Lessons of the Fallen?

One of the most fascinating and frankly frustrating things about our networking industry is the fact that companies often get a truly great insight, lead the market in introducing it and even productizing it, and then let it languish while the rest of the industry moves the concept forward.  There’s nothing harder to take than a failure that didn’t have to happen, and there are just so darn many of them…with more to come.

One example of this is Verivue, a CDN provider who was perhaps one of the pioneers in developing a CDN solution that was orchestrable and cloud-ready.  For a good solid year and a half, they had what I’d judged to be the best CDN technology out there (we ran a feature on this in our tech journal Netwatcher last year).  Now, we’ve just heard that network operators want “Network Functions Virtualization”, which is the componentization and hosting of network features in the cloud.  And guess what?  CDNs are one of their primary targets!  So what happens?  Verivue, almost coincident with the NFV announcement, gets sold to Akamai for a sum the latter described as “inconsequential to our bottom line”.

Another example is Sycamore, a company who emerged in the height of the dot-com bubble and was a high flyer in networking.  Sycamore raised a ton of cash in the optical/DWDM space.  They had good people, good technology, and they were at the very edge of the space where the merger of optics and modern technology innovations like SDN were preparing to revolutionize the market and potentially drive their opportunity through the roof.  So what do they do?  Liquidate.

What, you might ask, are the common themes of these needless failures?  In my view, the primary problem for both was myopia.  A focus on the sale of the moment blinds you to the opportunities of the future.  Not that you can’t focus on sales; the key is to make sure that your sales people are doing sales and everyone else is doing product and strategic planning.  I think the proof of this thesis is that in both the companies I’ve cited, the signals of market change were very clear (I was writing about them for a full year, for example) by the time the die was cast and yet they didn’t even make an attempt to position for these trends.  They never saw them, not really, because they had their eyes to the pavement and the feet of salespeople.

Every one of the current network vendors has their own demons to fight in this space.  Alcatel-Lucent has yet to articulate an SDN strategy when the company’s lack of servers makes it critical they build a bridge with software between network and cloud.  Cisco has said the vows with SDN while crossing its fingers at the alter, and yet if it wants to transform itself from being a network device vendor to something bigger, the transformation has to pass through the network/IT boundary that SDN defines.  Ericsson has the best SDN story of the major vendors, but despite repeated attempts to get details on it they still won’t provide a slide deck to describe it.  HP is the most logical cloud giant in all the market, with network devices, servers, and software, but instead of leading in SDN they wait till October of this year to announce something, and then do a total me-too.  Juniper was the first vendor to talk about the cloud officially, the first vendor to do an NFV offload of network functionality, and has done nothing to develop either asset…I could go on.

I probably will, but not in this blog.  We are going to see some business transformations in networking driven by the same changes that could have empowered Sycamore and Verivue and didn’t.  Those changes are going to drive M&A, even business failures…again.  It will be unnecessary…again.  So to the media that is asking whether SDN is a threat to Cisco or some other vendor, I ask the counter-question.  Are they a threat to themselves?  Market conditions are as they are; they create problems or opportunities for firms according to the firms’ own measure of themselves.

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