Who Wins, and Loses, in Open-Model Networking

Open feature software and hardware platforms for devices could revolutionize networking, at many levels.  I blogged about the service impacts earlier, so now it’s time to look at what could happen to the industry overall.  I think everyone understands that the changes would be radical, but not universal.  Even in the vendor space, there could be some winners, even spectacular winners.

Industry leader Cisco has already responded to the open-device threat, promising to make at least some network functionality available by hosting a version of its IOS software on open platforms.  This seems to be a classic incumbent response to things like AT&T’s dNOS (now under the Linux Foundation) and the ONF’s Stratum, meaning that it goes part-way toward creating a commercial alternative to an open framework, but not quite enough to be fully disruptive to Cisco’s business.

The Stratum approach to open network software seems to me to be the most organized.  You have a series of hardware-function abstractions that are mapped, via plugins, to specific hardware implementation.  The software, which is based on the P4 packet processing language, is run on top of that, so device features are customized at the software level while all potential hardware benefits are exploited below.  This seems to be the logical, best, way to approach the problem.  However, it’s also the most disruptive.

The Stratum approach opens the widest possible door for open network devices, so of course it poses the greatest threat to vendors like Cisco.  First, open hardware that’s effectively supported could by itself cut profits by about 25% if all Cisco’s hardware business were impacted.  Then there’s the fact that the IOS software would have to compete with an open community whose products had lower cost and a whole host of feature developers working to enhance it.

Am I then advocating “Open IOS?”  Not hardly, at least not at this point.  Such a move by Cisco would immediately validate a shift to open technology that, as I said in a prior blog, has yet to find its optimum justification path.  Why, if you’re worried about losing revenues/profits to an open platform, make such a platform inevitable?

If you’re not an incumbent router/switch giant like Cisco is, though, such a move would be very smart.  Dell EMC and Metaswitch have joined to offer a “composable network” framework that is very similar conceptually to the Stratum model or dNOS.  Their material shows the Cisco approach of “disaggregation” or separation of hardware/software, as being an intermediate step to the happy future of full openness, characterized by the ability to interchange elements of the network software stack from top to bottom, and also leverage silicon advances.  The software runs on OPX-compatible switch hardware, including the Dell S and Z series.

The duality of the disaggregated and composable options is the focus of the current tension in adoption.  Cisco’s approach says “Hey, you know our stuff and you have a ton of our gear in your networks already.  You know you can’t fork-lift all that undepreciated stuff, so why not let us give you something that makes that unnecessary?”  The Metaswitch and Stratum/dNOS approach still has to address that problem of near-term displacement, so Cisco could in theory gain traction for its disaggregation model before any more convulsive approach gets anywhere.

As I said in an earlier blog, the challenge is that you can’t realize capex reduction through premature displacement.  A tossed switch that’s not written down costs more than the purchase price of the replacement, and that additional cost would have to be covered by something else.  Future service benefits aren’t currently credible according to operators, so the only pathway is opex reduction.  While it is true that open, composable, devices could be managed more efficiently than devices are managed today, what we’ve seen so far in service lifecycle automation has focused on managing “virtual routers” that are mapped to the same management techniques as the real ones.  Thus, any improvements in opex efficiency would be just as available to legacy networks.

Intel/Wind River may be coming at the issue from another angle.  They’ve announced that they’re contributing portions of the Wind River Titanium Cloud software, parts relating to edge computing to the “Akraino Edge Stack, the open source community creating an open source software stack that supports high-availability cloud services optimized for edge computing systems and applications. These contributions supplement AT&T code designed for carrier-scale edge computing applications running in virtual machines and containers to support reliability and performance requirements.”  If I’m right about “overlay services” being the easy pathway to future new services, and if the most obvious place to look for displacement opportunities is the edge of the network where the most devices are, then this deal might be able to frame those future overlay services as cloud-edge services not network services.

Microsoft has also just told its employees that it’s forming new development teams and realigning efforts to focus more on intelligent cloud and edge, which includes AI and edge computing.  This is a clear indicator that IT companies, both software and hardware, are going to look a lot more closely into edge computing and the use of “intelligence” as a service, which again suggests that many of the new overlay service opportunities will be addressed from the cloud and IT side.

It seems to me that this combination of happenings proves two things.  First, any near-term success for an open model for networking is going to depend on minimizing displacement risk.  That means that you either have to focus on spots where there’s little or nothing to displace (AT&T’s 5G edge, or the network edge in general), or you have to cover the cost with benefits.  Second, we don’t have any clear pathway to realizing those covering benefits so far.  We still don’t know how to manage complex distributed systems cooperating to create services.

This opens the “competitive point” in our discussion.  If incumbents like Cisco want to minimize the damage to their bottom line, they will need to frame highly efficient zero-touch automation of the full-stack service lifecycle, and do it in a way that fully leverages legacy devices.  That would radically reduce the risk that an open-model device could include management features that would tap that opex reduction benefit in new ways.  On the opposite side, if Metaswitch/Dell EMC and Intel/Wind River want to foment a revolution, they need to build an open management strategy that’s stellar in its efficiency, and incorporate it with great fanfare into their tools.  That would as much as triple the number of devices that could be targeted for replacement by open nodes in the next three years.

Nobody survives as long as Cisco has by being stupid, but IBM juggled the present and future successfully for a longer period by far, and IBM seems to have slipped up in managing the current virtualization-and-cloud shift.  Cisco could mess up in facing the current open-device challenge.  That’s particularly true given that Cisco tends to spread a soothing oil of positioning over a troubled market, relying on the fact that it’s a leader in networking to protect itself until change is inescapable.  This has been called the “fast-follower” strategy, and this time it poses a risk of being a “first-left-behind” strategy instead.  Some very big players are already moving.

Who might win, then?  In a period of market convulsion, winners are often selected by serendipity.  There are always avenues of change that pan out faster, pay off better, than average.  Some smaller companies will be accidentally positioned in one such niche, and a smaller number may see the opportunities in advance and get positioned.  For mid-tier vendors, this figure-it-out-first approach could be particularly rewarding because they have some market credibility to leverage.  Smaller players will need to position with great verve and flair and aim to be acquired by companies like Cisco when the opportunities become clear.

One candidate group of smaller players is the SD-WAN vendors.  Most of them realize by now that overlay services are the game, not simply extending VPNs beyond MPLS.  Most have also realized that hosted functionality is better than fixed appliances, because they have to embrace putting SD-WAN endpoints in the cloud.  Thus, they have all the pieces needed, technically speaking, to address the opportunity.

The problem this group faces is their VCs.  The litany of “laser focus” that I’ve heard from VCs for decades hasn’t changed in modern times, and it reflects the notion that you toss ten million or so at somebody and see if they get traction.  If not, you let them die.  There have been some M&A deals in the space, which may induce the VCs with remaining companies to stay the traditional, narrow, course.

Another candidate is the SDN players, but in my view they have more baggage to contend with.  Yes, they typically have more backing (those who have survived), but the fact is that the open movement is an impediment to early SDN adoption, or broader adoption.  If you can make legacy routing and switching open, why test out totally new centrally controlled paradigms?

Specialty startups focusing on open-model networking seem unlikely at this point; it’s hard to raise money to promote commoditization.  Other players, especially those in the SD-WAN space and some SDN players, could jump on this, and of course hardware vendors might focus on building the appliances and supplying supported but open software.  The big players?  They’ll likely wait till something really gets going, then buy the startups.  That will give them technology options, but for their business model, there’s no stopping the open movement now.