SIWDT is my second blog. My first blog lasted few years from 2005 to 2007. I created my first blog, which can still be found on the Wayback machine, after having an unexpected breakfast with Dave Winer in 2006. It was at a conference in San Diego and if you do not know who Dave Winer, please stop reading now and go back to whatever you were doing before you thought to read this blog. Continue reading
It has been awhile since I have had time to think about stocks and since we are at the start of earrings today, I was looking through my stock watch list and thought I would pick out a few interesting charts.
If I told you that HPQ had 349,000 employees at last report would you be surprised? I did not attend HP’s analyst day this past week, but I did read a few of the headlines with surprise. Here are few that I thought were noteworthy:
- HP CEO Whitman says company is now a diversified IT company
- HP’s CEO: We are number 1 or 2 in each of the major markets
- Hewlett-Packard CEO cites management changes as slowing down company
- HP’s Whitman says turn around will take time
On CNBC the day after:
- Hewlett-Packard CEO Whitman says ‘very comfortable’ with make-up of board
- Hewlett-Packard CEO Whitman: I don’t think company is too big
I have written a few times on my blog about HPQ. The last entry of note was over a year ago in September 2011 here. At the time I wrote “This is an interesting chart when you consider that it is framed by $25B for Compaq in September 2001 and the iPad shipping in January 2010. Assume for moment that the credit crisis did not happen and the chart is down a bit in 2008 and then peaked in 2010. HPQ acquired EDS in 2008. They did this because they were believing in the ongoing propagation of Moore’s Law and the enterprises would consume more network infrastructure and having the ability to influence or control the decision making process in regard to that consumption was a good position. Kind of interesting that the peak in HPQ equity coincided with launch of the iPad, which marks an important transition point for the PC market in the same manner that the iPhone marked a transition point for the mobile device market.”
In November 2011, I wrote the following on HPQ “Meg Whitman, CEO of HPQ on CNBC: I think companies should give Y/Y guidance only and report a monthly set of numbers, which would be a subset of financials and unaudited. I think this would take a lot of emotion out of quarterly results as well as the channel check drama. With that said when companies stop giving guidance or provide less transparency, I do not see how this is helpful and I sell or short the stock until I can trust the management team. I listened to Meg Whitman’s comments on CNBC yesterday. She said there was a lot of complexity and cost in HPQ and she wants to strip it away and simplify the company (my take away from her talking points). Leo was there 9 months, so did all this cost and complexity come from him or did Hurd oversee it? I viewed Hurd was an acquisitive cost cutter and when he was ousted the management team at HPQ was quick to tell investors that Hurd and stripped the company down to the bare bones and there was no investment in innovation and growth. Apparently I am confused.”
Here is updated version of a weekly chart for HPQ going back to the time of the Compaq acquisition. A year later and HPQ is going full on RIMM. I have a colleague at work that has a thesis I have heard him tell many times. His meme is about the large tech companies (e.g. IBM, HPQ, DELL, and OCRL) have been on a binge to become diversified IT companies. If you look at the history of tech acquisitions post the LEH bankruptcy it supports his meme. We joke about every Board Room having a white board full of categories on the Y axis and the big players on the X axis. Management teams are focused on filling in every box: IT services, cloud, storage, networking, tablets, mobile, big data, little data, dumb data, etc.
In terms of HPQ, I think it is good that the CEO is comfortable with the BOD because that has been one BOD full of drama since the Compaq deal. I am not sure investors could take another decade of drama, pre-texting, spying, tattle telling, etc. I am not sure if the CEO thinks the company is too big, too small or just the correct size. I suspect that the leadership team and BOD are all trying to determine what size is correct as well. What I do know is the PC market has turned against the company, printing has gone with it and the EDS business is not a grower. The rest of the business is a just a bunch of parts and they may be 1 or 2 in each market, but they are not great markets. As for being a diversified IT company, whatever happened to the diversified IT companies of the 1970s and 1980s? You know…IBM, EDS, NCR, ATT, Amdahl, CA, Tandem, Wang, DEC and DG. I am not sure being a diversified IT company is a good thing, but as usual I could be wrong.
[Note…it is Monday morning and I already see the break-up, sell off, sum of the parts notes coming out of Wall Street. I would not be buyer on any sum of the parts, break up value or IP value notes.]
* It is all about the network stupid, because it is all about compute. *
** Comments are always welcome in the comments section or in private. **
Yesterday HP announced some SDN products to include a controller. If you had read my SDN Working Thoughts #3 post, then you already knew this data point. I have many questions about this announcement, starting with why would they announce an OpenFlow based controller when you can get one from Big Switch Networks (BSN)? I am sure there is a smart answer, but that is not my point. In addition to HPQ, IBM announced a controller using the NEC controller. My point is there is has been and continues to be a lot of development and design of controllers going on. My hypothesis is that the controller architecture will play a role as to where the battle of SDN market share will be won and lost in the coming years and simplification of the market into “separating the data plane from the control plane” is not specific enough and does not encompass a broad enough data set. I have written several times before SDN is more than APIs and reinventing the past thirty years of networking in OpenFlowease.
I think a person’s perspective of the controller is directly related to how you see the network evolving and how your company wants to run their business. There is no stand alone controller market. If I was to summarize the various views of the controller I would say that incumbent vendors view a third party controller as a threat and need to provide a controller as hedge in their portfolio in case it becomes a strategic point of emphasis. Incumbents really do not know what to do with a controller in terms of their legacy business, which is why they market a controller as some sort of auto-provisioning, stat collecting NMS on steroids. It will enable you to buy more of their legacy stuff, which for HPQ after today’s guidance cut may not be the case. The emerging SDN companies view the controller as point of contention for network control. All the companies in the market share labeled “other” or “non-Cisco” view the controller as a means to access the locked-in market share of Cisco. In the past, I would have told you that control planes have enormous monetary value if you can commercialize them inside customers. Cisco did this with IGRP, IOS, Cisco IOS and NX-OS. Ciena did this with the CoreDirector. Sonus failed to do this. Ipsilon failed to do this. Does anyone remember the 56k modem standard battle between US Robotics and the rest of the world who were working on the 56k standard and who won that market battle? The question becomes over the next year or two is how many controllers become commercialized in the market place and what are these controllers doing? I think there is a difference between controllers doing network services and controllers providing network orchestration based on application needs.
The following quote is from Jim Duffy’s article in Network World on HP’s controller announcement:
“HP’s Virtual Application Networks SDN Controller is an x86-based appliance or software that runs on an x86-based server. It supports OpenFlow, and is designed to create a centralized view of the network and automate network configuration of devices by eliminating thousands of manual CLI entries. It also provides APIs to third-party developers to integrate custom enterprise applications. The controller can govern OpenFlow-enabled switches like the nine 3800 series rolled out this week, and the 16 unveiled earlier this year. Its southbound interface relays configuration instructions to switches with OpenFlow agents, while it’s northbound representational state transfer interfaces — developed by HP as the industry mulls standardization of these interfaces — relays state information back to the controller and up to the SDN orchestration systems.”
Reading Duffy’s description I think the SDN orchestration system (is that application orchestration?) is more valuable than the controller he describes, but that is a side discussion. I also took the time to read this blog post from HP. Much of this controller architecture discussion has been on my mind for months as well as in my day to day work conversations for the past few months. It seems a day cannot go by without a conversation on this matter. I have no conclusions to offer in this post, so if you are looking for one please stop reading. The point of this post is that controller architecture, controller design and how SDN will evolve is in process and I think it is little early to be declaring the availability of solutions that offer marginal incremental value at best. The evolution of the controller thought process can be summarized at a high level by the following:
- Wired Article from Apr. 2012
- Urs Hoezle’s presentation from ONS in 2012
- Google A Software Defined WAN Architecture (81 Slides) from ONS 2012
- Martin’s Blog
From the Martin’s blog in the section on General SDN Controllers:
“The platform we’ve been working on over the last couple of years (Onix) is of this latter category. It supports controller clustering (distribution), multiple controller/switch protocols (including OpenFlow) and provides a number of API design concessions to allow it to scale to very large deployments (tens or hundreds of thousands of ports under control). Since Onix is the controller we’re most familiar with, we’ll focus on it. So, what does the Onix API look like? It’s extremely simple. In brief, it presents the network to applications as an eventually consistent graph that is shared among the nodes in the controller cluster. In addition, it provides applications with distributed coordination primitives for coordinating nodes’ access to that graph.”
Regarding, ONIX here’s a brief summary of the architecture but you can read a paper on it here and note who the author’s are and where they work:
- Centralized approach. Central controller configures switches using either OpenFlow along with some lower-level extensions for more fine grained control.
- Default topology is computed using legacy protocols (e.g. OSPF, STP, etc.), or static configuration.
- Collects and presents a unified topology picture (they call it a network information base – NIB) to Apps that run on top of it.
- Multiple controllers (residing in Apps) are allowed to modify the NIB by requesting a lock to the data structure in question.
- Scalability and Reliability:
- Cluster + Hierarchy of Onix instances, but NIB is synchronized across all instances (e.g. via a distributed database). For the hierarchical design, there is further discussion on partitioning the scope and responsibilities of each Onix instance.
- Transactional database for configuration (e.g. setting a forwarding table entry), DHT for volatile info (e.g. stats). Lot of focus on database synchronization and design.
- Example of “apps” mentioned in the paper:
- Security policy controller
- Distributed Virtual Switch controller
- Multi-tenant virtualized datacenter (i.e. NVP)
- Scale out BGP router
- Flexible DC architectures like Portland, VL2 and SEATTLE for large DCs
Combining the info from multiple sources, Google uses ONIX for a network OS (see the link to the ONIX paper above). ONIX appears to be Nicira’s closed source version of NOX, and both Nicira and Google use it. NEC has something called Helios that involves OpenFlow, which noted above was OEMed by IBM. I not sure about HPQ and their recent controller announcement, but I think it serves us well to understand the history of the ONIX architecture.
- ONIX users think that fast failover at the switch level while maintaining application requirements is a hard problem to solve. They think it is better to focus on centralized reconfiguration in response to network failures.
- ONIX synchronizes state only at the ONIX controller
- ONIX wants to use multiple controllers writing to the network information base interface and probably to any table in any switch
Is ONIX a direction for some OpenFlow evolution or a design point? I think one of the early visions for OpenFlow and ONIX was for it to become a cloud OS, which it has yet to become, but others are trying. The evolution of OF/ONIX vision looks something like this:
- Build a fabric solutions company with software and hardware, which is largely about controlling physical switches with OpenFlow (Read NOX paper here)
- Build a commercial controller (ONIX) and sell it as a platform product to a community of applications developers
- Build a network virtualization (multi-tenancy through overlays…this is the part where Nicira renames ONIX to NVP?) application that happens to embed their controller (formerly ONIX). Control the forwarding table with OpenFlow and every other aspect of overlay implementation using OVSDB protocol talking to OVS (it is largely about controlling virtual switches with only a pinch of OpenFlow).
- Nicira purchased by VMWare for their general expertise in SDN and for future applications of the technology assets (VMWare today ships a virtualization/overlay solution using VXLAN that does not include any Nicira IP).
It will be interesting over the next year or so to see how the architecture of the controller evolves. I wrote about some of this in the SDN Working Thoughts #3 post. I think we are coming to an understanding that there are variations to just running a controller in band with the data flows. I think we will conclude that having a controller act as session border control device translating between the legacy protocol world and the OpenFlow world is also a non-starter, but this is the current hedge strategy of most incumbent vendors. As the world of SDN evolves, we will look back and see the path to what SDN has become by looking at the failures as proofs along the way. The industry will solve the scaling and large state questions, but I think the solutions will be shown to exist closer to the hardware (i.e. network) than most envision in the pure software only view.
In a prior post I had made a reference to an article that was partially inspired by a post by Pascale Vicat-Blanc on the Lyattis blog. The Lyatiss team has been working on a cloud language for virtual infrastructure modeling. In particular, it generalizes the Flowvisor concept of virtualizing the physical network infrastructure to include application concepts. I am not sure of the extent of their orchestration goals. Do they expect Cloudweaver to spin up the VMs and storage, place them on specific servers, configure the network to satisfy specific traffic engineering constraints, and finally tear down the VMs? I am not sure. With Nicira now part of VMWare what is the future for NOX/ONIX and will other companies be innovators or implementors?
There is another potential market evolution to consider when we think about the controller. The silicon developers are looking to develop chips that disaggregate servers into individual components. The objective is to make the components of the server, especially the CPU upgradable. Some people have envisioned this type of compute cluster to be controlled by OpenFlow, but I think that is unlikely. Network protocols will be around for a very long time, but putting that aside, the question is what does this type of compute clustering do for the network? How much server to server traffic stays in the rack / cluster / pod / DC? I am not sure how much of this evolution will have to do with OpenFlow, but what I do know is that this type of compute evolution will have a lot to do with SDN, if you believe that SDN is about defining network topologies based the needs of the applications that use the network.
In a true representation of the title, this post is just some working thoughts on SDN with hypotheses to be proven. Comments and insights welcome…