It's not shocking that a group of venture capitalists with a history of investing in SDN startups would take the stage at the Open Networking Summit last week and pronounce that network hardware incumbents are "screwed."
After all, venture capitalists depend on startups to disrupt the market with new technology that can unseat incumbents. But a panel of speakers from venture capital firms Lightspeed Venture Partners, New Enterprise Associates and Andreessen Horowitz, explained that SDN startups may gain market share not because incumbent vendors can't innovate, rather because they're unwilling to change. In other words, incumbents are desperate to hang on to the old proprietary hardware model with closed software.
"If you're selling a giant piece of iron with ASICs, and you're charging hundreds of thousands of dollars for it [with an enormous margin], it's difficult to change the business model," said Peter Levine of Andreessen Horowitz, which has invested in network virtualization pioneer Nicira (which has been acquired by VMware), as well as network OS company Cumulus Networks and cloud storage vendor Coho Data.
Until recently, network innovation among the incumbents only meant increasing speeds and feeds.
"Over the last several decades [network hardware vendors have built the same sailboat over and over again -- refreshed GigE to 10 GigE. They'll build you a faster, better, costlier sailboat," said Kittu Kolluri, of New Enterprise Associates, which has invested in SDN and network virtualization pioneers Nicira, Embrane and Pluribus Networks.
Incumbents say they're tackling SDN, but many have not embraced innovative ideas like less-expensive, commodity hardware or open software. Instead, they've simply enhanced their closed systems and proprietary, purpose-built hardware with SDN technology that makes networks more programmable and flexible.
Although incumbent network hardware vendors have driven the formation of SDN standards and development bodies like the OpenDaylight Project and the Open Networking Foundation (ONF), these organizations are simply "throwing sand in the gears" of SDN innovation, said John Vrionis of Lightspeed, which invested in SDN innovators Nicira, Plexxi and Pertino.
The ONF launched to develop and standardize the OpenFlow protocol, but it has been accused of being closed off to SDN startups that can't afford the $30,000 annual membership fees. Meanwhile, OpenDaylight, which is developing a modular, open source SDN software stack, has seen turf wars develop within its ranks between incumbent vendors and startups that have been said to slow the organization's innovation.
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While some incumbents chip away with new SDN strategies that don't always embody openness, SDN startups will begin to change the minds of users with technology that simplifies architecture by reducing not just the price per port, but the proliferation of boxes and ports, too, Kolluri said.
They'll also tackle the high cost of data center Opex with simplified and unified management.
"The challenge for SDN is to figure out how to make DevOps and NetOps [work together]. How do you make management more integrated and make it so that you reduce Opex challenges that you have because of a schism between server ops and net ops," Kolluri said.
SDN startups gain access to customers through the cloud
SDN startups could get a crack at customers through greenfield cloud data center projects that wouldn't have existed just a few years ago.
"When incumbents own the enterprise, the most difficult thing for startups is not building something new, but it's the access to customers," Andreessen Horowitz's Levine said. "In this new cloud world there is a parallel universe starting to appear, which are scale-out cloud implementations that have nothing to do with old data centers."
In these new clouds, "There is interest to create something that is greenfield based on new architectures. … You don't always have to go right into the incumbent's teeth," Levine said. Once startups make their way into these cloud projects, they can "flip over to the other side" of the enterprise network, he added.