Does 10Gb Ethernet Change the Competitive Landscape?

We are in the midst of an inflection point in the network industry with the adoption of 10 Gigabit Ethernet (10GbE).  The adoption curve for 10GbE hit the knee of the S-Curve last year.  The big question for industry watchers is will Cisco maintain its dominance in the Ethernet market?

There are a host of competitors who are fighting to get ahead of Cisco and take share.  Competitors will attack by going to market first, on price, by going after niche markets, by creating new functionality, through partnerships or just by attacking the 800-pound gorilla for real or imaginary deficiencies.  In this article I simply want to start asking some questions and lay out the landscape.  Beyond the speeds and feeds I’ll also investigate why the network needs to change for applications, infrastructure and storage. This is not a simple marketplace, neither Cisco nor its challengers can boil down the competition to a single bullet point, but here is a value equation for sizing up the conversion hurdle:

(perceived benefit)/(perceived cost) = value; if relative value of products are within ~30% of each other inertia typically wins; else disruption                  8:55 PM Jun 6th by James Watters

Early Movers and New Architectures

The first mover in a new market does not always win, especially when it is an extension of an existing market.  In the last 12 months, I’ve seen a fast adoption of 10GbE in customers that I’ve spoken to.  Some early-entrants didn’t survive to see this growth (e.g. Woven).  One of the first places where 10GbE has seen some significant volume is blade servers, and an early winner in that space is Blade Network Technologies (BNT).  BNT specializes in networking embedded solutions including OEM offerings with HP and IBM.

Another active participant in the space is Juniper Networks who has extended its well respected JUNOS operating system from its routing products into a switching product line.  In addition to price and performance advantages, Juniper is looking to change the discussion by re-architecting customer environments with a “3-2-1″ data center network architecture which collapses multiple switching tiers, leading to a new simplified design that requires fewer devices and interconnections.  Juniper’s management suite includes Virtual Control for automation in virtualization environments.

Start-ups are also in play including Arista Networks, who’s management team has an impressive pedigree. Arista has built a new architecture from the ground up to address the needs of transition to 10GbE.  Arista has high density, high performance products and claim the best power and cooling solution in the market (including 10GBase-T options).  While Cisco has multiple product lines for 10GbE – the legacy Catalyst and new Nexus – Artista has a single product line with an extensible OS (vEOS) built on Linux.

Convergence

Cisco is working hard at owning the thought leadership for 10GbE adoption.  Cisco are leaders in the charge for converged network environments (they run the website and wrote the book on FCoE) and cloud.

One of the objections that I hear from customers on FCoE is that they feel that there is no choice. They will not adopt a new protocol that is only supported from a single vendor.  The obvious second choice for FCoE is Brocade, but while the company is making strides to move into the converged network environment (and merging its traditional products with the acquired Foundry products), they are still not a familiar and trusted name to most network administrators.  If convergence becomes the driver of 10GbE adoption (see my post on organizational changes for convergence), then there is a possibility that the storage people, where Brocade is well positioned, could influence the vendor choice.  Many of the other networking vendors are supporting the DCB functionality and all of them have solutions for NFS and iSCSI allowing for a converged environment.

The Rest of the Stack

Cisco got the “Stack Wars” started by entering into the server market.  This has exploded into a very public battle with former partner HP.  HP already had a nice set of networking products with ProCurve and Virtual Connect. Through the acquisitions of EDS (services) and 3Com (more networking products), it owns the most components of any stack solution and therefore a significant threat to Cisco.

Virtualization is a significant driver of adoption of new technology and high-bandwidth solutions.  Cisco is aggressively driving virtualization solutions through the VCE initiative.  This does not mean that it has a monopoly on virtualization or VMware’s attention. Everyone in this space understands the opportunity, most of the vendors will be at VMworld this year and many are also working on solutions with Microsoft, Xen and Citrix.

Winners

Since Cisco’s current marketshare in Ethernet is much more than all of the competition combined (most studies I’ve seen show them over 90%), a change of a few percentage points would translate into a sizable growth of revenue for anyone that could take it.  There are more angles and players – such as Force10 who could go IPO and Chinese telecom powerhouse Huawei – so I know there will be plenty to learn and talk about.  The marketplace and needs of the customer are definitely changing; how that affects the overall competitive landscape will play out over time.  I look forward to further investigation into the Ethernet marketplace, questions and debate are always welcome.

Some Recent Articles on the Changing Landscape

Brocade One announcement covered in The Register by Chris Mellor

Cisco vs. HP in the Networking Market in Network World by Jim Metzler and Steve Taylor

Brocade Copies Juniper, Takes on Cisco and Emulex Tries to Take on QLogic on FCoE in SiliconANGLE by John Furrier

Validating Some Power/Cooling Assertions by Doug Gourlay

The Stack Wars Have Begin! in GestaltIT by Stephen Foskett

Juniper rivals Cisco in virtual data center push in Tech World by Jim Duffy

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  • Douglas Gourlay

    Thanks for the comments on Arista – our portfolio and EOS software are keenly focused on the 10Gb transition, specifically in the data center!

  • dvellante

    Nice post stu…I agree with your implication that it will be hard for Cisco to grow at a pace faster than the industry average– i.e. Cisco will lose share in core markets going forward.

    FCoE is interesting. As we've discussed, the fact is it's the mother of all lock-ins. While users don't like that they really don't have many choices. With about $25B in installed FC infrastructure out there they can: 1) Stay w/FC indefinitely; 2) Make the move to FCoE or 3) Migrate all that mission critical data off FC SAN– perhaps to iSCSI or even NFS/CIFS.

    Pricing for FCoE will be fascinating. Vendors have to walk a fine line. The overall FC market isn't growing so vendors are keeping prices high; using their leverage. At the same time, users will continue to choose alternatives for new workloads. It's a classic manage decline business that will hang around for a long time.

  • Jeremy Arnold

    BTW you can grab a copy of the Gartner MQ Enterprise LAN at http://www.procurve.com/ar/gartner2009.htm

  • Jeremy Arnold

    Well written article Stu. Two points you should consider.

    10GbE is used for two main reasons these days – uplinks / cross links between switches, or used for Top of Rack to Blade Server environments. In this article you've only reasoned the Datacenter piece. While important, the whole LAN is more so.

    As a Technical Consultant for one of the listed vendors above, I was hoping to see what you have to say about everyone that sits in the Gartner Market Quadrant for Enterprise LAN. You've missed out over half of them – Enterasys / Extreme / Alacatel Lucent and Avaya (formerly Nortel). Considering that some of these listed above, have such a small market share you really should mention what they are doing…

  • http://blogstu.wordpress.com stu

    Jeremy,
    You're completely right that I'm only covering part of the picture – I was looking to hit the area that will be VOLUME and what is also important in the STACK. I haven't heard much about the vendors that you mention for this area, I'm always trying to keep my eyes open for all relevant players. Thanks for the comment.

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  • Pierre-Antoine Thiebaut

    The Answer is Yes : 10G change the competitive LandScape !
    Look at the new Alcatel-Lucent OmniSwitch 10K !!!
    256 10Giga ports wirerate in a very compact and green Switch …
    Who tells more ?

  • http://blogstu.wordpress.com stu

    Pierre-Antoine – thanks for reading and commenting. I’d be interested to hear more of the Alcatel-Lucent product, but honestly from a market share and mindshare perspective I don’t see them in the picture.

  • Pathiebaut

    Agree with you. we have today a little marketshare in LanSwitching. But this marketshare grows year after year.
    N°3 in EMEA …. and soon N°33 WW.
    DataCenter is an other story. our strategy is really base on 3 pilars :
    1 – Architecture : with the OS 10K (see the Lippis report), 40/100 Gig ready and MPLS Data Cenbter interconnection (N°1 EMEA and N°2 WW).
    2 – Controle : VM switching, embedded security, Layer 2 and 3 ect …
    3 – Operations : performance management and IP management with Vital. Automatic configuration and other “easy to manage” tools.
    And of course … Greenest products on the market !
    PA

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