Broadcom joined both Innovium and Nephos by publicly announcing 12.8 Tbps fabrics with its Tomahawk 3 product line. We love new data center silicon from all vendors, it is something we track closely and we see these as a disruptive technologies to the networking ecosystem and an enabler of next generation cloud architectures. There will be many more such announcements in 2018. Here are some of our takeaways as we enter 2018.
More rapid innovation cycle – Even noted in the Broadcom's Tomahawk 3 press release, we see the demand requirements of the hyperscalers as driving a more rapid cycle of silicon over the next couple generations. Tomahawk 3 is being introduced less than the typical 24 months we see separating prior between generations of data center fabric semiconductors. This will put significant pressure on parts of the supply chain, especially on optics vendors. Optics vendors are still ramping for 100 Gbps and now must support both OSFP and DD-QSFP for 400 Gbps, essentially doubling their product diversity needs. Not only are there more form factors, but there are also different variations of distance and specifications that increase the complexity.
What next – We see two waves of 400 Gbps, the first being based on 56 Gbps SERDES, the second coming in the 2020 timeframe based on 112 Gbps SERDES. We believe 800 Gbps is not that far off in the horizon as hyperscalers like Amazon and Google continue to grow. We note that the hyperscalers are about to be 3-4 generations ahead of the enterprise. This type of lead and technology expertise really changes the conversation around Cloud. We saw this at Amazon re:Invent with their Annapurna NIC, the Cloud is doing things that just aren’t possible in the enterprise, especially around AI, machine learning, and other new applications that take advantage of the hyperscalers size.
2018, the Year of 200 Gbps and 400 Gbps – In 2018 we will see commercial shipments of both 200 Gbps and 400 Gbps switch ports. We see significant vendor share changes because of this. Simply put the Cloud, especially the hyperscalers will be that much bigger by the end of 2018 and they buy a different class of equipment then everyone else. This will continue to cause the vendor landscape to evolve.
New CTO - It was great to see and hear Juniper’s new CTO, Bikash Koley at NXTWORK. The message was very clear that new networks need to be built, not only from the speeds and feeds technology point of view, but from the operator point of view. Scale and simplicity are very important and only going to be more critical as billions of IoT devices dump traffic and data on the network. Juniper is looking to take the network it is building for some of the hyperscalers and Service providers and take help the tier 2/3 Cloud as well as the enterprise customer adopt a cloud architecture for the future.
Contrail – The big announcement was OpenContrail joining the Linux foundation. What we saw in talking to customers and listening to the talks was that Contrail has significant commercial adoption, definitely larger than perceived in the marketplace. We see the largest hyperscalers and service providers as having their own controllers, but see Juniper leveraging its expertise in this area into smaller Cloud and service providers. This will give Juniper the opportunity to build, operate, and transfer for many customers.
We were impressed with the caliber of customers that Juniper has. Juniper has premier Cloud, Service Provider, and Enterprise customers. We enjoyed listening to Twitter’s VP of engineering on stage as an example. We see Juniper as one of just a handful of vendors that can support a customer base with this breath and complexity. We note Juniper mentioned complexity and simplicity throughout the sessions; we only see networking getting more complex, especially as we move beyond 100 Gbps. It is up to vendors to help the human scale with that complexity and we saw Juniper give many good examples during NXTWORK 2017.
Nokia was bullish on its technology developments and cautious on telco capex. CEO Rajeev Suri described the telecom market as having tough market conditions and expects telco equipment market revenues down in 2018. He said the Swedish competitor pricing aggressively and that it will be difficult to keep share in China with 5G ramp. He said Nokia is executing on plan to grow non telco verticals – and it will take 3+ years before it is sizable enough to potentially offset telco challenges. He emphasized a key strength is its focus on cost reductions. He highlighted success in cable MSO market and that its FP4-based router will ship in a few days. Suri thinks 5G could roll out in China first, maybe tied with US. Nokia CEO's comments were quite similar about 5G rollout timing expectations compared to comments made at Huawei’s recent conference (2019 initial deployments; chipsets 2019; broadening deployments in 2020).
Some more details from Rajeev Suri's presentation:
Ericsson. We were surprised that the CEO of Nokia took the opportunity to take some digs at Ericsson. He said that Ericsson is pricing aggressively; it also shared some quantitative statistics about competitive take-outs of Ericsson installed base. He argued that it has broadest portfolio in industry (fixed, software are examples).
China. Two interesting comments about China – a) will be difficult to maintain share in China as 5G rolls out, b) China might be first to deploy 5G.
Emphasized that Amazon Web Services is making a presentation at this conference. Said its new FP4-based routers are more efficient than any competitor and will be so for at least the next year.
Other presenters made comments about 5G mainly. Here are some interesting comments:
Artificial Intelligence. The company has a lot of network automation technology that is it working on but would not share details about this technology. We guess Nokia is more open with its customers and that it'll make announcements at MWC '18 in Barcelona.
5G Radio. Beamforming is a key technology that will be highlighted in 5G. Also, the company's separation of Stage 1 and Stage 2 MIMO processing makes the bandwidth needs from baseband to array be much less than competitors. Additionally, the company explains that its expected systems will have dramatically higher efficiency than competitors - again, the company kept its secrets here under wraps. Late 2018 will see first 5G deployments, going into 2019.
IP/Optical. Basil Alwan, President IP/Optical division said the first FP4-based product went to production end of the last week. Major customers will take shipment before the end of this quarter. The company will ship its 57 Terabit router during 1Q18. SD-WAN will replace MPLS VPNs over time, perhaps at a rapid pace.
Service Provider presentations:
Amazon Web Services IoT. Satyam Yadav, GM of AWS IoT made a presentation at this meeting. The presentation focused on how Amazon's IoT software and its services would be used in a partnership with Nokia to deliver Amazon IoT services.
Sprint. Ron Marquardt, CTO. He is not sure how much customers might pay for lower-latency connections available from 5G. Now that the uncertainty of the T-Mobile US acquisition is beyond us, Sprint says it is rapidly focusing on spending to upgrade its network. Sprint also said it plans to deal with fewer vendors in the future.
Elisa. The Finnish operator presented data about its extraordinary data traffic growth and its per-subscriber data usage being far above competitors as well as other service providers in the world.