Big firms bet on SDN
Products make managing networks easier
As Superstorm Sandy bore down on the East Coast last year, companies with data centers in its path needed another location fast. But moving computerservers is tricky, and usually planned over days or weeks.
Enter a new technology: software- defi ned networking, or SDN. Such urgent data moves could now be done within a few hours.
Investors, including some of the world’s biggest technology companies, are buying into the start ups behind SDN, a technology that allows users to substitute some of the most complex hardware functions in server switches with software.
SDN is still relatively small, generating around $ 300 million in annual business in a $ 30 billion networking industry. Customers are not yet sure how to make the most of its flexibility.
But established operators such as IBM, Cisco Systems and Microsoft are starting to pursue a technology that market research fi rm IDC says could generate annual revenue of $ 3.7 billion within just three years.
Palo Alto cloud- software maker VMware made its move last July, snapping up Nicira for $ 1.05 billion. Silicon Valley powerhouses Cisco, Oracle and Juniper Networks have also bought SDN companies in the last year.
Private- equity fi rms have backed companies such as Embrane and Plexxi, while Intel and Goldman Sachs have invested in Big Switch Networks.
SDNallows the control functions of data- center switches to be run separately from the servers they manage, allowing much more fl exibility in the control of networks.
“For 30 years we’ve sold the physical box and the software, and the vendors don’t allow you to buy one without the other,” said John Vrionis, partner at venture capital firm Lightspeed Venture Partners, which is backing Embrane and Plexxi and is a former investor in Nicira.
With SDN only coming of age in the last two to three years, standards vary between vendors, holding back large customers who don’t want to be tied to one supplier. But the entry of the big players has brought a determined drive for a common standard.
Cisco is most tied to hardware networking equipment, putting its business most at risk from SDN, but analysts say it is keen to dominate this technology, too.
“There will be other vendors, but I think Cisco will be the main benefi - ciary for the next couple of years,” said Justin White, an investment analyst at T. Rowe Price. The fi rm is Cisco’s sixth- largest shareholder.
“For enterprises, the most logical approach is probably to stick with someone like Cisco.”
SDN is expected to allow companies to build networks that need less human intervention and are easier to modify and update.
“People want to automate their solutions,” said Lauren Cooney, Cisco’s senior director of software strategy. “They want to automate the ability to create, for example, policy for different sets of users so that they don’t have to go back in and be running around and setting that manually.”