Why Cisco May Miss The Boat On SDN

(CSCO NASDAQ) is a leading software defined (SDN) network provider Some analysts have called Cisco Systems, Inc.This is because they announced plans for its Infrastructure Centric application, its SDN solution. Juniper Networks (NYSE: JNPR) has published a series of products of SDN, as well as a series of switches, all running on JUNOS programming. Both projects have a fatal flaw, however.

In the past, these important network hardware companies have market shares dominated lock-in customers. With Cisco hardware runs its own proprietary protocol have all the infrastructure of a customer network must be built on the same hardware vendor. When it came to replacing, repairing or extending the network infrastructure, the supply would again come from Cisco. Now, with his Centric Infrastructure application, they will try to create the same type of lock-in, as SDN integrated into the network infrastructure of data centers and service companies.

On this occasion, the major carriers like AT & T and Verizon Wireless are having ein Negara Lock-in client-equipment suppliers. SDN separates intelligence rotate from the hardware itself, putting the focus on el-Software. As a result, networks can be built using cheap generic is a team interchangeable.Such refers eine targeted Hardware Hardware box. It is available from many vendors, including foreign fabric with much cheaper prices than Cisco or Juniper. This makes the hardware with vendor specific protocol in its most irrelevant.

The Flugzeuge for future infrastructure rot both Verizon and AT & T have already stopped Cisco Out photo. Domain AT & T 2.0, a complete restructuring of its rot, says in the notes that have strong aversion to being locked into a specific vendor protocol, thus preventing them from continuing with the options of Caja Blanca. In the same report notes that the new infrastructure will enable new partnerships with companies that have not been traditional telecommunications providers. In fact, many of these associations have already been established with private companies for Software. The names include Meta-switched networks, Tail-F Systems and Networks für Heiss. Service Carriers require customization of these new networks, that is not being supplied by Cisco.

The IDC estimates the SDN market will grow to $3.7 billion in 2016 and to $8 billion by 2018. This is compared to $360 million in 2013. This market share will not be captured in majority by the traditional network providers, but by the upcoming private software vendors that have already begun work with major carriers. As SDN becomes more and more of a reality, Cisco may not only miss out on new market share, but may lose its current business as well in what will soon become old technology.

59.7% of Cisco's business comes from data communications equipment, which is the switches, routers, and modems that major carriers will no longer demand once their restructuring plans set in. Further evidence can be seen in AT&T's capital expenditures over the last few years.

AT & T recently announced a budget for capital expenditure in the graph clearly visible. Total CapEx $ 18 billion in 2011 decreased to 5 billion US dollars in 2013 shows his moves to reduce costs and change the network architecture. In the same period, Cisco margins of 61.2% have fallen to 58.9%. It is a statistical relationship between the two, so return an adjusted R-square of 0.867 in linear regression. Although this statistical analysis is far from complete, is not it show a fairly strong correlation between the two variables, supporting the idea that the central business Cisco damage with reduced investment and demand for services providers.