Webscales Yield Heavy Market Influence: Google, Facebook and Others Driving Network Equipment Roadmaps

Glen Hunt – Principal Analyst, Transport and Routing Infrastructure

Summary Bullets:

• Webscale influence on new product developments is being felt in data center interconnect and massively scalable switching and transport gear.

• Traditional telcos, however, are using these new Webscale-driven platforms to retool their own networks and prepare to deliver more agile services to protect their service base.

Since the first public networks were built, incumbent telcos like Vodafone, Deutsche Telekom and AT&T have ruled network equipment roadmaps and investments – dictating the features, operation and capabilities of new networking products. However, more recently Webscale operators are the influencers. Whereas vendors had been focused on providing the high capacity and broad coverage required by rapid smartphone adoption and a massive increase in video traffic, the focus has steadily turned to support massive, low-latency throughput between the data centers that serve the most popular brands on the Internet, dubbed FAMGA (Facebook, Apple, Microsoft, Google and Amazon). Traditional network operators are scrambling to adapt to this change in service delivery focus, and better prepare their networks for the emerging 5G and Internet of Things (IoT) era.

Webscale Requirements
From their inception, Webscales were faced with building very high capacity networks to deliver huge amounts of internet traffic from and between their data centers. But that was not easy – the ideal equipment was not available.

The early dilemma Webscale operators faced was the lack of commercial products that could deliver the levels of 10G end-user services and 100G connections to and between their data centers. Legacy telco products could not keep up with growing subscribers and the volumes of data traffic they consumed.

Some Webscales began designing and building their own platforms. Although this appeared to be a great idea, and it was to a degree, their primary business objective was to deliver content, not to manufacture telco equipment.

Growing Webscale Influence
GlobalData tracks the key products used to build service provider networks, and in the past three years, we have seen a fairly radical shift in the nature of the products being designed and delivered by the dominant IP and optical product houses to support on-demand and high capacity services.

The focus of new product entrants is now on programmability and performance – not so much support for legacy services, although support for legacy revenues remains a challenge for incumbent operators. We also note the arrival of the second generation of Webscale influenced products, indicating that this trend is here to stay.

Innovation has been a key theme at recent industry forums and analyst events is innovation. Innovation from a technical perspective is clearly being seen in recently announced hardware and software initiatives and appears to be well entrenched in new vendor product introductions.

Software Innovation is characterized by a strong emphasis on open source community efforts like OpenStack. The industry needs to continue its move forward and not rely on products developed by a single company or software team. Operators prefer open source-based solutions, but they must be fully supported by the supplier, since open source contributions are not deployable products until they are integrated into a supportable software distribution or a commercial product.

Hardware Innovation falls into two camps, 1) in-house development of custom silicon to satisfy the performance needs and deliver solutions with the lowest cost and highest power efficiencies possible; and 2) similar to the software approach, commercial silicon (a.k.a., merchant silicon). Although the use of readily available silicon can speed the development process, it does challenge vendors to differentiate their solutions.

Innovative Talent is in short supply. The networking industry has been upended with the move to digitization and virtualization, and faces a classical “evolve or perish” dilemma. Long development cycles, typically 12 – 18 months, have typically been required to build a new product or launch a new service, in a market that increasingly expects nearly instant responsiveness. Recently we noted a former Webscale executive joining Juniper Networks to chart Juniper’s technology strategy and lead the company’s critical technology innovations, including Contrail and AppFormix. This type of cross fertilization of Webscale operator expertise and vendor strategy should help future product innovation.

Innovative Products are coming. We have seen traditional network equipment vendors bring innovative products to market recently, including Cisco’s NCS 5500 series and Nokia’s “IP Networks Reimagined” 7950 XRS powered by its FP4 and integrated Deepfield analytics. Both products bring the scale and simplicity needed to meet growing traffic demands. The optical transport world has also seen a move to disaggregate the optical line systems from the transport platforms, with vendors such as Infinera and Lumentum supporting Facebook’s Voyager program.

With what began as a diversion from the traditional equipment portfolios, the impact of Webscale requirements appears to have permeated most if not all new developments. What was also seen only as a Webscale need, is now an integral part of most telco strategies – perhaps creating a win-win for all. It appears entirely possible that future differentiation between Webscale operators and the telcos will disappear altogether – driven by common products and a fully virtualized software and operational infrastructure.

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