During the summer of 2021, there was optimism that the worst supply chain shortages were behind us, and vendors' stockpiles of components and chips would be enough to work through the remaining issues. Instead, early October 2021 saw a worsening of component shortages. Some vendors saw component cancellations, and we are about to exit the year with 9+ month lead times. Many SPs were already moving towards disaggregated routing and the use of Fixed systems.
The current supply chain shortages will increase the rate of adoption to mirror what hyperscalers a doing. The industry can benefit from a better model of Fixed systems.
Component Shortages Worsen Throughout 2021 – Vendors Work Through Supplies
The past several weeks have been turbulent for many system vendors. Everyone is burning through inventory at a quicker rate of replacement. In some cases, component suppliers cut deliveries to vendors, and secondary sources are drying up. Many distributors don't have components, and those that do tend to have higher pricing. This requires many vendors to change out parts and re-qualify systems based on what is available. Few SKUs and reduced complexity is a significant theme for supply chains in 4Q21.
Complex Modular Systems Have Too Many Components
Modular Router and Switch platforms have more components compared to newer Fixed alternatives. Historically, customers preferred these chassis because of higher redundancy (dual supervisors, reduce power supplies, etc.) that would guarantee almost 100% uptime. Some of the heritage also relates to application architectures that require this type of guaranteed service. One could make an analogy that the line care is equivalent to a Fixed 1RU box and that the chassis and all the components that go with it are those additional components. However, networking is different now compared to 5/10/15 years ago, and many of these modular architectures no longer apply to current and future networking needs. These chassis, and their complexity, are now a liability with so many component shortages.
Service Providers (SPs) and Telcos Network Need Dissagregation in Todays Supply Chain World
Disaggregated Routing leverages the hyperscaler supply chain of smaller and easier to build Fixed platforms. It can step up and address the challenges of availability today and provide a cleaner and better model as we advance. Hyperscalers figured this out and are currently benefiting from disaggregated architectures during this supply shortage. Without moving to more[ILR1] fundamental building blocks, Service Providers and Telcos will not keep pace with hyperscalers or absorb supply chain shocks as robustly.
White Box Opportunity
White Box architectures in Routing - a 1-2 RU ‘pizza box’ based on Networking Processor Units (NPUs) that can support multiple networking use cases like core, edge or aggregation routing, become enticing to many customers. While shifting from modular to fixed at a vendor level eliminates some complexity, the customer still depends on the vendor's supply chain. An SP dual vendor strategy might end up being reliant on the same manufacturing or bottleneck. The white box is different. There are nearly a dozen white box vendors shipping today across multiple regions. While there are still some dependencies (Jericho ASIC), the diversification is significant and less risky. ‘
In addition, the same white boxes can be combined or used as stand alone, and support multiple networking use cases – core, edge, aggregation, etc. Stocking on few building blocks and using them across multiple needs provides the tremendous flexibility in dealing with supply chain shortages.
2022 and Beyond
We expect an increase in Fixed Dissagregated Chassis announcements at a customer and vendor level throughout the end of 2021 and into 2022. We believe this will help set up the next upgrade cycle to 800 Gbps and 1.6 Tbps as customers learn and become comfortable with this new topology with 400 Gbps solutions currently shipping and begin demanding more from vendors in future platform updates.
By Alan Weckel, Founder and Technology Analyst at 650 Group.