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HP ConteXtream acquisition complements open NFV work

Hewlett-Packard's acquisition of ConteXtream is likely to bring a number of valuable features to HP's upcoming open NFV products.

Hewlett-Packard's acquisition of networking company ConteXtream is expected to bolster the open technology HP sells to carriers turning to software to anchor more flexible networks.

HP announced this week that it had signed a definitive agreement to buy privately held ConteXtream. The latter company provides a carrier-grade software-defined networking controller based on OpenDaylight, a vendor-driven initiative to develop an open framework for SDN and network functions virtualization (NFV).

The ConteXtream controller would be a "fair complement" to the open NFV technology under development at HP, said Paul Parker-Johnson, analyst for ACG Research.

"ContexNext [ConteXtream's SDN platform] has a number of features that would be a value-add to anyone's base SDN controller," he said. "[In addition,] the ContexNext solution could be a useful addition to HP's NFV offerings in service provider broadband networks."

NFV is an industry initiative to move routers, firewalls, load balancers and other network functions from dedicated hardware to software. HP's upcoming NFV technology is based on the work of the Open Platform for NFV Project (OPNFV).

Major communication service providers (CSPs) and technology vendors founded OPNFV last year. The group is building a reference platform for NFV that borrows from other open-source projects like OpenDaylight and OpenStack. HP is a non-founding member of OPNFV.

Service providers are adopting NFV because it eases the difficulty of modifying networks as the needs of business customers change. The initiative is also expected to help carriers build new services to replace revenue lost to pricing wars and over-the-top services, such as voice over IP, video conferencing and messaging apps like Snapchat and WhatsApp.

HP challenges in the NFV market

HP will compete in the NFV market with Ericsson, Cisco, Huawei, and Alcatel-Lucent, which Nokia plans to acquire in 2016. ConteXtream will bring "value and credibility" to HP's portfolio, Parker-Johnson said. But whether that's enough to carve out a profitable portion of the market is uncertain.

"The next one to two years will answer that question to be sure, as operators move toward trial deployments of NFV solutions in parallel with their SDN plays," he said.

HP plans to roll ConteXtream into its Communications Solutions unit. ConteXtream chief executive and co-founder Nachman Shelef will continue to run the business. He will report to Saar Gillai, general manager of HP's NFV business unit.

HP's future in the SDN market depends in part on the success of its plan to split into two separate companies, one focused on PCs and printers, the other on enterprise computing. HP expects to complete the breakup by the end of October.

Heading to the enterprise company with ConteXtream will be wireless-networking company Aruba Networks. HP announced the $2.7 billion acquisition of Aruba in March. HP hopes to boost revenues with wireless networking products and SDN technology.

After the separation, HP Enterprise will look for more companies to acquire, HP Chief Executive Meg Whitman told Bloomberg in releasing earnings last week. For the quarter ended in April, HP reported a nearly 7% drop in revenue to $25.5 billion. Sales fell in all HP units. Net income fell 21% to $1.01 billion.

Next Steps

What's needed from NFV orchestration

NFV's underlying infrastructure

SDN, NFV are the new IP

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