A Thought on the SDN Early Warning

At dinner a couple of weeks ago with some industry colleagues I found myself thinking and then stating that I think the SDN community did itself a disservice by being vocal and derogatory towards the incumbent supplier vendor community. If you read the previous post that would be the steam shovel companies.

In retrospect, it is odd that people would form groups and then provide presentations telling the world that they are going to attack a $47B company that has ~80% market share.   I now think that ONS 2011/2012 and industry alliances such as ONF, end-user communities such as ONUG did a disservice to the very goal they wanted to achieve, which was to take business from the incumbent. Maybe we should channel some sort of Sun Tzu quote:

“If your enemy is secure at all points, be prepared for him. If he is in superior strength, evade him. If your opponent is temperamental, seek to irritate him. Pretend to be weak, that he may grow arrogant. If he is taking his ease, give him no rest. If his forces are united, separate them. If sovereign and subject are in accord, put division between them. Attack him where he is unprepared, appear where you are not expected.” 
– Sun Tzu, the Art of War

The prior mentioned organizations provided the biggest company that has the most resources an opportunity to apply those resources to the SDN market with a message to their customer of “we got that too.” Reminds me of APPC versus APPN, but that is from what seems like a long time ago. If you are the incumbent supplier then the plan is to (i) distract your customer base from competitive messaging, (ii) confuse the installed base with a new technical messaging to freeze the decision making cycle and (iii) then leverage your installed base to play it forward and buy the future business with discounts. That is what is going on now. The incumbent (i.e. steam shovel company) is leveraging their installed base to buy the business because the alternative companies (i.e. hydraulic suppliers) are viewed by the market to be a combination of (1) not ready for prime time, (2) not different enough to provide a strong value proposition to warrant wide spread deployment, (3) and the application use cases are too narrow, too complicated, too contrived and not obvious.

In the market selling motion, all that matters is for Cisco to narrow the gap between perceived value and the price paid. When I meet with the mid-forties aged network engineer or network architect or SVP level exec, I would say 85% of the time they are risk off – not risk on. They are risk off for many of the above reasons. They are risk off because change and knowledge gaps are uncomfortable if you are mid career with mortgage payments and pending college tuition bills. I explored these subjects in earlier posts: part 1, part 2 and part 3.

Early this year I was at financial conference and met with the sponsor’s analyst and IB teams. They asked me if I was trying to sell to their firm. My response was no. I told them it was a complete waste of time because their firm was risk off and I would be too if I was them. The team who runs the general-purpose network is not going to use a small company for the risk of an outage. If this team was to introduce a new vendor and there were outages, the boss (CxO) is going to ask why did we make a change and who is getting fired? If the large incumbent vendor’s equipment has an outage the customer response is “call them, yell at them, see if they violated any SLAs.”

At this point you probably think I would conclude that there is zero risk to Cisco. My answer is there is plenty of risk, but that will be the subject of another post. In the meantime, Cisco is going to lean on the installed base, cut deals to lower customer OPEX and buy as much of the forward business they can, while promising SDN this, SDN that, white box, blah, blah. I would do the same because I think it solves the vast majority of their customer’s complaints, which goes back to the perceived value versus the price paid problem. I think if Cisco offered major price concessions, customers would renew contacts and buy more, which is their real challenge. Customers just think they paid too much for the value their infrastructure gear provides. In a way that has been the mainstay of the Arista sales value proposition: cheap 10G with a better software and user experience.

SDN and other networking alternatives are not going to be successful recreating all the networking crap from the last twenty years. SDN is going to take root in small, specific pockets of the infrastructure where it provides a significant value over legacy networking and it is going to expand from that point outward.

/wrk