interop 2006: evolution of the networking industry
DESCRIPTION
This was a presentation from 2006 where (starting on slide 30) I described how the way consumer networking vendors built their products would ultimately upend the way enterprise vendors built products. Today, the hype around SDN, commodity switching products, and linux based network operating systems is making much of this come true. This presentation was first given in May 2006 at the Interop trade show. Slide 30, is where I talked about how the networking market would split from vertically organized vendors to horizontally specialized vendors. I predicted this transition would take 10 years. At the time, the use of merchant silicon in datacenter and enterprise switching products was a rarity. Today, it is common. Then linux derivative network OSes were limited to consumer products, today they are taking over large scale cloud datacenters. The networking market hasn’t come as far as I expected in 10 years, but it’s pretty cool much of this either came true or is on the cusp of coming true. Much more change is under way.TRANSCRIPT
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www.idc.com
The State of Enterprise Networking: Interop 2006
Abner GermanowDirector, Enterprise Networking
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Agenda
• A quick refresher on disruptive markets• The state of the enterprise networking market• Solving the complexity and crisis• Guidance
©IDC, 2006
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A quick refresher course
in disruptive markets
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Sustaining vs. Disruptive Innovation
Performance that customers
can utilize or absorb
New performance trajectory
Disruptive Innovation
Pace of
technological
progress
Sustaining Innovation
Breakthrough
Incremental
Pro
du
ct
Pe
rfo
rma
nc
e
TimeSource: The Innovator’s Dilemma
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Interdependency Vs. Modularity
Modular Archite
ctures
Beat competitors with speed, responsiveness and standards
Pe
rfo
rma
nc
e
Time
Interdependent Archite
ctures
Beat competitorswith complete solutions
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Shifts in Interdependency and Modularity Has a Long IT History
Equipment
Materials
Components
Product design
Operating system
Applications software
Sales & distribution
Field service
Intel, Micron, Quantum, Komag, etc.
Compaq, Dell, Gateway, Packard Bell
Microsoft
Word Perfect, Lotus, Borland
CompUSA
Independent contractors
Microsoft
1960–1980 1980–1990 1990–Present
Dell
IBM
Co
ntr
ol D
ata
Dig
ital E
qui
pm
ent
Monsanto, Sumitomo Metals, Shipley, etc.
Teradyne, Nikon, Canon, Applied Materials, Millipore, etc.
Assembly Compaq Contract Assemblers
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Where are we today?
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Gigabit is healthy, but 100 MB will represent the majority of shipments for a while
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05
2002 2003 2004 2005
fix m - 100 MB
fix m - 1000 MB
mod - 100 MB
mod - 1000 MB
Layer (All) Vendor (All)
Sum of Ports
Year Quarter
Form Factor
Speed
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10 G Port Growth
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05
2002 2003 2004 2005
fix m
mod
Layer (All) Vendor (All) Speed 10 G
Sum of Ports
Year Quarter
Form Factor
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WLAN Market Share by Shipments
0%
20%
40%
60%
80%
100%
4Q2004
1Q2005
2Q2005
3Q2005
4Q2005
Other
3Com
Aruba
Symbol
Cisco
WLAN Share of Shipments
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0%
20%
40%
60%
80%
100%
4Q2004
1Q2005
2Q2005
3Q2005
4Q2005
AP vs Controller Share by Revenue
Controller
AP
WLAN Product Mix Shifted: Share of Revenue
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Where are we going?
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Core Enterprise Network Forecast
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
2003 2004 2005 2006 2007 2008 2009
Billions
LAN Switch Router
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New Enterprise Markets Are Hot
$0$5
$10$15$20$25$30$35$40
2003 2004 2005 2006 2007 2008 2009 2010
Billions
LAN switch Router IP PBX WLAN Application Networking
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What’s on the agenda in 2006?
0% 5% 10% 15% 20% 25% 30%
Branch Routers
Compliance
Wiring closet LAN switch
Network Management
Core/Backbone LAN switch
Headquarters Routers
IP Voice
No major networking initiatives
Wireless LAN deployments
Security function / appliances
Source: IDC Enterprise Networks Vertical Views Survey, May 2006 N=623 (Prelim data, unweighted)
Q: What are the top two upgrades or initiatives making up largest share of your organization's data network equipment spending over the next 12 months?
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Security
Problems: 1. Need to reduce response times, but security and
networking groups often have different priorities2. Conga line of appliances doesn’t scale
©IDC, 2006
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Security goal #1
Reduce response times
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Network
Network identifies suspect traffic
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Network
Network identifies suspect traffic
Security Function
Security productanalyzes traffic
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Security Function
Network
Security productanalyzes traffic
Security productissues mitigationrecommendations
to network
Network identifies suspect traffic
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Network
Network identifies suspect traffic
Network takes action to block,
rate limit, or quarantine
Security Function
Security productanalyzes traffic
Security productissues mitigationrecommendations
to network
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Demand For Closed Loops Exists In All Hot Markets
SecurityMobility
IP Telephony
App Networking
Enterprise Network
StorageNetwork
Compute
Storage
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Common Themes In Hot Topics
A closed loop with the network is a win-win
Control may lie outside networking group
Web services standards
SecurityMobility
IP Telephony
App Networking
Enterprise Network
StorageNetwork
Compute
Storage
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One End of the Solution Spectrum: Build It Yourself
Acquire or develop technologies and integrate in house
Pros: Grow revenues through growth in hot products. Development teams can be forced to work together
Cons: Assumes customer wants to buy everything from you Angry partners
©IDC, 2006
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The Other End of the Spectrum: Play with Others
Develop a set of APIs and use a standard platform build links to secondary and tertiary technologies
Pros: Customers can use multiple vendors Vendors can specialize
Cons: Customers can’t exploit the value of the open platform until
the 2nd or 3rd application Multiple vendors blame others for problems
©IDC, 2006
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Security goal #2
Consolidate conga line of appliances
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Classes of Appliances at the WAN gateway
• WLAN access point management• Wide area file services• WAN Bandwidth Management• URL Filtering/content management• IP PBX/PSTN Gateway• Network access control/computer quarantine• Intrusion detection/prevention• Messaging Security• Authorization/authentication• Anti-virus/spyware
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What platforms do customers want a VPN to run on?
16%
43%6%
25%
10%General purposeserver
Purpose builtappliance
Blade in blade server
LAN Switch or router
Managed Service
Q14. I am going to read a list of applications, and I would like you to indicate your preference of five platforms for that specific application. You can select more than one platform for each application. In other words, on which platform would you like … to reside?
Source: IDC Next Generation Network and Security Special Study, May 2006 N=411
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COTs Modularity:Breaking Networking into
IT-sized Chunks
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Shifts in Interdependency and Modularity Has a Long IT History
Equipment
Materials
Components
Product design
Operating system
Applications software
Sales & distribution
Field service
Intel, Micron, Quantum, Komag, etc.
Compaq, Dell, Gateway, Packard Bell
Microsoft
Word Perfect, Lotus, Borland
CompUSA
Independent contractors
Microsoft
1960–1980 1980–1990 1990–Present
Dell
IBM
Co
ntr
ol D
ata
Dig
ital E
qui
pm
ent
Monsanto, Sumitomo Metals, Shipley, etc.
Teradyne, Nikon, Canon, Applied Materials, Millipore, etc.
Assembly Compaq Contract Assemblers
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What will networking look like?
Equipment
Materials
Components
Hardware design
Operating system
Applications software
Sales & distribution
Field service
1990–Present
Assembly
Usual Suspects
Usual Suspects
The Future
3C
om
, Cis
co, N
ort
elAtheros, Broadcom, Intel, Marvel, ??
Contract Assemblers
Accenture, IBM, EDS, VARs, SIs
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Accenture, IBM, EDS, VARs, SIs
Atheros, Broadcom, Intel, Marvel, ??
What will networking look like?
Equipment
Materials
Components
Hardware design
Operating system
Applications software
Sales & distribution
Field service
1990–Present
Assembly3
Co
m, C
isco
, No
rtel
Intoto? Nexthop? Level 7? Symbol?
Linux?, IOS? JUNOS? Others?
Cisco? Extreme? IBM BladeCenter? Bivio?
Contract Assemblers
Usual Suspects
Usual Suspects
3Com? Adtran? Cisco? Procurve?
The Future
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Example: Intoto Ecosystem
Source: Intoto
OS Vendors(BSP integration)
SnapGear
3rd-Party Apps
Antivirus
Antispam
Content filtering
WLAN autoconfig.
Hardware ODM
Semiconductor Vendors (Chip integration)
Service Providers (Provisioning and certifications)
3rd-Party Certification Consortiums(Industry Standard Certifications)
End-user Product(OEM Branding + Channel + Support)Networking OEM
Hardware ODMHardware Platform
(CPU/NP, coprocessors, PCBA, OS, and BSP)
Production-ready Security Gateway Platform
(Intoto Network-centric Security Gateway Platform Software + Integration + Certifications)
Software ODM
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Modularity in Networking: New Market Disruption
Example: Netgear
Buy code from third parties
Off-the-shelf silicon
Off-the-shelf operating systems
Integrate software and hardware
ODM manufacturing
Consumer & SMB Focus
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Low-End Disruption
Target over-served customers
with lower-cost business model
Performance
Time
Sustaining Innovation
Bring better products into
established markets
Three Strategies for Market Disruption
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Non-consumers orNon-consuming
occasionsTime
Different Performance
Measure
Low-End Disruption
Target over-served customers
with lower-cost business model
Performance
Time
Sustaining Innovation
Bring better products into
established markets
New Market Disruption
Compete against
non-consumption
Three Strategies for Creating Growth
New Market Space: Consumer & Security Products
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Long-term Outlook for Network COTs Modularity
Traditionalnetwork
R&D
OSASICs
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Long-term Outlook for Network COTs Modularity
COTS model matures in consumer and SMB markets
TraditionalNEM R&D
ModularNEM R&D
OSASICs
IntegrationUsabilityPartners
Specialists
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3 Notes on Market Disruptions
Disruptions in networking take a long time (10+ Years) Disruptive businesses are often lower margin than
incumbents COTS model comes with risk that incumbent and new
entrants fail
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Networking Vendors:Where Are They Headed?
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Start-ups
Airspace, Andiamo (both acquired by Cisco,) Aruba, NetDevices, Trapeze, many others
Develop on Linux
Off-the-shelf silicon
Consolidate Apps Functions Services
©IDC, 2006
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Disruptors
Adtran, Dell, D-Link, Huawei?, F5, Linksys (Acquired by Cisco), Netgear, ZTE?
Off the shelf silicon (Broadcom, Intel, Marvel, etc)
Network device software Intoto, Level 7, Nexthop
Customer-defined controls (F5)
OS: Windriver, Linux, other COTS OS
©IDC, 2006
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Challengers
3Com, Enterasys, Extreme, Foundry, Juniper, Nortel, Procurve
Mix of custom ASICs and COTS silicon
OEM or partner with specialists for security, voice, WLAN
Open APIs to internal developers and/or partners
Modular operating systems
©IDC, 2006
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Modularity in Networking: Cisco’s Opportunity & Threat
Integration is a key value proposition for voice, security, and mobility
Little to no incentive to buy COTs
IOS is now “internally modular”
Will Cisco’s ability to add, consolidate, and simplify new features or even acquire and integrate become too slow?
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Cisco
IIN: Intelligent Information Networking
Technologies that produce a better network
SONA: Services Oriented Network Architecture
An architecture and technology set that should enable customers to virtualize and consolidate a set of infrastructure services across an enterprise.
The benefit of this consistency will be to helping other parts of IT gain efficiencies and increase the network’s share of total IT spend.
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Guidance For Vendors
1. The enterprise network market continues to grow, with new access, WAN, and applications driving demand for new functions, scale, and manageability
2. COTs does not equal commodization of network equipment in the enterprise.
3. Enterprise equipment vendors need to use COTs in order to shift and prioritize R&D, not to cut R&D spend
4. There is resistance to network service integration INTO network equipment, but demand for integration with in the near term WITH network equipment