Most of our discussions of the competitive landscape in networking involve the larger firms; Alcatel-Lucent, Cisco, Ericsson, Huawei, Juniper, and NSN. While it’s true these firms have the most influence and the greatest resources, they also have a powerful incentive to take root in the current market and become trees. Mammals may be smaller, but mobility makes them more interesting, and in market terms the wolves of the SDN/NFV revolution might well be the smaller more agile firms.
One such company is Brocade, who transformed itself from a storage network vendor to a broader-based network vendor with the Foundry acquisition. More recently Brocade acquired the Vyatta soft switch and router, and it’s here that they became interesting from the perspective of SDN and NFV. They’re a big player in OpenDaylight in the SDN space, and last year they took a data-center-centric vision of NFV on the road and got surprising carrier traction.
What Brocade said was essentially what enterprises already know; the network in an IT-dominated world starts with and orbits around the data center. You have to architect the data center to build the network of the future. What you host service features in for NFV, make money with in cloud computing, is data center equipment married effectively to networking. It’s all true of course, and it was a very different story than operators were hearing from the Big Six. But Brocade wasn’t able to turn the story into actionable insights and they lost the strategic influence they’d gained with their story. Now they want it back, and their earnings call yesterday gives us a chance to see what they think might work, and gives me a chance to express what I think about their approach.
Brocade saw an uptick in both SAN and WAN—five and nine percent sequentially, respectively. On the call, they reiterated their key point—it’s about the data center—and augmented it by saying that the industry transformation now underway favored them. That’s certainly true, and validated by the strategic influence uptick they had last year just by taking their story out to carrier executives. They can get in to see the big guys, and tell a story there, which is important.
They also made a point about software networking, which is absolutely key. The SDN and NFV revolutions are dilutive to the network equipment providers, and so there’s little incentive for them to drive things in a software direction. Yet software is where we need to go. The best strategy for a little guy against a giant is to lay a trap, which in this case is to accentuate the aspect of the revolutionary future that large players will be most uncomfortable with. Your hope is to get them to pooh-pooh the thing that’s really important, because for them it’s really inconvenient.
Brocade thinks this formula is going to work, and they’re forecasting IP growth of 6-15% q/q. That’s growth any of the Big Six would kill for even at the low end. A big part of their gains are going to come from their marriage of Ethernet fabric and software—from SDN—and that’s an area where Brocade management specifically feels that they’ve got an agility edge over the incumbents. They mention SDN and most significantly NFV on their call—they talked more about it than any of their larger competitors in fact. There is absolutely no question that Brocade thinks the network revolutions of our time are their big opportunity.
So where are the issues? First, I’d have to point out that Brocade got a big pop in credibility last spring when their data-center-centric NFV story hit. The problem was that they’d lost virtually all of it by the fall, and the reason was that they couldn’t carry the story forward in enough detail. In the fall, operators said that they thought Brocade had the right idea but didn’t have a complete NFV solution baked yet. They still felt that way this spring, despite the fact that Brocade plays in some of the NFV proof-of-concepts. Thus, operators are on the fence with respect to whether Brocade is a wolf in my forest of competitor trees, or just crying wolf.
There’s some justification for that. Brocade tends to position their Vyatta stuff as “NFV” when in fact it’s a prospective virtual function in the big NFV picture. Where does that picture come from, if Brocade isn’t yet articulating it? If the answer is “one of the Big Six” then Brocade is setting itself up to be a small follower to a giant leader. If one of the major firms can drive NFV, why would they leave any spot for Brocade? Not to mention the fact that the whole premise here is that those firms won’t drive it because it undermines their revenue base. But if neither Brocade nor the Big Six offer the NFV solution architecture, Brocade is depending on an outside vendor like an IT giant to set the stage for it.
Might HP, or Oracle, or IBM, or Intel field the total NFV architecture of the future? Sure, but in their own sweet time. So here’s my view; Brocade has de-positioned its competitors but now it has to position itself and its allies. A smart move at this point would be to lay out the right NFV architecture, address the questions, and assign the major roles to friendly players. If Brocade could do that it could accomplish two critical things.
Thing One would be that it could help drive a business case for NFV. Operators today, at the executive level, tell me that they are working to prove NFV technology but their trials are not yet comprehensive enough to prove a business case. That’s because their scope is too limited—service agility and operations efficiency are secured meaningfully only if you can span the network, not just a tiny hosted piece of it. If Brocade can advance NFV, their victory in positioning there could be meaningful. Otherwise they’re playing checkers with the Big Six.
Thing Two is that it could make them a kind of “fair broker of NFV”, a player who is seen as understanding the process well enough to fit the pieces together in the right way. That they have a nice big piece themselves only proves they have some skin in the game.
So that’s where things stand with Brocade, as we head into a critical period. Operators tend to do strategic technology planning for the coming year in the September-November period. This would be a good time for Brocade not to just stand, but to stand tall.