F5 kicked off its #F5Agility18 conference with over 1,300 attendees.  The company’s themes was “Any app, anywhere,” and words repeated included “Automation” and “as a service.”  The company is moving towards selling security as a standalone offering.  Accompanying the show, there was a press release announcing Gi LAN traffic management and Gi Firewall VNFs generally available September 2018 focused on mobile operators, available on capacity-based consumption model.  A striking difference between this year’s conference in Boston and last year’s conference in Chicago was that a significant portion of the management team is different: new CIO, CFO, regional VP, Chief Strategy Officer, two new SVP/GMs of business units, EVP HR, EVP Services.

Generally, the company is planning on delivering new capabilities:

• automation & orchestration,
• cloud-native applications service platforms (Packaged software and as a service for native cloud consumption experience (in next 12 months)
• new application security services.

Here are the three eras of market development for F5:

• 1996-2004.  Load balancer.
• 2005-2015- ADC market.
• 2016+    Multi-cloud application services

The company is putting significant investment into SP, software, automation.  “Any app, anywhere” vision.

​Growth strategy:

1. Drive share gain in physical ADC market.  F5 expects physical ADC down mid single digits Y/Y (5%).  Think ours will decline less fast b/c we have exposure to largest customers, have SP exposure who demand hardware (ViPRION) and because we innovate on hardware faster than competitors
2. Capturing growing demand for virtual ADCs and ADC-as-a-service.  Been growing vADC 20%/yr past few years; could accelerate.  Just now releasing purpose-built software (BigIP) and cloud-native software in early 2019. 
3. Expanding security with new multi-cloud solutions.  WAF enhancements. 
4. Creating long-term value through services. 
5. Driving margin expansion and earnings power.  Through scale.  40% software by 2022. 

Development timeline:

• F2018: Just announced orchestration / automation a few months ago for BigIP (BigIP Cloud edition).  Per app use-cases are enabled through this innovation.
• F2019: cloud-native app services.  Container-based, Kubernetes, cloud-native distributed ADC system.  Beta end this year, release 1H19.
• >F2019: ADC-as-a-service. 

Security strategy:

• F15-17: ADC-attached security
• F18-19: Standalone security offerings
• F20-22E: Multi-cloud application security

Fast-growing Ethernet Switch vendor Arista Networks announced plans to acquire Mojo Networks, an Enterprise-class WLAN vendor today.  The deal is expected to close in C3Q18.  This deal douses hopes that Arista may buy other WLAN vendors, in our view.  Mojo Networks is unique in the WLAN industry: (a) it has a different business model from competitors, and (b) as of Aug 2018, it manages more Enterprise-class Access Points using Artificial Intelligence than other vendors.  Arista says that it plans to use Mojo AI in its Cognitive Cloud Networking for Campus initiative.  

Mojo Networks has taken revenue for cloud-managed services and has not taken revenue from the sale of Access Points.  The Access Points are sold by distributors who make a small margin and drop ship them to Mojo Networks customers.  The Mojo Networks revenue from cloud-managed services is significant when compared to other vendors in the Enterprise-class WLAN market.  Additionally, because Mojo's Access Point selling partners charge only a small premium for the hardware, Mojo customers benefit with a lower total cost for the Access Points, than, say, Cisco or HPE Aruba Access Points.

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Back in late January 2018, Aerohive announced its 802.11ax product line.  We have eagerly awaited for the company to ship and today, the company announced its first 802.11ax customer, Wellington College in the UK.  The company claims it is first to ship 802.11ax to a European customer; we are not aware of any others who have done so (but not every vendor puts a press release out about this kind of thing).  Still, quite an accomplishment.  We understand that the company plans to continue shipping more products in the coming weeks and that by "late summer" the 802.11ax product shipment status should be considered "shipping."  

We had a follow up call with the product managers at Aerohive about 802.11ax and got an update:

• Aerohive has had several beta customers already using its 802.11ax APs
• The company expects that the OFDMA features in 802.11ax will be more important than the MU-MIMO features in practical terms
• Target Wake Up Time and 2.4 Ghz support are important features supported in the first Wave of 802.11ax to support Internet of Things (IoT) devices
• Overlapping Basic Service Set (OBSS), 1024 QAM and 160 Mhz Channel width will all improve functionality of 802.11ax compared to its predecessors 802.11ac and 802.11n.

 

H3C and Qualcomm announced the planned availability of the WA6628 802.11ax Wireless LAN Access Point; it is slated for September 2018 shipments.  This new Access Point uses the Qualcomm IPQ8078 part number - we checked the Qualcomm website and we cannot find this part on the website.  So, we assume that this is a future product.  

While the H3C press release is not the first 802.11ax Access Point get announced (Huawei, for instance, announced its own .11ax product in early 2017), this is important because this press announcement has a specific shipment date - September 2018.

Additionally, it is generally expected that another set of announcements are imminent from vendors using Broadcom chips.  Looks like Qualcomm and H3C wanted to get ahead of those announcements.

Not quite a year ago, Cisco and Google announced a Cloud partnership. Today, at the very first keynote at Cisco Live 2018, Diane Greene, CEO of Google Cloud joined Chuck Robbins on stage to talk about the partnership, highlighting Kubernetes and a  unified security policy.   Both Chuck and Diane want a large ecosystem of partners and developers.  Later on, Chuck mentioned Cisco passing the 500K developer milestone for DEVNET.

Chuck touched a litter on routing, mentioning next-generation branch and highlighting intent based networking activity in the SP space.  For example, one of their SP customers updates 60,000 routers each night using automation. He then quickly got back to the Catalyst 9K switch, highlighted as the fastest ramping product ever in Cisco history.
 
Children’s Hospital of Los Angeles was highlighted as a customer of the Cat 9K. As a customer, they have over 35,000 connected devices.  They purchased over 2,000 WLAN APs and over 200 Cat 9300 switches. They are also deploying ISE and have done over 23,000 different device profiles/identifications and are track to start policy enforcement.  They are now in the process of deploying at their branch locations. They noted 550k blocked threats over the first few months of deployment.
 
My key takeaways are that there is an explosion of devices and data on the network, much of which is encrypted and a human can only do so much; thus the network must scale and automate.  Cisco is looking to use AI, automation, and its architecture to allow the customer to scale with those IoT devices and to have the network automate many tasks, especially around security. Monetization for Cisco will occur both in the hardware, but also in the solution sale.  An ideal customer would be end-to-end Cisco, but Cisco will also support open APIs in order to allow partners and customers to operate with their preferred solutions.

We attended the Ribbon Perspectives conference in Los Angeles this week.  Ribbon, the result of the merger between Sonus Networks and GENBAND, made the pitch that it is moving to the services oriented business of real-time communications over time instead of just being an infrastructure equipment company.  Ribbon has differentiated from competitors in a few different ways, including that it is the first vendor to bring GPU-based acceleration to the telecom network industry and that it is offering a white-label voice/Communications Service as a Platform (CPaaS) service.
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Kevin Riley, CTO Ribbon commented that:

• Public cloud is viable for use in telecom
• The company has deployed Microservices SBC at edge and core in a large Tier 1 North American Service Provider

Disruptive technologies that Ribbon is pursuing:

• 5G
• IoT
• Big Data/ML
• uCPE
• SD-WAN
• GPU
• CPaaS

GPU helps transcoding, complex media in SBC environments.  Have invested for the past 2 years.  3.5x transcoding compared to DSP, 9x transcoding compared to CPU, 2x power consumption reduction.

Ribbon is using GPU in both private and public cloud, just won Japanese Interconnect at hyperscaler scaler for transcoding.  Will likely pursue GPU acceleration for cryptography, video and DPI.

Additionally, the company emphasized its relationship for its new services - a win with Softbank Japan chose Ribbon Protect.

Ribbon's bets:

• Analytics & Security
• Kandy.  Consumption-based.  Only "white label go to market strategy"
• GPU/NFV.  Only company in telecom with GPU expertise

David Walsh, Founder Kandy.
Customer wins discussed during presentation:

• Optus Loop
• IBM/Softlayer got Hertz as first customer, using Kandy.  IBM will become a major voice player, using Kandy, according to Ribbon
• City of Los Angeles.  Active Shooter application
• KPN CUBES
• IPC, 2,000 users now, rolling out further
• Etisalat

The company highlighted several features about Kandy:  IoS call-kit integration, Outlook integration, web browser integration, meeting collaboration, advanced conferencing, and an AI assistant capability.  The company reiterated its focus is on the enterprise market, unlike Twilio who it says it focused mainly on the consumer market.  The company declined to disclose revenues of its Kandy business.

Well known security company, Fortinet, acquired privately-held Bradford Networks on June 4, 2018, citing the need to extend segmentation and security to the edge of enterprise networks, including Internet of Things (IoT).  Fortinet does not expect the transaction to have a material impact on the Company's 2Q or full year results, which is consistent with our estimates of revenue for Bradford.  Historically, from a market share standpoint, we have categorized Bradford in the Other category of ENAC. 

Fortinet cites the growth in IoT and Bring Your Own Device (BYOD) - both of which are largely wirelessly connected devices in the enterprise setting as reasons why Fortinet felt a need to acquire Bradford.  Fortinet, like other ENAC vendors, cites the value of quarantining badly behaving devices (using words like "posture" to describe this function), wired + wireless environment support and automatic segmentation.  What will Fortinet's entry to the ENAC market mean to the networking industry.  Well, Fortinet is one of the players in WLAN, albeit a low single digits percentage revenue player.  But, like other WLAN vendors, it now has an ENAC solution. 

The main vendor ENAC vendor without a WLAN owner is recently IPO'd ForeScout - will it survive long as a standalone?  Maybe, because its market capitalization is relatively large compared to the remaining WLAN players.  Interesting, Fortinet takes the time to explain that it will continue to work closely with Bradford competitors who have competing solutions, such as Aruba ClearPass, ForeScout CounterAct and Cisco ISE through its Fabric Partner Program, citing the need for open standards.  

We attended the Wi-Fi NOW conference in Redwood City, CA this week and attended some interesting presentations.  We are writing about our observations and notes from the Google, Quantenna, Mist Systems and Mojo Networks presentations.  

Google Station presentation.  "GOOGLE STATION: PUBLIC WI-FI TO CONNECT THE NEXT BILLION INTERNET USERS."  Monica Garde and Erika Wool made an interesting presentation.  The jist of the presentation, from our viewpoint, is that Google is partnering with service providers and enabling these service providers to monetize the Wi-Fi network through a revenue sharing system that is based primarily upon advertising.  The company shared some statistics, which we have in the accompanying slide.

Quantenna presentation.  James Chen, VP Product Line Management presented "GREAT INNOVATIONS PART ONE: MASSIVE MIMO & DUAL-BAND 802.11AX".  Chen made the the case that 8x8 WiFi (that Quantenna calls Massive MIMO) outperforms 4x4 systems.  For instance, in its tests, at 85 RSSI and through a wall, performance was 1.6x greater using 8x8 compared to 4x4.  The company also made the case that Massive MIMO has greater throughput compared to non Massive MIMO, as well; the company has demonstrated >1 Gbps throughput in a typical home.  The company showed that Massive MIMO alleviates the "Sticky Client" using a 1x1 Samsung Galaxy Tab Active2 device.  The company did not talk about 802.11ax, unfortunately, other than to say that 8x8 is relevant for 802.11ax, as well.

Mojo Networks presentation.  Mojo CEO Rick Wilmer made the point that simply enabling Cloud-managed Wi-Fi has been done already, implying this is cloud 1.0, and that this message is boring.  The company explained that its cloud architecture is cloud 2.0 because it takes advantage of the capabilities in the cloud and enables - Cognitive Wi-Fi.  Cognitive Wi-Fi, as far as Mojo is concerned, has to do with big data (store key client parameters and run ML algorithms) and smart edge APs.  The company didn't go into deep science of ML/AI, but explained the ML workflow: 1-data collection, 2-training the classifier model, 3-trained model in action, 4-result.  

Mojo explained that it has lots of data to perform Machine Learning on.  It has 1/2M APs deployed.  The company shared that using 1 week of data of a subset across only 4 verticals (enterprise, education, mfg, retail & hospitality): 237K clients, 31M associations, 400+ applications.  Separately, the company said it has obtains 50M associations per week (in a press release).  A significant amount of the data that is delivered to the cloud has been pre-processed in the Mojo APs; the APs cache 2 days of data.  The point of these statistics, according to Mojo, is that it has more data than other Wi-Fi vendors to train its Machine Learning system on.  

According to Mojo, using inference engine, automatically fixes everything possible.  Wilmer says that this makes interacting with the User Interface less necessary because it takes care of problems automatically.  Was Mojo serious or joking when it said, "the UI may disappear as we know it."  Time will tell.

The company shared some other information that was interesting:

• 130K APs deployed at a single customers - a very large customer.  Very scalable.
• Many Mojo customers are decomissioning their EThernet infrastructure (including cables) in lieu of using Wi-Fi from Mojo. 
• Mojo deploys 'a lot' of 3 radio APs.  With third radio, a listening radio, it watches RF environment and does wireless intrusion scanning.  Every 5 seconds, it feeds critical information to the ML environment.  So, if users physically move, the AI system can make adjustments to the system so there are fewer performance issues.  The third radio can also be used as a client, to simulate performance.  This client capability can run the specific application that will used in an environment and simulate whether the Wi-Fi will perform adequately before an event (like a test at a university, for instance).
• Open Standards.  Believe all APs from all vendors should interoperate like light bulbs.  That would accelerate the Wi-Fi market.  Wilmer highlighted that the OCP event, earlier this year, Mojo 'lit up' the entire trade show floor with non Mojo APs using the Mojo system.
• Mojo will announce AP providers soon that are not Mojo APs that you can plug.  No margin stack from an OEM, purchased directly from an Asian ODM.  

Mist Systems.  Bob Friday, of Mist made a presentation on May 17, 2018.  In addition to the content from his presentation, I interviewed other at Mist personnel at the show.  The company claims it is focusing and having success in selling to large enterprises.  We learned that Mist uses Broadcom WiFi chips and has a custom-designed Bluetooth antennae array (shown at the show).  The company highlights its location services as a unique capability, and it draws upon its Bluetooth capabilities to deliver location.  However, the company's main message is its AI capabilities; in some ways, it has become the poster-child for AI amongst startups in the networking industry.  Mist's presentation at the show reiterated the same point - that it is an AI company.  

Stepping back, Mist has been shipping commercially for a year now.  In our observation and research, the company's efforts to take share from competitors has landed it on the map - over the past two quarters, its larger competitors have taken notice of Mist and see it competing at large enterprise accounts.  

During the Q&A part of the presentation by Bob Friday, Mist CTO and founder was asked something that we found very interesting; the question was what kinds of algorithms does Mist use in its system, and do they all need to learn?  The answer was to the effect that many different types of algorithms are used, linear optimization, decision tree analytics, neural networks, etc.  Friday made the case that there are just certain things you just know about how a WiFi network will and should work, so why go an have a machine learn about it when you already know it.  This begs the question - how necessary is AI in the first place, especially if the vendor and its IT workers or VARs have gobs of experience and can design and implement a Wi-Fi network right in the first place.  Looking at the problem differently, what this means is that some vendors may have had different backgrounds than competitors and can design Wi-Fi systems that know how to work under a variety of working conditions.  Friday was also asked another question - given that Mist is focusing so much on AI, does this mean that far fewer IT workers will become employed?  Bob's answer was diplomatic, but probably true - he said that no, we'll need the same number of workers in the near-term, and that AI Wi-Fi will simply allow the same number of IT workers to make better decisions.  Still, the question makes it clear - the audience is concerned about job loss as AI works its way into the IT industry.

Earlier this year, Aerohive issued a press release about its A3 software system.  A3 is what we categorize as an Enhanced Network Access Control (ENAC) system; we calculate market share statistics on this market in our Security report series.  The company is now getting ready to bring the product to market and is blitzing the media, so to speak.  We were briefed and learned more about the product. To summarize, it checks the boxes necessary for us to include it in our ENAC report and we like that it has a common user interface to allow customers to perform device profiling, authentication / registration, compliance / remediation, device management, billing integration and network access control.

Our outlook for ENAC is positive and, today, three main vendors consist of the majority of share: Cisco (with ICE), Aruba (with Clearpass) and ForeScout.  We learned that company has more aggressive pricing than these market leaders.  If you look at why a product like A3 is important to Aerohive, recall that back when Aruba introduced Clearpass back in 2012/2013, it used it as a selling tool to get into its competitors' accounts (it also got high margin sales from Clearpass, too).  Aerohive's A3 is positioned similarly - it operates with its competitors' equipment (including those from Cisco, Ruckus, Extreme and others).  So, Aerohive has developed another means of selling to customers, by offering A3 to customers using non-Aerohive equipment.  

Tomorrow, 650 Group's Alan Weckel will be a featured speaker on the NBASE-T hosted webinar, entitled "Growth of NBASE-T, Market Trends and Forecast."  In this webinar, we will review Ethernet trends that related not only to Campus Switch ports, but also WLAN, computing and other devices.  The NBASE-T ecosystem continues to expand, including most recently with broadband modem devices.  We are excited about this market and hope you will attend.