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

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.

There were two main announcements, a new relationship with Google Cloud Platform and a new flash device - the AFF A800. Also, in our interviews with NetApp, we learned about the future of Fibre Channel at the hyperscalers.

Google.  Google Cloud Platform now integrates NetApp Cloud Volumes as a drop-down menu capability as part of the Google console.  This allows enterprise customers, for instance, to use Cloud Volumes to manage their data on Google's cloud service while simultaneously managing their data on premise.  This relationship with Google now rounds out the NetApp relationships with the main hyperscalers - it already has in place relationships with both Amazon (AWS) and Microsoft (Azure).  NetApp Cloud Volumes on Google Cloud Platform is currently available as a "preview" capability (sign up at www.netapp.com/gcppreview) and is expected to go to commercial status by the end of 2018.  Customers will pay Google for the use of NetApp Cloud Volumes.

AFF A800.  New flash hardware available from NetApp, which besides having impressive density and low-latency capabilities supports NVMe-over-Fibre Channel.  Of course, the product also supports 100 Gbps Ethernet.  From a historical standpoint, it is interesting that NetApp, a company whose heritage was driven by storage over Ethernet, is touting Fibre Channel.  But, that's what its customers are asking for in order to accelerate their on-premise workloads such as database (Oracle), ERP (SAP) and other mission-critical enterprise workloads.  In our interviews with NetApp, we were told that Fibre Channel is growing faster than Ethernet - this makes sense given the company's foray in recent years to flash and low-latency workloads.

Fibre Channel at the hyperscalers?  We asked about what is going on with the hyperscalers' architecture to adapt to AI/Deep Learning workloads.  NetApp executives explained that AI workloads are different from traditional workloads; they are random, low latency workloads connecting to GPUs.  This type of workload, we were told by NetApp, works very well when attached to Fibre Channel.  From NetApp's perspective, if customers want to run AI workloads fastest, they would likely do so on-premise, using Fibre Channel.  Yet, many customers run their workloads on hyperscalers, all of which use Internet Protocol and the underlying Ethernet infrastructure.  We have always been skeptical that hyperscalers would adopt Fibre Channel.  We believe the hyperscalers may work with vendors such as NetApp to develop additional software capabilities to address the changing workloads relating to AI/ML/GPU workloads in the future - on top of IP/Ethernet infrastructures.  

We attended the Deutsche Bank Tech conference this week and met with a ton of companies.  It is always interesting to see the difference in questions from investors vs. those directly in the industry.  During the conference, each company put spin and had different definitions of Data Center Interconnect (DCI) that helped address their specific portfolio.  This is very similar to the early Cloud days where every vendor and component manufacturer said they sold into the Cloud.  Fast forward to today, and very few vendors sell to the Cloud.  We see a similar end game with many suppliers being squeezed out of the DCI market as it matures.
 
The lack of clarity created confusion amongst the investors as they went from session to session and we think is a short term negative to the market.
 
We are very excited to have holistic DCI coverage.  One that looks at legacy approaches around Optical and the new approach of using switching and routing.  We are hopeful that the market will move towards one consistent definition of DCI as that will be better for the market itself and the suppliers in that market, but see that as unlikely as many vendors seem to be digging into a definition that is self serving and more focused on legacy products vs. what customers will want in the future.
 
We look forward to many future conversations on DCI.

Tomorrow, at 8:30 AM, we are presenting at the Flash Memory Summit 2017 and will share our views on the storage infrastructure market.  We expecting growth in segments such as hyperconverged, All Flash Arrays, and SDS.  We expect growth from customer groups such as Cloud Service Providers, as well as Telecom Service Providers, while traditional enterprises are expected to experience declines.

From a technology standpoint, we are bullish on NVMe technology as well as 3D Xpoint and expect that Hard Drive based systems will experience long, slow declines.

For those in attendance at Flash Memory Summit (#FMS2017), we will be presenting slides.  If you are interested in learning more about our views on the storage infrastructure market, please contact us.

Aerohive, a leading enterprise-class WLAN vendor, announced changes to its product and services pricing that is intended to get its foot in the door of more customers.  Here is what it has done:

• Announced a new WLAN Access Point, the AP122, an 802.11ac device, for $229.  This includes a cloud-management service for no cost.  The version of cloud management, called "Connect" that comes with this product has fewer features than its current cloud-manged service, which will be called "Select."  The AP122 will still have BLE Beacon and USB support, making it suitable for both retail and hospitality vertical markets.
• Announced it is changing pricing across its total product portfolio, with the approximate net effect being a lower customer price for hardware plus its services of about 1/4 off the prices just a week ago.
• Changed pricing of its exiting AP130 to $299, which, like the AP122, includes "Connect" cloud-managed service.  the previous price of the AP130 was $599.

Taken as a whole, it appears that Aerohive has seen that there has been stronger growth with more aggressively priced products from competitors, such as Ubiquiti Networks, and the company wants a piece of this faster growth.  

In our interview with management about the new product (AP122) and new service (Connect) announcement, we learned that the company expects many of its prospective customers will opt to chose the "Select" service level over time because there are more features than those available from Connect.  Additionally, we learned that the company will be charging somewhat more for its services and software and somewhat less for its hardware, taken as a measure across its entire product line.  We see this change as being consistent with its price-aggressiveness it just announced for its low end" of its product line, namely the AP122 and AP 130.  

We expect that Aerohive's pricing moves will have an impact on the industry. Certainly, other well-featured products with aggressive price points have done well in the marketplace in recent years.