Notebook 02.19.13: Merchant Silicon, Insieme, Controllers, Portfolio and stuff…

Before the week is over, I am going to write a blog post entitled “Imagine that SDN Did Not Exist, What Would Do with All the Free Time?”  That is something I will find the time to crank out either on my current flight to SFO or the return flight.  Until then, here are a few things I have been collecting in my SIWDT Evernote to write about.

1. Merchant Silicon Revolution: Can we stop blogging, writing and talking about merchant silicon (MS) as if it is some sort of mystical enabler of SDN and all things networking?  It is 2013 — not 2006.  There are really not that many choices of MS if you want to build an ethernet switch.  There are INTC, BRCM and MRVL.  People put MS on slides as if there is a rich ecosystem of companies leap frogging each other each year – which is nonsense.  If you want to build an ethernet switch you have about 2.5 options via MS or you can build your own ASIC.  Anyone in the business of building an ethernet switch is going to tell you that every chip is late, delayed and late again.  The process of building switching silicon is a complex and difficult business.  We are not talking about a making a pot of soup.  Be grateful for what we have.  If you think I am wrong, contact your local VC and ask him how many MS startups they funded in past few years.

2. Insieme: Speaking of ASICs, here is an interesting post on what Insieme is building.  By far the most popular post I wrote on this blog was almost a year ago on Insieme.  The TechTarget post makes perfect sense to me.  Insieme is building a large leaf/spine fabric like platform with custom ASICs and a high-end controller.  I would have thought that they were going to try to leap to 100G, but a highly dense 40G spine layer is fine too.  As for the concept of “application defined networking” I would just like to state I wrote that before here.

3. DIY/White Box Networking: I think this subject deserves a deep dive and I plan to write about this and the joys of building leaf/spine architectures next week.  I had a competitor sales person tell me that leaf/spine was “white hot.”  In the mean time, my colleague Mike Bushong has some comments on commoditization on the Plexxi blog.

4. 2013 is the Year of the Controller: I wrote that supposition internally at Plexxi after attending the JPM conference in CA in September.  Here is what I wrote publicly after that conference.  So far nothing in 2013 has led me to believe otherwise.  I am referring to the Project Daylight post over on SDN Central.  If you read the Insieme post on TechTarget, you will find another controller data point.

5. Portfolio Changes:  In the past I have had no problem being a healthy bear.  People who are bearish, have a good sense of risk in their portfolio and personally I would never let a pom pom waving bull manage my money.  Having made the last statement, I think there is also a point when the market is moving around you (generally up) and you are not participating because you are too bearish that you eventually feel like a moron.  That is why I went long some equities in December in the face of the fiscal cliff and countdown clocks.  I have trimmed back my portfolio with the LNKD, CTXS, GOOG, AMZN and CCI positions all closed out.  I want to put some money to work, but this is a market I never seen and and it is taking time for me to learn the subtitles.  I am sure my learning curve is elongated because I spend most of my time selling ethernet switches.  Net/net…if I was managing a portfolio in this market I would be busy each day managing beta, the greeks and trying not to be caught long.  I want to be long because I think the market is setup to be long and waiting for some backwater nation-state in Europe to break the market is a fool’s errand.  The Central Banks have control of the market.  Maybe they get out, maybe they do not.  Multiples do matter and I cite as examples AAPL and VMW.  I have no idea if the WMT letter is real or bravado, but I know that a 2% move in WMT is mice nuts.  I look at the market every day and it is a shell of the market in 2007-2008.  If you were actively running money in the 2008 market you know what I mean.  That market destroyed your soul and sapped your energy.  I am happy to dabble in this market, but I am not risk on by any means.  if you want to talk tech stocks or macro stuff, DM, email or hit me on Linkedin.

* Update…I closed out the GLD position.  Look at this GOLD chart (a daily) with gold sitting on the 600 MA.  I circled the last time this happened. As soon as the technicals indicate I will be back up on the LONG side, but I am not dumb enough to ride it down if there is a big break here.

6. Cloud Outages: I have written in the past about cloud outages as well as networking outages.  This is all part of thesis that adopting a controller architecture enables us to build networks that are far more resilient than allowing distributed state protocols to guess state from N number of devices.  With that in mind I found this listing a fascinating lunch time read on outage postmortems.

/wrk