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Cisco's Chambers: We're Pulling Away From Competitors In SDN

Will Cisco's software-defined networking ACI take over the market? Significant second-quarter earnings growth shows it could be a possibility.

Many of Cisco's rivals point to software-defined networking (SDN) as a possible Achilles' heel for networking giant Cisco Systems, but with impressive second-quarter earnings results released last week, CEO John Chambers says his company is now pulling away from competitors.

Cisco's Application Centric Infrastructure (ACI) portfolio, which includes the hardware products Nexus 3000 and Nexus 9000 as well as the Application Policy Infrastructure Controller (APIC), has grown from 580 customers two quarters ago to 1,700 this quarter, Chambers said during a conference call Feb. 11 with Wall Street analysts. The Nexus 9000 passed the 1 million installed port mark this quarter, less than one year after the first shipments, with a 350 percent year-over-year growth for the pair of nexus products, he said.

"We are pulling away from our competitors and leading in both the SDN thought leadership and customer implementations," Chambers said during the conference call. "The market has recognized the benefit of ACI as compared to PowerPoint concepts of aspirational competitors. ACI and APIC will become the cornerstone of the next generation of networking architectures for many years, much like the UCS [Unified Computing System] has become in the data center."

Solution providers said they see San Jose, Calif.-based Cisco stepping up its game in the SDN arena.

"Cisco has taken more of a leadership role in this space of late," said Chad Williams, vice president of research and education at Matrix Integration, a Jasper, Ind.-based solution provider that works with Cisco. "But to be fair, I'd say there are numerous thought leaders in this space as well. As we all know, there is a lot of time, resources and money being invested in this space from many of these thought leaders."

In a report released in November, Infonetics said it expects the global carrier SDN and network functions virtualization (NFV) markets to grow to more than $11 billion in 2018, up from less than $500 million in 2013. In a separate report released last week, the market research firm IDC said the SDN market will surpass $1 billion by 2018 in the Asia/Pacific regions alone -- excluding Japan.

Zeus Kerravala, principal analyst at ZK Research, said Cisco's ACI will lead the way in the SDN market because it offers a turnkey solution to simplify network operations.

"Cisco's ACI will win," said Kerravala. "Cisco's ACI is focused on automating processes and reducing operation complexity to the point where most of the tasks are done instantaneously."

However, Kerravala said other vendors "certainly have a chance" to compete against Cisco in the future.

"I would say Brocade [Communications Systems], with its relationship with EMC has a chance. Avaya['s networking line] has an excellent fabric story and is a dark horse," said Kerravala. "But for someone to come in and take share, they'll need to do something unique."

Many solution providers said in January that 2015 is the year that software-defined networking will truly begin to reshape the networking landscape.

"I see this market continuing to grow at a steady pace, especially as we continue to fine-tune management and control of all those applications -- open source or not," said Williams, who's been involved with SDN for the past seven years. "The [Cisco financial results] show the market is indeed gaining traction in general. I imagine others are seeing shipment growth as well, and that is not something unique to Cisco."

On Feb. 6, Cisco said by the end of the month it added support on its Nexus 9000 switches for an open protocol called BGP EVPN [Border Gateway Protocol -- Ethernet Virtual Private Network] with the aim is to offer businesses a way to build out an SDN infrastructure based on Cisco technology. Cisco plans support for Nexus 7000 series switches and ASR [Aggregation Services Routers] 9000 series for the second calendar quarter of this year. The company said the move represents an expansion of its efforts to promote open standards in SDN.

"[This] offers customers a choice of deployment options to achieve operational flexibility and paves the way for integration with third-party overlay controllers," said Cisco in a statement.

PUBLISHED FEB. 17, 2015

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