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Today Intel had a major Data Center event in San Francisco. It was a multi-hour announcement showcasing all the different products Intel is/will be launching.
Some interesting background that Intel talked about was that only 2% of worlds data has been analyzed and a 5G will be a major driver move compute to the edge. They also touted that over 50% of AI workloads are inference and runs best on Intel (X86). Noticeably absent at the beginning of the presentation was Intel’s work on training. We found the most interesting parts of the announcement being that AWS talked about custom versions of Intel’s CPU and a Up to 14X inference improvement from just July 2017 in its XEON processors. Overall there is a 30% gen/gen improvement in XEON, the biggest jump in 5 years. While staying at 10NM, Intel is able to continue to squeeze performance gains out of the server. It is important as we hit the limits of process geometry that everything be accelerated, especially with Intel having a similar view of AI workloads and that’s what we saw with Intel. New Optane memory, new persistent memory, faster Adapter cards which will lead to more Smart NIC announcements, and a 10nm FPGA. It was clear at the event that large cloud provers like AWS, Azure, and Tencent are looking at all avenues to increase performance and reduce power consumption via software and hardware advancements. Some interesting highlights included AWS touting over 100 unique instances that leverage Intel processers with more SAP instances running on AWS than anywhere else and Formula 1 using of 65 years of historic race data to train its models in order to make real-time race predictions. 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. Today Broadcom announced Trident 3. The companies third major release of a chip that drove the merchant silicon revolution in the data center and started the white box movie in the Cloud. With Trident 3, all of Broadcom’s data center switching ASICs now support speeds of at least 3.2 Tbps per chip.
Trident 3 is impressive, but a few things about it really caught my eye. First, Trident 3 will offer five different skus, two of which are really focused on campus switching. One could see a 48-port 2.5 Gbps switch out of the X3 version of Trident 3 next year. We believe the Trident family moving into the campus will be significant for the industry once products begin to ship. Second, native 25 Gbps ports. Trident is the most popular of Broadcom’s ASICs, especially in the enterprise, and with Trident 3, we expect the market to quickly move away from 10 Gbps/40 Gbps products and towards 25 Gbps/100 Gbps products. This product aligns well with our forecasts for this transition which we are excited to be publishing shortly. We still don’t see a bandwidth need in most enterprises for 25 Gbps, but the ability to future proof at the customer level and the ability to consolidate skus at a vendor level will make this compelling. Third, we see a potential for both switch vendors and customers to benefit from one family of ASICs from the campus all the way to the data center. While it is too early to know the impact of this right after the announcement, we look forward to conducting interviews over the next few months to define this impact. Extreme Networks has been very busy announcing acquisitions lately. Yesterday, it announced plans to acquire Brocade's Data Center switch business and on March 7, it announced plans to acquire Avaya's switch business. Additionally, it completed its acquisition of the Zebra Wireless LAN business just last October 2016.
When the two switch acquisitions are completed - some time in the summer of 2017 - the company will be vaulted higher to become one of the major share leaders in switching. To put the acquisitions into context, assuming the acquisitions had been completed last quarter, using our 4Q16 Ethernet Switch Market Report revenue share figures, the company's share would have been:
In 2016 Data Center switch market share leaders by revenue were (alphabetically) Arista, Cisco, Juniper and White Box vendors. In the North America in the Campus Switch market by revenue, considering Extreme had acquired the switch divisions of Brocade and Avaya it announced in March 2017, market share leaders were Cisco, Extreme and HPE. Starting this year, we expect that networking customers will get used to seeing Extreme in the top share lists when considering vendors. |
CHRIS DePUY
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