2014 in review

Looking back at 2014, it feels like a lot of progress was achieved in the past year in both the cloud infrastructure and NFV infrastructure markets. Some of that progress is technical, some is in terms of increased understanding of the key business and technical aspects. This post is my attempt to capture some changes I’ve observed from my particular vantage point.

This December marks the second anniversary of the acquisition of Contrail Systems by Juniper Networks. In the last year the Contrail team managed to deploy the Contrail network virtualization solution in several marquee customers; to solidify the image of the OpenContrail project as a production-ready implementation of the AWS VPC functionality; but, probably, more importantly to help transform attitudes at Juniper (and in the industry) regarding NFV.

In the late 90s and early naughts, the carrier wireline business went through a significant change with the deployment of provider managed virtual networks (using BGP L3VPN). From a business perspective, this was essentially outsourcing the network connectivity for distributed enterprises. Instead of a mesh of frame relay circuits managed by the enterprise; carriers provide a managed service that includes the circuit but also the IP connectivity. This is a service that has proven to be fairly profitable for carriers and a key technology for networking vendors such as Juniper. The company’s best selling product (the MX) earned its stripes in this application.

Carrier wireline is going through a similar change in the next few years. This time outsourcing network based services that are still present at either the branch office or central offices: security (firewalls), VPN access, NAT, wireless controllers, etc… The business case is very similar to managed connectivity. I believe it became clear during 2014 that these virtualized services are going to run on OpenStack clusters and that the OpenStack network implementation is going to have a similar role that the L3VPN PE had in connectivity.

The timeline for this transformation also seems to be accelarating. Some carriers with a more competitive outlook for their wireline business are planning on trials with live traffic for Q1/Q2 2015; some of these projects are in a rather advanced stage.

Across all the major carriers, I see a demand for a production-ready OpenStack networking implementation now. The consensus seems to be that there are two alternatives available on the NFV market: OpenContrail and Alcatel’s Nuage. Not surprisingly, both of these solutions where built on the technologies that made connectivity outsourcing successful: BGP L3VPN and EVPN. Technical experience provides an advantage in delivering production capable solutions.

While OpenStack seems to be solidifying its position in both the public cloud space and in NFV solutions, 2014 is the year that containers (which docker greatly helped popularize) went mainstream for SaaS/enterprise developers. A significant percentage of operators considering docker/container solutions, that I spoke with recently, are still uncertain of what orchestration system they will use. Most are considering something other than OpenStack. I expect that this space will keep changing very rapidly in 2015.
For the OpenContrail project this implies the need to integrate with multiple additional orchestration systems.

The “enterprise switching” space has also advanced significantly in 2014 when it comes to perception. I often explain to network engineers that OpenContrail implements the functionality that was traditionally present in the aggregation switch in a traditional 3-tier design. This is where, traditionally, access control policies and network based services where applied to traffic transitioning administrative domain.

The need to transition from an aggregation switch to a solution such as Contrail comes from the fact that increased bandwidth requirements force network engineers to opt for a CLOS fabric design. As the fabric bandwidth increases it is important to simplify the role of the fabric switch node. These switches are becoming increasingly commoditized to the point where most switch vendors offer pretty much the same product, with the variation being the software. Often network engineers attempt to reduce the functionality running in that software to the minimum.

2015 is likely to bring additional movement towards switch commoditization. There is still space for “premium” switching solutions but my understanding is that most industry observers would expect this to fall into a 80-20 rule with 80% of the market preferring an OCP-like switch.

Against this backdrop, the Contrail product is finally starting to excite the Juniper sales-teams. Taken on a per-server basis, potential revenue of the Juniper Contrail solution is in-line with selling switch ports, when taken at a 3-year time interval. Software has better margins and Contrail is a differentiated product with one viable competitor in each of the markets it plays in. My expectation is that we will see in 2015 a much greater interest from the parent company in the Contrail business unit; <smirk> which will undoubtably be a mixed blessing </smirk>.

Simultaneously, I believe that in 2015 OpenContrail will become much less of a Juniper project and much more of a partnership of different vendors and cloud operators. From the perspective of Juniper’s commercial interests that is not a bad thing. It is much preferable to have a smaller share of a bigger pie than 100% of a small one.

OpenContrail seems to be at a juncture where its starting to attract significant interest from people that have become disillusioned with other approaches that lack its problem statement and execution focus. The challenge will be to retain the later properties while creating a “bigger tent” where others can meaningfully participate and achieve both their technical as well a business goals. It promises to be both challenging as well as a great learning opportunity.

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