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650 Group Blog

Fortinet Accelerate 2022 Recap

5/11/2022

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Fortinet had its Accelerate 2022 conference today. Its executive team presented its current strategy and expectations for the future and highlighted what it thinks are its key differentiators in the marketplace. The company explained: (a) the importance of its ASIC and its software code-base called FortiOS, (b) its services bundling strategy called "Fabric," and (c) its sales and marketing differentiation (the presentation was intended mainly for its selling partners as well as for financial analysts).   We were reminded of the relative simplicity of Fortinet's messaging (Fabric, ASICs) and the solid financial results that illustrated its sales team and partners' success (it grew product revenue 54% Y/Y in the most recent quarter).
​
ASICs and FortiOS. The company explained that it takes around four years to develop an ASIC. According to its ASIC roadmap, it has three types of ASICs: Network Processing, Content Inspection, and Entry-level Systems-on-Chip.  CEO Ken Xie explained that the company uses 7nm process geometry semiconductors for its ASICs, which we assume means for its CP10 (content inspection) based on the timeframe shown in its ASIC Roadmap. The company's marketing strategy around its ASICs is that these systems allow its firewall platforms to perform better than competitors.
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Fortinet Accelerate 2022 ASIC Roadmap
​The company's operating system software that runs on its firewall platforms has evolved to include many functions besides standard firewalling, including SD-WAN, Enterprise WLAN Controller, and SASE. What's interesting is that Fortinet is up till now has been taking an appliance-focused strategy and integrating many non-firewall services into its FortiOS. However, the company indicated that the OS will find itself in many environments in the future. Indeed, management highlighted that it sells FortiOS to four different environments today, including on appliances, as virtual software (that can operate in a data center, on a cloud hyperscaler infrastructure, or as cloud-native SaaS), as a container, or as cloud-delivered services. The company said that VM revenues are growing very fast, but expects its VM revenue stream to "go cloud-native." The company says it is "working on" a SaaS business and that its customers will consume these SaaS services through Fortinet's own cloud service. To summarize, management said that its R&D team is heavily investing in cloud designs and expects to make new cloud-related announcements soon. 
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Fortinet Accelerate 2022 FortiOS Everywhere
​Fabric. The company highlighted its sales strategy called "Fabric." CEO Ken Xie said that Fortinet charges less for its services, only around 20% of product prices and that when it uses bundling (which we interpret as synonymous with its "Fabric" strategy), it "discounts a lot." The company shared a slide highlighting "Broad Service with Half the Cost." The slide highlighted its FortiCare, FortiGuard, and FortiTrust services on this slide. On the company's earnings call earlier in May, it said it is "giving away" services in some cases. The company's Fabric offering includes services/functions/software such as "Access & Endpoint Security," FortiGuard Threat Intelligence," "Secure Networking," "Cloud Security," and "Network and Security Operations." If we were a competitor to Fortinet, we would find it frustrating to compete with Fortinet's discounting of these services – yet customers seem to embrace Fortinet's integrated product offerings.
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Fortinet Accelerate 2022 Security Fabric
Sales and Marketing. The company rapidly embraced SD-WAN a few years back, and now many of its firewall customers are using the same appliances to run SD-WAN networks. Likewise, Fortinet has embraced the SASE marketing moniker and has found large selling partners for this offering. Likewise, the company has adopted a selling strategy called "OT" that takes advantage of its ruggedized products (first introduced in 4Q20); it has experienced substantial growth in new vertical markets such as manufacturing and construction. The company's management has likewise embraced the industry trend of converging networking and security functions. It expects to sell using its positioning as a leader in "Secure Networking." Fortinet has experienced strong growth LTM product growth of 44% growth, which supports Fortinet's decisions to embrace SD-WAN, SASE, OT, and Secure Networking.
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HPE Aruba Atmosphere 2022 Recap

3/30/2022

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We attended Aruba, a Hewlett Packard Enterprise’s  Las Vegas-based Atmosphere conference.  It was very well attended, and this was Aruba’s first in-person user conference in over two years as we come out of the pandemic.  Aruba made several important announcements at the event, including a formal Network as a Service (NaaS) offering, a series of broad cloud-services announcements, a formal unveiling of the Aruba/Pensando partnership, and the availability of industry first location-based access points. 
​
The biggest splash came with Aruba’s NaaS announcement.  While the company has been offering NaaS for two years, most of the deals were custom deals. In one of the smaller group meetings, the company shared a few of the logo wins, which included Texas A&M, Brookfield Properties, and Trevecca.  What Aruba has done is standardized its offerings to a number of “service packs” that resellers can approach customers with.  The company basically took its two years of experience and and packaged up what it felt were the best practices and the most common packages, which include wireless, switching and more.  On a related topic, 650 Group announced that it is publishing a NaaS report, which of course includes historical and forecast data for this up and coming market.  Additionally, in the small group breakout meeting, some resellers were asking questions about what happens at the end of a three or five year subscription and whether the offering can be split up or must it be sold as one.  We feel that Aruba will be working closely with their partners over the next year or so to support them as NaaS gains stickiness, but that there is some genuine interest as markets move away from pure CAPEX models towards subscription and as-a-Service. 
The company also announced significant enhancements to its Aruba Central Cloud-Managed Services offerings, with Aruba Central NetConductor. NetConductor allows for cloud-based central management of wired, wireless and WAN systems as well as to SASE systems. It also integrates the capabilities of two other functions well known to Aruba customers, Network Access Control (NAC) and Dynamic Segmentation.  Aruba has based NetConductor on some widely used protocols like EVPN, VXLAN and BGP which would allow for integration with both Aruba gear and non-Aruba gear.

During the first day’s keynote sessions, HPE CEO, Antonio Neri, spent quite a bit of time on stage. Former Cisco CEO John Chambers joined him on stage so that they could discuss the HPE  and Pensando’s partnership.  It was interesting to see Chambers literally hugging Neri, especially considering that Chambers ran Aruba’s arch-nemesis, Cisco Systems, for two decades.  It made the keynote very interesting.  We covered the Aruba-Pensando announcement last fall and you can find more about it here. Another thing that is interesting is that Neri’s presence was felt beyond the Chambers discussion, as Aruba Central is now part of HPE GreenLake. HPE claims that this gives IT admins a single operating model for network, compute and storage services across edges, data centers, and public clouds.  

Aruba announced that its newer access points have all been shipping with a location-based feature that leverages GPS.  This is a differentiator for Aruba because it said it is not charging extra hardware or subscriptions charges to use GPS.  We’ve been thinking about what this function can do for Aruba customers. Relative location capabilities have been around on WLAN Access Points and on Bluetooth beacons for several years now and many vendors offer it. However, the way we see it is that having a GPS capability makes location capabilities far easier to use because what Aruba’s location capabilities do is position all the APs on an absolute basis, and thereafter, a relative service like wayfinding, dwell time analytics and the like can be anchored to specific places on a floor plan without having to get the ruler out, so to speak.  Also, maintaining control over inventory can be simplified because these Aruba APs know where they are, like, what ceiling tile they can be found in, or what building they were moved to.

In summary, at the Atmosphere show, Network as a Service has become a major talking point in the industry, Aruba’s cloud service now shares the stage with other top players in the industry, and Aruba announced a really cool function on its access points that simplifies location services.
 


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Extreme Networks Entering the SD-WAN market

8/10/2021

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Extreme Networks announced its intention to acquire the Ipanema SD-WAN operations of Infovista.  The company expects the deal to close in October 2021 and that in Extreme's Fiscal 2022, the revenue contribution will be "material."  We think Extreme's entry to the SD-WAN market gives the company exposure to a critical part of the networking industry, the wide area network market.  In the past couple years, we've seen enterprise customers are demanding a wider range of networking products that will be managed using a "single pane of glass" management system, and with the addition of SD-WAN to Extreme's portfolio that includes Ethernet Switches and Wireless LAN, Extreme's customer appeal will grow.

Ipanema is based in France and after the acquisition, almost a quarter of Extreme's workforce will be Europe based.  Ipanema currently has reseller agreements in place with British Telecom and Orange Business Services and half of its revenues are from the UK and France.  The other half of revenues are from other European countries.  As part of the SD-WAN operations, Ipanema has a relationship with firewall leader, Check Point Software, that allows Ipanema to offer Firewall as a Service (FWaaS).  Over time, Extreme says it plans to address the SASE market, which according to our research is a very high growth opportunity.

Extreme has been acquisitive in the past several years and has been focusing its efforts on offering cloud-managed services as the "glue" that binds its hardware products together.  The plans for Ipanema is that it'll be integrated into Extreme's cloud-managed services system as soon as 6-9 months after its acquisition closes.  Extreme also said it will continue to offer SD-WAN as a standalone offering.
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Aruba Atmosphere 2021 – “Journey to the Edge”

4/13/2021

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Each year, Aruba, a Hewlett Packard Enterprise company has its Atmosphere conference. This year the conference theme was “Journey to the Edge.” However, this year was also much different from previous conferences because Aruba completed the acquisition of Silver Peak last September.  As a result of the acquisition, the conference had a significant focus on SD-WAN, the primary product of Silver Peak, and integration with Aruba.  A critical new trend that the combined company is now pivoting towards is SASE, which Aruba includes in “Edge to Cloud Security.” Aruba is partnering with well-known companies to deliver a complete “Edge to Cloud Security” portfolio. Aruba’s broadening portfolio allows it to “land and expand” to customers and provide a more comprehensive portfolio. Portfolio growth is what other competitors to Aruba are doing because there’s a growing need to manage networking and security systems simultaneously as users and computing leave the campus environment. Additionally, the company made several new announcements to advance Aruba ESP (Edge Services Platform), like Aruba Central being available on-prem, ClearPass Policy Manager integration with the Aruba EdgeConnect SD-WAN edge platform, and IDS/IPS/UTM capabilities. The company also updated its partners on its growing AIOps capabilities and hinted that it would be making Wi-Fi 6E announcements “soon.”

New announcements
  • Aruba Central On-Premises. Aruba Central for customers that need an on-prem solution. This will complement AirWave, and the two will come together to service network management . Central includes deep analytics, peer comparisons, and AIOps. Aruba Central on-prem is a new introduction that sees acceptance by customers who want to manage the system themselves. For instance, Northwestern University, which uses 7,000 Aruba Access Points, is now using Aruba Central On-Premises. 
  • Edge-to-Cloud Security.  This includes a number of integrations for Aruba ESP. Among them are the integration of ClearPass into EdgeConnect, which brings in the zero trust dynamic segmentation; the integration of Aruba Threat Defense with the EdgeConnect platform; and a new service orchestration capability, so customers can have the freedom to deploy best-of-breed, cloud-delivered SASE security components.
  • Zero Trust Dynamic Segmentation. Aruba’s Zero trust dynamic segmentation capability makes it so users and devices only connect to intended resources.  For instance, Point of Sale systems only talk to transaction processing systems.  By integrating with the Aruba-based product called ClearPass, the company will offer end-to-end zero-trust dynamic segmentation. 
  • Unified Branch Security.  Aruba’s IDS/IPS/UTM capability goes to beta April/May 2021, with General Availability expected by the end of 2021.  Aruba will incorporate IDS/IPS/UT into Aruba Central.

Future announcements. Management hinted at some announcements that will come in the future.  These include:
  • Wi-Fi 6E Access Points.  There were no announcements at the conference, but Keerti Melkote, Founder, President and General Manager of Aruba, said such an announcement will come “soon.”

Updates.  We felt some noteworthy comments came up during the show.
  • AIOps. Aruba has offered AI-enabled systems in Aruba Central for the past year or more, and it is a core attribute of Aruba ESP.  The company explained that it sees three general types of AI happening on its systems and also discussed the improvements that some users see from AIOps use:
    • Reactive AIOps – most common (when a customer has a problem, the system help to resolve it)
    • Proactive AIOps – We’ve seen it improve capacity 100% in specific retail customers, 4x speed increases at some higher-ed customers, and 30x reduction in user issues at some enterprise users
    • Protective AIOps (Security) – 75% report IoT blind spots
  • Aruba Central.  The company shared that it has approximately 80,000 Aruba Central customers as of 4Q20, about 50% greater than the just over 50,000 level in 4Q19.  And Aruba Central now manages 1.3M network devices and over 10M end devices.  
  • Aruba has delivered products to customers “on-time” 99.3% of the time, despite industry-wide supply chain challenges.
  • RAP and VIA. Both the Remote Access Point (RAP) series and the VIA software client have been available in both the Aruba and Silver Peak portfolios for a while; there was some discussion about how these can be used to manage and secure work from home (WFH) environments. We found it interesting that Aruba can turn a home into an office and felt that Aruba could have done more to emphasize this, as the product has been very popular due to the Covid-19 pandemic crisis, so we are bringing it up because work-from-home (WFH) and hybrid work schedules are probably not going away soon. 
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Cisco Live Event Features Observability, Network-as-a-Service, SASE

3/30/2021

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Cisco's customer event, Cisco Live (virtual), is underway, and the company made many announcements.  We are emphasizing what we think are the most relevant, which include Observability capabilities, Network as a Service (NaaS), and SASE.  Here is a rundown of what we learned about today.
 
Core portfolio (includes Campus Ethernet Switches, Wireless LAN).
  • Observability.  DNA Advantage and Premier customers will now be able to run the ThousandEyes agent natively on their Catalyst 9300/9400 switches and will receive access to ThousandEyes Internet and cloud intelligence at no additional cost.  ThousandEyes Internet and cloud intelligence data is being incorporated into AppDynamics Dash Studio, AppDynamics’ next-gen dashboarding experience..   Cisco executive, Todd Nightingale, elaborated that the Thousand Eyes acquisition has been integrated into the Cisco portfolio very rapidly, and in fact, more rapidly than the Meraki acquisition.   We think that the merging of Observability into Cisco's core products could drive partnerships between Cisco's competitors in networking, security, and Observability.
  • Cisco Plus.  Cisco Plus offering includes Hybrid Cloud and SASE offerings initially.
    • SASE.  Cisco's first Network as a Service (NaaS) focuses on its SASE offering.  Nightingale emphasized that its SASE focus does not mean it is de-emphasizing SD-WAN, but includes SD-WAN, cloud security gateway, and other security functions.  We see that the cloud security gateway (a cloud-based subscription offering) is a significant services capability for Cisco in that it is not a hardware function that Cisco is offering to customers to then resell to others, instead, it is a cloud-based service that Cisco is offering directly to customers.  Cisco views SASE as the combination of networking, security and analytics.  Executives from two different business units introduced SASE: Todd Nightingale (Core Networks) and Jeetu Patel (Security).  Similar to our comments about Observability, we expect that Cisco's SASE offering will drive Cisco's competitors in networking and security into partnerships or other corporate combinations.
    • Hybrid Cloud. The company will also offer private cloud capabilities such as its UCS server, SAN, DC networking (Nexus) and Intersight (orchestrator) as private cloud capabilities; the company has not yet announced names of 3rd partners.   The company's entry to the private cloud as a service market has some similarities to HPE's Greenlake offering. 
  • Intersight.  The company emphasized its digital networking building capabilities by incorporating technology from Hashicorp with its in-house Intersight capability.  We published our views on this Hashicorp / Cisco deal just a few days ago.

Security (includes Firewall, Content Security, Identity). 
  • Password-less.  The company announced its Duo portfolio now includes the unveiling of its Duo password-less authentication; the company says this capability will be available in July 2021 as a "public preview."  The company indicated that it will also bring Duo and Umbrella capabilities "down market" and will also continue to be available to Cisco's traditional large enterprise.  The company announced that it sees 900 million Duo-based authentications per month across its installed base.
Mass Scale portfolio (includes Data Center Switches, Optical Transport, Routing).
  • Silicon One.  The company reiterated that it has 10 Silicon One chips since its initial announcements ranging from 3.2 Tbps to 25.6 Tbps speeds.  The company claims that it has a dozen companies focusing on Routed Optical networks based on the architecture that leverages advancements relating to Silicon One and its just-closed Acacia optical technology.   Executive Jonathan Davidson highlighted the Acacia ZR and ZR+ transponder module capabilities.  Routed Optical networking offers capex, opex, and energy savings.  The company suggests that existing customers who use Routers and optical transport today can take a first step that means plugging transponder modules directly into routers, meaning the need for optical shelves can be eliminated over time.  Cisco featured spokespersons from Microsoft Azure and Lumen (Century Link) to discuss general thoughts on the Routed Optical concept. 
  • Open RAN.  The company has made investments, both disclosed and undisclosed.  The company has engaged third parties' services to integrate and test its orchestration and transport technology with other 5G systems in the marketplace.
  • Subscriber Management.  The company introduced Cisco Cloud Native Broadband Network Gateway, which supports the integration of wireless packet core and wireline subscriber management.
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Chuck Robbins, CEO of Cisco Systems at Cisco Live on March 30, 2021
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The SASE Market Is Poised For Growth

2/12/2021

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This week, we published our Secure Access Service Edge (SASE) Forecast and Research report, a deep analysis on the market, the key players, and the opportunity that lies ahead for it. We expect SASE revenue to grow more than 500% by 2025. As a result of strong market growth, we also expect a tremendous opportunity for new vendors to stake their claim in this increasingly complex environment. As the SASE market is at a relatively early stage, many vendors are introducing new products and services to the marketplace, many of which can be considered “best-of-breed” offerings.
 
We think enterprises will be navigating multiple priorities, shifting between the needs of their security teams and their networking teams. As enterprises shift toward Zero Trust and SASE architectures, they are increasingly evaluating and deploying multi-vendor cloud-delivered security services, and it is not currently necessary for all the SASE elements to come from a single vendor. For example, HPE Aruba (Silver Peak) offers freedom of choice through a best-of-breed multi-vendor partner ecosystem. HPE Aruba’s approach is reinforced by the hundreds of deployments they have alongside cloud-delivered security services from partners like ZScaler, Netskope and Check Point. Enterprises working with vendors like HPE Aruba, with a multi-vendor partnering strategy, should be able to continue working with vendors they have worked with already or be able to pick “best-of-breed” systems.
 
The news media has featured our research, and the reports have had interesting takes, for example a Dark Reading article, SASE Surge: Why the Market Is Poised to Grow, focuses on the significant growth opportunities for the market. 
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    CHRIS DePUY
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