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01 February 2013
Few initiatives epitomise the drive to make networks more intelligent than software defined networking. And the cutting edge work, as Richard Irving discovers, is not on the ground but in the cloud.
The fight back has begun. For much
of 2012, leading equipment makers like Cisco and Alcatel-Lucent
struggled to dispel mounting fears that they would be driven
out of business by the march towards software defined
networking (SDN) – a game-changing technology that
strips away the need for expensive switches and routers by
taking all the intelligence out of the network and handing it
to a central computer that can be programmed in an almost
Now they are looking to reassert their dominance in a market
that will be worth more than $300 million this year and
possibly billions by the end of 2016. And the battlefield on
which they are mustering their forces is not, as most analysts
anticipated, the wide area network, but in the cloud.
In recent months, Alcatel, Cisco and Juniper have all announced
acquisitions or initiatives drawing together fledgling SDN
projects and cloud-based services. This should come as no
surprise. Most wholesale carriers readily admit that they view
the cloud as a top priority over the coming year, so it follows
that equipment vendors should be exploring ways to virtualise
Cynics might counter that vendors have a vested interest in
preserving sales of proprietary routers and switches to network
operators for as long as possible and that they therefore have
much to gain in shifting the focus to cloud-based services,
where they have no legacy revenues to lose. But the reality is
that telecoms companies themselves see more opportunity in the
cloud than elsewhere and are clamoring for the technologies to
support their own efforts.
This is not in any way to belittle the huge strides that SDN
design has so far made on the ground. Last year, for example,
Google announced that it had upgraded its entire data centre
backbone, one of the largest stand-alone networks in the world,
to an SDN architecture.
But as Mark Lewis, vice president of architecture and
development at Interoute, operator of Europe’s
largest cloud services platform explains, the search
engine’s requirements were unique and in many ways
less onerous than those facing most network operators. "Google
had a very specific objective and a very specific use case.
However, most wholesale carriers have a huge variety of
customers who want very different things from a network. We
look at SDN very much in terms of how it can help facilitate
Perhaps the defining moment for the
SDN movement came last summer, when VMware, the Palo Alto-based
software maker, stumped up a whopping $1.26 billion for Nicira.
According to one estimate, the deal valued Nicira at around 100
times historic earnings – arguably the highest price
that a technology start-up has fetched since the very top of
the dotcom boom. But if the price was high, the expectations
were – and remain – immense.
VMware’s cutting edge software helped to create
the backbone of cloud computing as we know it today, optimising
computer and data storage through a suite of state-of-the-art
software breakthroughs. It was perhaps inevitable that having
featured so prominently in the move to virtualise computing and
storage, VMware would want to complete the circle with a
technology that could do the same for data transport and that
it would be prepared to do so at pretty much any price.
In doing so, it puts VMware's majority owner, EMC Corp, on a
collision course with Cisco, the world’s biggest
maker of networking equipment and a long-standing partner.
Moreover, this time around, VMware will find the market a
little more crowded.
Ironically, a swathe of rival start-ups that began
2012 in stealth mode are breaking cover early, spurred by
Nicira’s spectacular valuation. And as they
emerge, they are being snapped up by hardware vendors keen to
defend a market that is conservatively estimated to be worth
around $40 billion a year.
In December, Cisco itself led the way, stumping up
$141 million in cash to buy Cariden, a network mapping and
cloud optimisation company that is moving aggressively into the
SDN arena. Juniper followed suit a fortnight later, agreeing to
pay $176 million for Contrail – a company that has
been going for less than twelve months and is not due to launch
its first SDN product until later this year. Then
Alcatel-Lucent went public, confirming that a specialist unit
within the business, known as Nuage Networks and run by Sunil
Khandekar, has been working on an SDN solution for the best
part of a year.
Like his peers, Khandekar sees the biggest
opportunities in virtualised infrastructures and sees this
manifesting itself around data centres: "Data centre networks
are very static, very rigid and as a result they have been slow
to respond to the push towards cloud services," he
"The concept behind SDN is all about bridging the gap
between the network and the applications that sit above it." In
the past, these have evolved separately like ships passing in
the night: network operators and applications providers have
both assumed that either side will configure their products to
ensure compatibility. But the market is moving swiftly towards
a virtualised cloud-based infrastructure and that changes
everything, Khandekar adds.
"Large telcos see tangible new revenue opportunities in the
cloud services market. They have considerable network and data
centre assets at their disposal. The key is to provide
visibility and control to the applications that run over them
and thereby encourage them to consume more and more network
Nuage Networks takes the form of a controversial new
investment model known as a "spin-in", where a technology
company seeds a new start-up, quite often the brainchild of
existing employees, and then buys the company outright if the
technology succeeds. Khandekar says that Nuage, which was
created over a year ago, decided to go public after extensive
discussions with clients who are very supportive of the
company’s approach to SDN. But the timing of the
announcement comes as competition in the SDN market hots
In particular, fevered speculation surrounds another
spin-in, this time at Cisco, where three of the most successful
networking engineers of the last two decades are busy plugging
some of the gaps in the group’s SDN strategy. The
Silicon Valley giant, which arguably has more to lose from the
rise of SDN than anyone else, has put $100 million into a new
venture called Insieme, the brainchild of Mario Mazzola, and
his long-time lieutenants, Prem Jain and Luca Cafiero.
The trio, lest it be forgotten, have struck the
jackpot for Cisco not once, not twice, but thrice before: In
the early 1990s, the team invented a corporate networking
switch while at Crescendo Communications which Cisco bought for
$94 million and turned into a $13 billion business; in 2004,
they helped elbow Cisco into the storage-related switch market
when they sold their second venture, Andiamo Systems to the
group for $750 million; and in 2009, they helped Cisco flesh
out its attack on the data centre hardware and services market
when they sold Nuova Systems to the giant for $678 million.
Cisco has an option to buy the latest venture for
$750 million if all goes well. For now, the equipment maker is
saying little about Insieme, other than to stress that
Mazzola’s work will compliment a wider effort,
known as the Open Network Environment, or Cisco ONE.
Cisco’s ultimate goal is to defend its
lucrative hardware business from a basic principle of SDN,
namely that the data plane, which is responsible for shunting
packets of information on their way along the network, should
be separated from the control plane, which decides when and
where that data goes next.
In so doing, it is possible to do away with
Cisco’s intelligent routing and switching
equipment and transfer all that power to a programmable
computer in the control plane that would then talk to all the
various components on the network through a protocol called
OpenFlow. The resulting network is infinitely customisable,
flexible and scalable – and can easily be optimised
making it cheap to operate.
Few would argue with Dan Pitt, executive director of
the Open Networking Foundation, when he evangalises about SDN
as a "revolutionary approach" to design that will change the
way every organisation with a network operates. Just a few
lines of ordinary computer code are enough to change the way
companies do business for good, he argues.
But where he sees
opportunity, others see a potential threat. A simple operating
protocol such as OpenFlow, for example, might not only
disenfranchise high-end equipment manufacturers, but also
undermine the foundations on which long-term relationships with
clients are built by dissolving the sticky relationship which
links buyers of complex and proprietary network equipment to
the vendors through upgrade after upgrade.
Cisco claims that its new initiative embraces the
guiding principles of SDN, but goes further by including
overlay technologies allowing each layer of the network, from
the transport layer through to orchestration and management
layers, to be fully programmable. Crucially, says Cisco, this
means that network providers can design their own protocols to
further customise their own systems.
Some supporters of the OpenFlow protocol have
suggested that any attempt to undermine the ubiquity of what
they hope will become a de facto industry standard for SDN,
will set back network evolution by years. However, many network
operators recognise that the future of SDN does not hang on the
merits of OpenFlow.
For his part, Alcatel’s Khandekar says
that Nuage will embrace OpenFlow, but warns that the debate
around the protocol is turning into an unnecessary distraction.
"When you start talking about the huge potential of SDN with
customers, the discussion moves on very quickly from which
protocol you want to use to talk to the network elements below.
The whole promise of SDN – the real nugget here
– is how you harness applications to allow you to
quickly consume network resources. In other words, how you hand
control to applications that can determine network behavior
without having to drill down and re-tool the network
Given that his company is named after the French word
for cloud, it is no surprise that Khandekar is steering its
effort towards virtualisation-based technologies. But he is not
Interoute is poised to launch a new virtual router to
work alongside its award-winning virtual data centre
a private and public cloud computing platform built into the
company’s pan-European multiprotocol label
The router, which is currently being beta tested with
customers, is part of a big initiative at Interoute aimed at
helping network operators exploit the ongoing integration
between the business of connectivity and IT.
"The cloud on its own is a worthless commodity unless
you can actually provide transport to and from it," says Lewis.
"When you combine the cloud with connectivity, you have the
makings of a very powerful product. And if you can do that at
scale, you should be able to lower the cost, which then becomes
the point at which enterprises become very interested," he
explains. The virtual router is a natural progression in this
regard: "Essentially, we can point a customer to a web page
where they can download a router that automatically connects to
our cloud," he says.
There can be little doubt
that the telecoms sector is moving from a silo-based ecosystem
populated by a plethora of disparate platforms and product
lines, to a point where technologies are integrating very
And as Nicolas Fischbach, director of network and IT
platform strategy and architecture at Colt, explains, the
promise of SDN is that it will help smooth that transition:
"What makes SDN so revolutionary is that it has caused people
to think differently about how we build networks, bind them
with applications and manage them in-life."
In other words, he says, the attractions of SDN lie
not in a single protocol like OpenFlow, or in the various
applications that it will spawn, but in the fact that it will
allow operators to develop new end-to-end integrated
architecture to deliver, operate and consume network capacity
and managed IT services.
"At the moment, we have different network topologies
to serve different customer needs – from Carrier
Ethernet to IP and IP VPN", he explains. "Going forward, we
will have a single hybrid network that will be capable of
delivering all three of these solutions and that a customer
will be able to change between during the life of its
By definition, of course, an SDN solution will only
ever be as good as the apps that sit over the network, and some
of the most exciting development work currently being
undertaken by developers relates to the way various apps and
the network itself will communicate with one another.
"This is very new," says Fischbach. "The whole
concept of having the network be able to feed back to the app
what it can and can’t do – and the app
being able to process that and understand the
network’s capability – is groundbreaking.
It’s never been done before."
The challenge, adds the Colt network chief, is to
ensure that the apps are up to the task as you build out the
network: "SDN is probably 20% about the network and 80% about
the apps and systems." The concept started as an
engineer’s dream but the more you work on it, the
more you realise that a big proportion of the whole solution is
all about systems – details such as orchestration,
automation, billing – how you push the SDN concept out
from the OSS to the BSS layer, he explains. "We realised very
early on in our own development works that we only had
engineers in the room when what we needed was architects as
Fischbach says Colt is currently in the process of selecting
the right "fabric" to support the OpenFlow protocol as well as
continuing work on the apps that will speed up network
automation: "We have a very long history of driving innovation
in a number of areas such as Carrier Ethernet and managed
services and we plan to push network programmability with the
same energy," he says.
How big is the potential market?
According to the
information provider IDC, sales of SDN gear as well as software
and services will surge from $200 million in 2013 to $2 billion
in 2016. Some analysts put the number closer to $10 billion
over a similar time frame.
Do carriers really
have that much budget to throw at SDN?
No one is building
greenfield networks anymore so any move to SDN will necessarily
have to be an evolutionary process. But everyone is looking to
move as quickly as possible to a lower cost structure: the
quicker SDN architectures help better utilise the network, the
faster carriers can grow. That’s a compelling
argument for most finance directors.
How long will it
take before SDN comes of age?
expect to see carriers try any meaningful deployment in their
wide area networks much before 2015 – SDN is currently
undergoing rigorous testing among several prominent carriers
including NTT and Verizon. It’ll take about 12-18
months to iron out any glitches and at least a further 12-18
months on top of that to scale up for a launch.
Who are the
companies to watch?
The SDN arena is a
hotbed of M&A activity at the moment. Nicira, whose chief
technology officer helped devise OpenFlow, recently fell to
VMWare for $1.2 billion while Oracle snapped up San Jose-based
Xsigo Systems for an undisclosed sum. Other emerging start-ups
include Big Switch and Arista Networks. Don’t be
surprised to see IBM, Cisco or even Juniper step out along the
Can SDN live up to
all the hype?
Google has already migrated one of the largest networks in the
world over to an SDN format and expects to see cost savings as
a result. If that’s not enough to tempt carriers,
the prospect of developing new services that can attract big
premiums surely will.
software defined networks,