion

The SDN market can be sized by using appropriate market definitions and assumptions.  Demand will 1^st be driven by hyper-scale data centers built by public cloud providers.  Additional demand will be generated over time by private cloud data centers and changes in campus/branch network architectures.   The SDN ecosystem will take time to develop especially for software applications and services.

So how large is the SDN market opportunity?  According to Doyle Research, the market for Enterprise SDN software and new hardware (including Layers 2-7) will be $1.6B by 2017.

Please contact ldoyle@doyle-research.com for your customized SDN forecast.

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Why COTS is Important to the Network and Telecom Industry

COTS (Commercial off the shelf) is short hand for industry standard servers (e.g. Intel), operating systems (e.g. Linux or Unix), and middleware.

The enterprise network and telecom industries have been living in a world of purpose built systems for 30+ years.  It is standard for Ericsson, Cisco, or Juniper to design their own ASIC chips, develop proprietary operating systems (e.g. Cisco IOS), and integrate it all into highly optimized systems (e.g. base stations, routers, and ethernet switches).

Changes in the telecom world have resulted in some COTS adoption as Huawei, Alcatel, and NSN have moved some of their development efforts to commercial servers or ATCA (a blade server standard for high reliable telecom systems).  However, my recent discussions with a range of enterprise and telecom network suppliers indicates a relatively slow migration to COTS hardware and a continued dependence on internally developed middleware.

In the long run, migration to COTS is inevitable given the power of Moore’s Law and proven COTS benefits, namely:

• Faster design cycles
• Less expensive hardware
• Lower maintenance costs
• Benefits of server virtualization

Networking vendors are increasingly finding their value-add is coming from highly specialized software.   And given financial pressures most networking suppliers need to reduce the time and engineering costs of their hardware, OS, and middleware developments.

In networking and telecom change can (and usually does) take a long time – systems are designed for 5+ year cycles.  Migration to COTS generally occurs when a new equipment design cycle is required (e.g. 4G, 100GB) or in response to specific transformative industry trends (e.g. Software Defined Networking or SDN).

There is significant market opportunity for IT players with targeted programs to deliver COTS to the network/telecom industry.   For server hardware only, the telecom industry represents 8-10% of the total server market.  ATCA represents a $1B+ market opportunity (internal and external development) for COTS.   Additional market value is available in software (OS, middleware, and applications).  Key IT players here are IBM, HP, Intel/Windriver, Oracle, and Radisys.

The key questions are which parts of the telecom industry are ripe for COTS, for example base stations represent a very large opportunity with little to no COTS penetration today.   The price and margin challenges now impacting the large network equipment suppliers will work to accelerate COTS – see the recent financial results for Ericsson, NSN, and Alcatel.  Over time, adoption of SDN will bring the very large Ethernet switch and router markets into COTS scope.