Is Data Network Management about to change?
Software Designed Network is now Software Driven Cloud Network– Software Designed Network has been around since the mid 2000’s but with the advent of the cloud much of the old way of managing networks was not applicable many due to hardware restrictions and walled gardens. This changed when public cloud started to take off and smart management of data networks became a requirement. Simply put, the intra data flows in data centers needed to be managed with greater efficiency. Latency became the biggest issue with cloud infrastructure and this brought about technologies that looked to reduce this on the fly. In the main, only the largest cloud operators (think Google, Amazon etc) were interested in such technology as they were the primary users of vast amounts of compute and networking power. Data needed to move from one server to another server in a data center with great density and velocity combined with low latency for cloud based applications (think Netflix). Smart software that resided on network switches are able to cope with the new demands of the cloud behemoths. Over time, software will be used to manage networks to optimise data flows, reduce latency, security, workflow automation and security among other things.
Entering this market was difficult as the largest companies had a monopoly. Cisco, is the largest provider in this industry and disruptors attempted to take market share. We recently took a small position in such a disruptor, Arista Networks. Unfortunately, the stock has performed well since the start of the year and hence our small holding. The company is run by ex-Cisco executes who are well rehearsed in the industry. Its products are built with open software in mind unlike its competitors that have closed proprietary technologies. Currently, the company is under legal scrutiny pertaining to its patent infringement with Cisco, but so far it has come out successful on major infringement claims. The chart below is the reason why Cisco is attempting the thwart Arista. We continue to monitor the industry and our exposure to ensure we take advantage of this growing trend either via Arista or others in the space.