Who’d have thought that Google and Facebook and Netflix might be the face of competition for network vendors? Well, it’s happening, and while the risk isn’t acute at this point for reasons I’ll get into, the actions of these three OTT giants is a symptom of the issues that face networking and network equipment.
Google and Facebook are getting more into the network switch business. Google’s use of OpenFlow and custom hardware to enhance its network core is pretty well-known, and they’re probably a poster child for SDN in an IP core. The technology Google has used, at the software level at least, is pretty generally available and so in theory anyone could run out and adopt it. Their custom hardware isn’t (obviously) off the shelf, but it’s a harbinger of what’s coming down the line in generic switch technology. Add some open software to cheap hardware and you get a network.
Facebook’s plan is to build custom data center switching, also based on open-source technology. The concept is an offshoot of Facebook’s Open Compute Project, and it’s goal is to create a fabric switch that would flatten large data centers. Behind Facebook’s efforts is a shift in traffic patterns; social networks are an example of modern applications that have more inter-process communication than user-to-process communication. If everything is moving in that direction (which I think is likely) then could Facebook be building the model of future data center networks?
Netflix’s idea is to build their own cache point, a mechanism to make it cheaper to deliver quality video to their customers. Content delivery networks are typically built from fairly expensive purpose-built gear, or by tweaking general-purpose hardware, both of which are too expensive from Netflix’s perspective. So they’re rolling their own stuff, creating content cashing in the midst of a market that has many CDN providers and many CDN products.
So OTTs, like network operators, are looking to do networking on the cheap. Behind all of this is a simple truth; networking is under crushing cost pressure, and there is nothing likely to change this picture any time soon, in fact, never. Improved chip design, a more software-centric product framework, and better tools are allowing at least some network users to become their own vendors, to squeeze out a bit more margin. You might wonder whether do-it-yourself networking is going to take over the world and sweep the tech giants out of the game.
Not likely, particularly in the near term. The fact is that even though concepts of open design for servers have been around for several years, we’re not seeing open servers being cobbled together by your average (or even above-average) enterprise. Being a vendor isn’t all that easy, and the giant OTTs have an opportunity to play in that game largely because they are giants. For the masses, do-it-yourself isn’t an option. Even the giants aren’t necessarily going to have an easy time of it.
I’ve watched three standards groups struggle to define a new network model that’s more software-driven, and thus less expensive. None of them have found it an easy job, and arguably the first two have already failed at it. Here’s a mass activity, well supported, and yet unable to take the steps needed to break free of what they believe is a restrictive model (and market). So what’s the chance that individual users, even individual carriers, could carry off a self-help network transformation? Then there’s “who supports it?” Look at Linux. We have what is absolutely the key operating system of our time, and it’s open source—free. Yet when we ask businesses how they want to use Linux, over four out of five say that they want it from a source that will offer support. Red Hat is “Linux” to more companies than Linus Torvalds is; in fact nearly all Linux users know who Red Hat is and less than half know its inventor. And when you ask businesses whether they’d be comfortable with white-box, open-source, networks, guess what they say? No not yet.
OK, you say, we’ll get everything from inventive startups who will reshape the network landscape by creating something based on those white boxes and open tools, right? Ask VCs first whether they really want to fund a networking startup, second whether they’d do one with a broad general product mission, and third whether they’d accept something that was based on off-the-shelf commodity stuff that anyone else could assemble as easily as their startup could. You know where that one will go!
So just what’s going to come out of these Google, Facebook, and Netflix efforts? Nothing, you might think after reading my points here. But like the network operators’ NFV initiative, the OTT’s do-it-yourself craze is a message to vendors. Big buyers are not seeing feature value commensurate with price levels. They either want a lot more useful stuff or they want regular stuff a lot cheaper. That alone will have a major impact on markets, particularly since arch-price-leader Huawei is determined to provide both features and value at the same time.
I think that the do-it-yourself network trend is just another factor to hit vendors with lower margins unless they can do something truly innovative. The challenge for them in doing that is that we’ve spent about a decade and a half at this point winnowing innovation out of the industry in favor of aggressive cost control. Clearly software, computing, and the architecture that binds them into a unified fabric of services is the right answer for networking. We’re also at the point where tools are indeed facilitating self-help, maybe not for everyone but for the big buyers. There’s no question that change is on the way. Whether it will come by having major vendors accommodate commoditization, by Huawei driving everyone out, or by big players rolling their own networks and leaving “consumer networks” the only mass market, is too early so say.