If you review all of the industry news of the last week looking for “secret trends”, it’s hard to avoid the conclusion that a lot of the longer-term trends that everyone has ignored for almost a decade are now coming home to roost. As a result, we may in fact be in for some changes that could actually end up creating a viable SDN story—somewhere.
The Street consensus on the industry for 2014 isn’t exactly rosy. Generally, they believe that the only areas of network spending that will be strong are wireless RAN and the data center. The first of these traditionally benefits only a few vendors and the latter is historically the lowest-margin piece of all of networking, and also an area where SDN competition could be stronger and come on faster.
There could be worse news down the line, because both of these areas are susceptible to further commoditization from a price leader like Huawei. We see Huawei’s influence in wireless exploding (everywhere but the US), and that means that even a build-out of wireless will likely not generate a lot of extra profit for any of the major players. On the data center side it’s a little more complicated but the result is the same. Granted, Huawei is not a player in the enterprise space within the US today, but this is where something like SDN could come along. SDN could encourage somebody to become a white-box data center player.
Somebody like IBM, for example. IBM exited the network business long ago, selling its assets to Cisco in fact. Then over time they got back in through OEM deals. Today, it’s pretty clear that IBM has to do something more strategic and ecosystemic to rebuild its image. IBM has lost a lot of strategic influence over the last decade, and that’s especially bad given that this was the decade when buyers were faced with massive changes and challenges and wanted help from trusted partners more than ever. The Street thinks that IBM’s conservative strategy for building up earnings and sustaining its share price isn’t going to work (in fact, isn’t working even now) and that they’ll have to start getting more into something like “the cloud”.
IaaS is a waste of time, though; the margins there are already thin and will only get worse, which means that IBM would have to do two things. First, they’d have to offer a kind of “cloud-in-a-box” strategy that would necessarily get them more involved in data center networking, and second they’d have to do some M&A to build up platform services that would add software features to IaaS. I think that the logical way to approach both is to consider a radical commitment to Open Daylight.
Nobody makes money selling open source, so there has to be ecosystemic value in promoting it. So far, IBM’s commitment to Open Daylight has been confined to stamping the logo here and there and perhaps funding some developers. IBM needs to productize it because Open Daylight could offer IBM two critical assets; a data center story that hurts its competitors and helps IBM, and a platform services story.
If IBM promoted a strong central control story based on Open Daylight and targeting the data center, they would have the option of then actually generating white-box products there, OEMing them from smaller players, or simply promoting a white-box data center ecosystem built around the IBM/Open Daylight brand. Any of these options would seriously impact the revenues and profits of rivals like Cisco and Juniper, and since IBM isn’t directly in the networking business they’d not impact IBM in any negative way. On the positive side, it would give IBM a strong SDN-based product position.
Which would help the platform-services point. IBM has a ton of software and software skills, and it would be very easy for IBM to build up an Amazon-like web-services expansion to the basic IaaS cloud based on those assets. That would not only give IBM a specific and differentiated cloud tool offering, it would be the basis for a public cloud service offering that could sustain better margins.
All of this might be a factor behind a story that Network World ran last week regarding Juniper. Juniper has its own OpenFlow controller in Contrail (which has both a proprietary and open-source version) and recently there have been a number of high-profile defections from Juniper’s Open Daylight team. Could it be that Juniper wants IBM to push Contrail instead of Open Daylight (no chance of that, in my view), or could it be that suddenly Open Daylight people have improved opportunities elsewhere because something big is about to happen in Open Daylight that Contrail/Juniper isn’t going to match?
I know that there’s a lot of cynicism about Open Daylight given that IBM and Cisco are primary backers, but it’s my view that the project is doing more useful stuff in the SDN space than anything else, including the ONF. Specifications are simply not going to move the ball fast enough in today’s world—not for SDN, not for NFV, not for the cloud. You need implementation and Open Daylight is creating a community that is building stuff north of OpenFlow where everything valuable absolutely has to live, or it’s not going to live at all.
But Open Daylight poses a problem too, because these ecosystems tend to have support to the extent that they’re not perceived as being the purview of major vendors like IBM. If IBM makes a grab to brand Open Daylight they’d certainly start losing support of others, or they might see Cisco fighting with them for control. So that raises yet another possibility, which is that Juniper might see this as an opportunity for itself. If Open Daylight is pulled in a dozen directions and fractured by internal discord, might Contrail take hold?
No, not directly. This isn’t about OpenFlow at all, it’s about whatever is above it. To make any SDN strategy a success you need a specific notion of higher-layer services and how you’ll build them. If IBM can offer that they can win an Open Daylight branding war with Cisco or anyone else. If Juniper can provide that critical notion, they could make Contrail a contender. Right now, neither of the two companies is on a winning streak in positioning terms. Neither is the other Open Daylight giant, Cisco. Who will come out of the funk first? That’s the question.