We had a couple more earnings reports that seem to underscore the general theme that network spending, if not all of tech spending, is under pressure. Brocade did OK versus expectations but issued what the Street believed was tepid guidance. Aruba undershot by a very significant margin, and specifically called out Cisco’s “bundling” strategies as a factor in both the length of the sales cycle and the success and margins of the deal when done.
What we’re seeing here is pretty obvious; a benefit-constrained industry going through the inevitable throes of commoditization. A bigger player can do bigger deals. Bigger deals, by intersecting more issues, can potentially drive better benefits. For truly strategic or revolutionary shifts, it’s unlikely that small deals will do. The American Revolution wouldn’t have gotten far by wrestling control of Rhode Island from the British. But even where there’s no revolution and no broader benefit case to exploit, the fact is that as equipment prices come under pressure, it’s inevitable that operations and integration costs will too. And everyone knows that a multi-vendor network is, for the buyer, like accepting the Secretary Generalship of the UN.
Even Brocade and Aruba taken alone may prove the thesis of breadth, and also the thesis of revolution. Brocade is a storage and network switching/routing player, Aruba is a WiFi player. Brocade bought an overlay virtual network player (Vyatta) and so they can deliver the two-layer SDN strategy that is likely the optimum SDN story to tell in the current market. It’s hard to see how a WiFi player can be an SDN thought leader.
Interestingly, there are SDN ties to WiFi, in both the enterprise and carrier sense. It’s hard for vendors to push them (even if they know about them, which I’m pretty sure isn’t the case much of the time) because the buyers are so weak in SDN literacy. We have about half the level of market literacy on SDN that would be needed to drive a natural, normal, market. We’re at the point where SDN can be sold only as part of (you guessed it!) a big deal! Which is one of the reasons why Cisco has a good SDN strategy; they have a big deal strategy. Even a mediocre SDN story told as a sweeping Cecil B. DeMille epic sounds good to a buyer whose SDN knowledge consists of “it’s hot!”
I’ve been noting over the last half-dozen blogs that SDN is getting mired in hype and hyperfocus. We’re arguing about how to make a packet forwarding concept (OpenFlow) forward opaque optical flows, for gosh’s sakes, when we can’t make a packet forwarding value proposition that’s compelling. This, my friends, is not the way a rational market behaves, and that’s a big problem for the smaller vendors who might have a perfectly good SDN story but can’t make it resonate in a world that’s leaping from one easy-to-discuss hype ledge to another.
Brocade may end up being a kind of poster child for SDN rationality. First-off, they actually have a rational SDN product set and they’re pretty close to having a complete SDN story. The truth is certainly not mandatory in the current market, but it’s sure a convenient place from which to launch a dazzling marketing tale. Brocade could tell SDN as it is, or as it must be, and that could be something that’s enormously valuable to it as a company, and even to the market.
If we had a true notion of SDN, a valid and deployable and justifiable model, we could fit things like WiFi, security, application acceleration, and a bunch of other things into the SDN model. We could fill in the hills and trees and barns and livestock of the “big picture” even if the canvas is very big indeed. Absent that model, though, we’re forced to get the big picture from somebody who doesn’t want others to be filling in anything, and that means guys like Cisco. They don’t have to be best to win, they only have to be big…and they are.
You can’t stand indefinitely on your current conception of bigness, something Cisco proved with UCS in a positive sense and which Dell is now proving in the negative. Dell is perhaps the most PC-dependent player in a marketplace where the PC is never going to be big again. The company has a good cloud strategy, a decent SDN notion, but it has never learned to paint that big picture. No matter how good you are, in the current network age you have to be inspirational because you’re fighting against a buyer who has built up a half-decade of calluses against the grinding hype, who has no way of telling which story or claim is true. They have to believe in you because you will not educate them in time.
SDN alone probably won’t float Dell’s boat. Dell’s big chance is NFV, because Dell is a server player and because Dell has to fight another server player, Cisco, who is also a big network player. Networking change is a risk to Cisco if NFV is a positive opportunity, and to the same degree because the two are part of one trend. Networking change is no risk to Dell, but a big server-and-software payday arising out of NFV would be a heck of a benefit. If you want to win against a bigger guy, climb out on a limb that won’t hold his weight. That’s Dell’s only answer, and that’s Brocade’s too.
