There are more indications this week of a sea change in networking that goes beyond the simple question of whether you switch or route or whose boxes you use. One data point comes from a Credit Suisse story and the other from a Cisco rumor.
Credit Suisse is saying good things about Ciena, a company who’s been stuck in low gear for as long as I can remember. They’re “bucking the trend”, says the analyst, but that’s probably the one statement that’s out of whack in the whole report. It’s not that Ciena is bucking the trend, which in this case is the trend toward lower capex, it’s that it’s on the cusp of the new trend. Hold that thought till I get through the next data point, though.
Point number two is that Cisco is rumored to be launching another incubated startup, this one in the SDN space, and with some of the same players that were involved in one of the prior one according to some insiders. The new space is SDN, which means OpenFlow. Cisco has been fairly articulate in support of the new explicit-switching notion, going further than the reluctant-acquiescence response of many other switch/router players. SDN is a new notion of data movement by permission, a contrast to the open Internet connection model.
What’s common here? It’s not technology as much as drivers for the changes. What we’re seeing is a remaking of the Internet model, created by the sum of the modern forces of iPhones and iPads and Facebook and Twitter and Google and Netflix and LTE and more. The old Internet relied on creating a community that was reachable only with universal connectivity. The new Internet recognizes that however much freedom you offer in connective choice, the user is going to spend most of their time on a few sites doing a few things, and that the thing that will have the most traffic impact is content.
The shift to CDN and cloud is inevitable given the direction of services online, and CDNs and clouds mean a service network with a sharp boundary, an “interior” where you have a few high-powered valuable connections, and an “exterior” where you have conventional Internet addressing. Like it or not, vendors, this is how the network of the future will be built. The architecture means you don’t need big routers, just big on-ramps (Ericsson’s SSR comes to mind) and fat pipes inside to coordinate service traffic among a small number of supersites. It’s a perfect model for an optical network and SDN. You can see why Ciena (optical pipe player) and a Cisco SDN incubator (holds a place for Cisco without making it look like routing is throwing in the towel) are important.
Ciena has a potential advantage here. Raw optics isn’t the solution either. They have the potential advantage of moving from the space with the lowest margins into a higher-margin space, no matter where they move. It’s Ciena who should be doing OpenFlow, and not just in partnership with universities and science projects! Listen up there, guys. The low-margin space for them is the high ground for you, so don’t give it up.