Software-Defined Networking Will Change the Data Center Network Vendor Landscape

26 November 2013 ID:G00255768
Analyst(s): Evan Zeng, Joe Skorupa

VIEW SUMMARY

Adoption of software-defined networking will spark a new race among traditional and new data center networking vendors with a reorganization of the supply side, creating competition and opportunities for all vendors.

Overview

Impacts

  • SDN will simplify network device development, enabling new competition and disrupting the existing market landscape.
  • SDN will force traditional networking vendors to migrate from proprietary-coupled hardware and software designs to open-standard designs to shorten the innovation cycle.
  • SDN combined with standardized open interfaces will further enable best-of-breed offerings for networking hardware, software and services, as well as will create an environment for innovation.

Recommendations

  • Work on building an ecosystem that offers capabilities to enhance the solution and demonstrate a level of openness.
  • Begin to unbundle software with hardware whenever feasible to expose software values, including support of your software on third-party provided hardware.
  • Leverage new open-standard development groups, interoperability consortia and speaking opportunities to drive industry perception that you are at the forefront of new technology and solutions.
  • Create SDN-based applications that work across multiple vendors' physical infrastructure to demonstrate the value of an SDN-based ecosystem, and heavily promote your SDN certification program that recognizes your competitors' networking certifications. The key to success will be to help create and foster a broad, open, multivendor ecosystem that allows continued innovation, as well as different solutions and business models, to flourish.

Analysis

Our research "Ending The Confusion About Software-Defined Networking: A Taxonomy" defines software-defined networking (SDN) as a new approach to designing, building and operating a network. SDN has the following key characteristics:

  • The control plane is decoupled from the data plane and is logically centralized in an SDN controller to provide a single abstracted view of the underlying network topology and its state. This controller may be deployed as a cluster for high availability and scalability and, over time, eastbound and westbound APIs will emerge that enable multicontroller federation.
  • Communication between network devices and the SDN controller (the southbound interface) use communication protocols that may be open, such as OpenFlow, or may be proprietary. Open, standards-based protocols allow for multivendor interoperability and increase choice and competition, while reducing the threat of lock-in.
  • The SDN controller will support an open interface to allow external programmability of the environment for automation, control and feature enhancement (the northbound APIs).
Figure 1. Impacts and Top Recommendations for SDN Networking Market Players
Figure 1.Impacts and Top Recommendations for SDN Networking Market Players

Source: Gartner (November 2013)

Figure 2. SDN Architecture
Figure 2.SDN Architecture

FW = firewall; IDS = intrusion detection system; IPS = intrusion protection system; WAF = Web application firewall

Source: Gartner (November 2013)

This disaggregation of functions enables suppliers to focus on delivering portions of the system that will bring the most value. It also allows buyers to select components that best-suit their needs.

SDN has the potential to drive the networking market into the conditions described in "Tech Go-to-Market: Breaking the Bond Between Software Value and Underlying Hardware Disrupts Long-Standing Sales Motions." This research describes the emergence of three categories of vendors:

  • Large incumbents that need to protect their installed base and high margins (protectors, such as Cisco)
  • Incumbents willing to disrupt a market to gain share (evolutionary disrupters, such as Arista, Brocade, Dell, HP and Juniper)
  • New entrants that will adopt radical new business models to penetrate the market (revolutionary disrupters, such as Big Switch Networks, Intel, Microsoft, original design manufacturer [ODM] switch makers, Pica8 and VMware)

This research will provide guidance based on the model and assumptions presented in the Tech Go-to-Market foundational research.

Impacts and Recommendations

SDN will simplify network device development, enabling new competition and disrupting the existing market landscape

Traditional network devices, including switches, routers and virtual switches, have built-in control, data, management and service planes, relying on conventional Layer 2 or Layer 3 protocols to calculate local routes and manage the distributed network topology. However, SDN makes a dramatic change, replacing that approach by centralizing control, services and management functions into SDN controllers and remaining forwarding functions in devices. This approach introduces the following simplifications in network devices:

  • Pure SDN devices that adopt southbound protocols like OpenFlow and OpenFlow Management and Configuration Protocol (referred to as OF-CONFIG) need to support only lightweight embedded agents, eliminating most control, management and service functions. They have no need to maintain conventional functions like link discovery, route calculation and topology management. They also have no need for databases on services on devices.
  • SDN hybrid devices, like an OpenFlow hybrid switch, support both SDN southbound protocols and conventional device functions. They must keep the control, management and service planes inside devices, but they can reduce to support only the must-needed features, such as Virtual eXtensible LAN (VXLAN) gateway, spanning tree protocol and Multichassis Link Aggregation Group (MC-LAG). Eliminating the unnecessary campus and WAN features greatly reduces the complexity of network device software and improves reliability.

Recommendations:

  • For protectors:
    • Work on building an ecosystem that offers capabilities to enhance the solution and demonstrate a level of openness.
    • Begin to unbundle software with hardware and expose software values while you begin to shift to a new business model. Charge separately for software maintenance, in anticipation of continued pricing pressure on hardware and subscription-based software pricing.
    • Develop a professional services portfolio and certification program for your SDN solutions.
    • Evolve your physical network devices into data center Ethernet fabric, with some end-user benefits offered by SDN, such as single-touch management, programmatic interfaces and zero-touch deployment. Continue to develop further software-based proof points and benefits consistent with SDN enhancements.
  • For evolutionary disruptors:
    • Leverage new open-standard development groups, interoperability consortia and speaking opportunities to drive industry perception that you are at the forefront of new technology and solutions. This will better-enable your sales force to gain access to accounts and increase market awareness.
    • Create SDN-based applications that work across multiple vendors' physical infrastructure to demonstrate the value of an SDN-based ecosystem, and heavily promote your SDN certification program that recognizes your competitors' networking certifications. The key to success will be to help create and foster a broad, open, multivendor ecosystem that allows continued innovation, as well as different solutions and business models, to flourish.
    • Leverage this industry-shifting opportunity to build a footprint based on SDN network devices as a first step into the market. To do this, establish partnerships with (or, possibly, acquire) SDN-focused, software-only providers.
  • For revolutionary disruptors:
    • For software-focused providers, develop partnerships with ODMs or evolutionary disruptors to drive joint value into the market, particularly as hardware-based differentiation diminishes, or as hardware distribution shifts to value-added resellers/value-added distributors.
    • Offer flexible pricing models for software — perpetual license, yearly subscription or monthly lease for high-value capabilities. Consider online (download) trials for high-value software and open source, in addition to support models for baseline capabilities, to grow the market and challenge larger players' business models.
    • Build relationships with channel organizations that focus on design, implementation and customization, while avoiding organizations that depend on hardware margin dollars.

SDN will force traditional networking vendors to migrate from proprietary-coupled hardware and software designs to open-standard designs to shorten the innovation cycle

Traditional networking systems are closed, vertically integrated systems that OEM vendors control by developing all software features and without providing open APIs. Some large OEM networking vendors also develop their own application-specific integrated circuits (ASICs) to add value to their networking systems. In many cases, proprietary protocols and features are used to lock out competitors and to lock in customers.

This has resulted in a market dominated by a few large networking vendors, and among them, Cisco took 56.4% of the data center Ethernet switch port shipment share in 2012 (see "Market Share: Data Center Ethernet Switches, Worldwide, 2012"). Component and ODM vendors have considered the dominant OEMs as their primary customers and have based their designs and components on their need of the OEMs. As a result, the networking industry has been slow to innovate, and end users risk the potential of vendor lock-in due to lack of choice. The fast and open development in the server industry has not happened yet in the networking industry.

Emergence of SDN offers component suppliers and ODMs new routes to market. It also promises to open some traditional networking vendors' proprietary closed approach to design, shortening the product innovation cycle. For example:

  • SDN decouples the hardware and software functions in network devices. Since software functions are no longer tightly integrated with hardware, the SDN market will embrace vendor diversity.
  • Separation of the control plane and data plane in network devices simplifies the software complexity and enables more vendors to enter the network device market. In some cases, hardware will be provided by ODMs, with software coming from a mix of established and emerging suppliers that can provide, for example, SDN controller software, operation software and applications.
  • The northbound APIs in SDN can provide open programmable interfaces for third parties to develop feature sets on top of the network, instead of forcing the market to rely on a few dominant vendors to develop all the feature sets in their systems. Once a small number of standard northbound API sets emerge, it will encourage independent software vendors (ISVs), end users and networking vendors to develop an SDN application and feature sets using standard-base open APIs. The result will reduce innovation complexity and allow vendors to focus on their specialized areas.

Recommendations:

  • For protectors:
    • Position your company as an established leader with the expertise and resources to deliver a graceful migration to SDN, while providing a high degree of investment protection for customers' existing installed base. Focus on automation and agility as the primary benefits of SDN, as they are the easiest to deliver atop conventional network architecture.
    • Develop a plan to eventually open your closed design ecosystems, and enrich them with third-party development capabilities to deliver better customer values by SDN architecture.
  • For evolutionary disruptors:
    • Aggressively support open-source, community-driven innovation by offering free access to interoperability labs, as well as support and maintenance for software and hardware distributions that gain market traction.
    • Aggressively position your footprint into as many ecosystems as possible (such as, VMware NSX and HP App Store), and try to merge these ecosystems to enhance your SDN influence.
  • For revolutionary disruptors:
    • Aggressively support and leverage open-source communities as a route for your go-to-market.
    • Develop your SDN partnership and channel ecosystems to simplify deployment and routes to market.
    • ODM providers should leverage the opening of the SDN market to reposition themselves to provide hardware to large end-user accounts, cloud services providers, distributors and system integrators that have routes to the end-user market.
    • ISVs should develop applications that add value to SDN offerings from providers that are leading the move to SDN. Focus on controllers that offer widely supported APIs when possible.

SDN combined with standardized open interfaces will further enable best-of-breed offerings for networking hardware, software and services, as well as will create an environment for innovation

SDN opens the closed proprietary design approach of networking, enabling new offerings around infrastructure (physical and virtual) controllers, applications, network function virtualization (NFV) and professional services.

There has been much focus on SDN's potential to reshape the network device market (via commodity hardware, virtual switches and external controllers). However, SDN will enable providers to focus on the part of the network stack that will bring the most value. Gartner believes that if an open Android-like ecosystem develops, it will lead to a rich set of value-added applications that can be leveraged in multiple vendors' environments. This will further drive adoption of SDN.

Gartner defines SDN applications as a class of software that communicates with an SDN controller to provide external control or features for an SDN-based network. SDN applications leverage open APIs and enable organizations to add capabilities to the network without relying on the network hardware vendor (see "Hype Cycle for Networking and Communications, 2013").

While network provisioning and management applications, and network service chaining applications (often linked with NFV) are expected to be common, SDN promises to enable heretofore unanticipated applications. For example, wide area path protection, threat detection and redirection, and server-to-end-user automated quality of service for unified communications are being deployed. SDN's abstraction of the underlying infrastructure means that innovation is limited by only programmer creativity, and Gartner believes we are just beginning to see the results.

NFV can be implemented without SDN, and many organizations have already begun deploying Layers 4 through 7 service as software on general-purpose hardware. However, SDN's support of agility and automated service chaining makes NFV and SDN very complementary. As a result, adoption of SDN will further drive deployment of NFV.

SDN deployment can bring great value to organizations, but it also brings short-term complexity. This complexity will provide ample opportunities in system integration offerings from providers, value-added resellers/distributors and system integrators. Organizations that wish to leverage best-of-breed offerings often require assistance identifying the appropriate suppliers and then integrating offerings from those suppliers.

Recommendations:

  • For protectors:
    • Reinvent high-value SDN advisory services from project-based to annuity contracts to extend the period of customer touch and influence. The new service offerings should focus on at-will access to resources for design, migration and integration, and ongoing operation of new systems.
    • Use your competitors' support of open standards (such as OpenFlow and northbound APIs) as a strategic weapon against them. Include these capabilities in your offering as a way to enter a competitor's account and take control of its installed equipment.
  • For evolutionary disruptors:
    • Enrich your SDN application portfolios and develop SDN application ecosystems to offer as a competitive advantage to your SDN products. Link SDN applications to data center policy and provisioning applications to enable agility.
    • Drive development of a set of broadly supported northbound APIs to increase the value-added applications that are available on your controller.
    • Reinvent high-value SDN advisory services from project-based to annuity contracts to extend the period of customer touch and influence. The new service offerings should focus on at-will access to resources for design, migration and integration, and ongoing operation of new systems.
  • For revolutionary disruptors:
    • Providers should seek channel partners that are comfortable selling software value and can integrate complex environments. Additionally, consider a mix of direct sales, Web-based e-commerce and high-value system integrators to offer competitive value propositions against rivals.
    • Providers should carefully choose their specialized segments in the SDN stack before directly jumping into the market. These could be SDN application, ASIC, networking hardware and software, but they have different cost structure and growth market for development.

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Strategic Planning Assumption

The top three data center Ethernet switch vendors' combined port shipment share will decline from 72.7% in 2012 to less than 55% in 2016.