Can Second-Tier Network Vendors Win in NGN?

You generally find revolutionaries in coffee shops, not gourmet dining rooms or private clubs.  In the race for the right to shape the network of the future, the equivalent of a coffee shop is “second-tier” status.  You can see the candy through the window (to mix a metaphor) but can’t quite get at it—unless you break the window.  Brocade, Extreme, Juniper, and Overture are examples of this group, with Brocade and Juniper “logical contenders” and Extreme and Overture examples of possible upsets.

All of these players are squarely in that L2/L3 network space that, under my NGN model, is a prime target to get virtualized out of existence.  On the one hand, being virtualized is a bit like being emulsified—you probably would like the result more than the process.  On the other hand, the market leaders would like the process a lot less, which means these second-tier players might have a chance to take a lead in the transformation and gain market share while their bigger rivals are defending the past.

This proposition frames the optimum strategy for the second tier pretty well.  You have to be two things to be an NGN giant starting from the second string.  One is a purveyor of a clear evolutionary strategy, one that gets people committed to you without requiring them to fork-lift all their current gear.  The other is a visionary.  Nobody is going to hop from rock to rock to cross a flood if they don’t have a compelling reason to get to the other side.

If you lined up a table of second-tier players with ticks for points of strength and stake in the outcome, it would be hard to find somebody with more promise than Brocade.  The company is a combination of a data center switching vendor and a virtual router vendor, at a time when data centers are the future of the cloud layer and virtual routing is the future of L2/L3.  They have no major assets they have to protect, so they could mark a lot of others’ territory without stepping in anything unpleasant.  They have good operator engagement in both SDN and NFV, good representation in the standards groups that count, and a new CMO who has a reputation for aggression.  For now, though, the aggression isn’t manifesting as I’d hoped.  Brocade can support the NGN evolution but they don’t have the positioning to drive the engagement.  In a market where operators have to take a significant risk to evolve, you can’t win if you don’t inspire.

Juniper, sadly, looks a lot like the opposite.  They have a fixation for boxes and chips to the point where their CTO wants to talk them up to the Street no matter how convincing the trend toward a software-hosted future might be.  They have an activist investor who wants near-term share appreciation when the first steps of a revolution could put revenues at risk.  They haven’t been a strong marketing company in a decade, they’ve lost a lot of their key people in recent CEO shuffling, and they have never done a good software project or made a stellar acquisition.  But…they have some incredible technical assets, including base architectures that are cloud-, SDN-, and NFV-friendly that emerged before anyone had heard of the concepts.  Strong leadership, strong marketing, and a firm hand with the Street could even now propel these guys into being what they could have been years ago.  But getting those three things may be an insurmountable problem at this point.

So if the kings of the second string aren’t leaping at the throats of the establishment, are there any a bit further back in the pack who might?  Well, imagine Brocade without the virtual router.  You’d have Extreme (sort of, at least).  Extreme was one of the major switching players of the past, left behind as the market giants jumped in with broader portfolios and better account control.  The company’s SDN position is not only data-center-centric it’s cloud-centric for the operators, and they’re not a server/cloud vendor.  It’s also primarily an OpenDaylight positioning.  They have no real NFV position.  All this is bad unless you look at things as a blank slate.  There are plenty of assets out there that could be combined to create something very good, and Extreme has no barriers to picking one up.  And unlike rival-in-the-data-center Arista, Cisco isn’t suing them.

Then we have Overture Networks.  Overture is a very narrow player in networking, a Carrier Ethernet second-tier player in fact.  While they have good carrier engagement and are not strictly a startup, they are a private company not a public one.  Given these points, you could be justified in thinking that Overture has no business in this piece, but you’d be wrong.  Their NFV orchestration approach has always been one of the very strongest in the market, and their understanding of the realities of NFV and SDN in the business service space is similarly strong.  What’s held Overture back, and may still be doing that, is the fact that they’ve been unwilling to leap wholeheartedly into the NGN deep end.  If you sell Carrier Ethernet gear for a living it’s easy to understand why you’d be reluctant to have your sales people out there shilling for total network revolution.  Somebody else would get all the money.  But Overture is very close to being able to make a complete NFV business case, good enough to take most PoCs into a field trial.  If they go the rest of the way….well, you can guess.

You probably see the basic truth of this group at this point—sometimes those with fewer assets fight harder to protect them.  The challenge is that there is zero chance that a second-tier player could follow a market to success; they’d be left in the dust of their bigger rivals.  SDN and NFV leadership aren’t going to be attained by yelling the acronyms out while facing the nearest reporter, not anymore.  Trials are critical now, and you have to be able to present not only real assets but an actual business case to win in 2015.  If you don’t have something fairly progressive already in place at this stage, there is little chance to do that.

To me, Overture is the player to watch in this group.  While I still believe they underplay their own assets, they have assets to play.  There are perhaps two companies that could actually make a business case for NFV at this point, and they’re one of them.  However…they just don’t have a lot of upside unless it’s to get bought.  Carrier Ethernet gear isn’t the big win area for NFV, its servers and perhaps data center switching.  A marriage or merger of Brocade and Overture might be compelling; in fact, the only way that an NGN winner could emerge from this particular segment of the market.