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Will NSX snub hurt Cisco's integrated infrastructures?

Report says company may be locking NetApp FlexPod, and perhaps VCE Vblock, out of SDN opportunity

Did Cisco and NetApp shoot themselves in the foot by rejecting VMware’s NSX on FlexPod? This Seeking Alpha post, by investment researcher Critical Timing, implies that they did by ceding roughly one-third of the SDN market.

By refusing to support NSX…Cisco and NetApp appear to be willing to risk losing a sizable share of the SDN market.

Cisco and NetApp said back in June that they would not support NSX on FlexPod reference IT architectures combining Cisco compute and networking, and NetApp storage. That followed a statement from VCE in May, the coalition of Cisco and EMC building integrated and converged IT infrastructures, that it would not support NSX on its Vblock systems even though VMware invests in VCE and its hypervisors are integral to Vblocks.

Both Vblocks and FlexPods will, however, fully integrate and support Cisco’s Application Centric Infrastructure (ACI), NSX’s rival in the SDN market. This could be a boon to ACI as both FlexPods and Vblocks are on $2 billion annual run rates, with FlexPod overtaking Vblocks in integrated infrastructure market share, according to the Critical Timing post.

But snubbing NSX could be bad for both FlexPod and VCE Vblocks. The post rightly notes that NSX is expected, along with ACI, to gain strong traction in a fledgling SDN market forecast be between $18 billion and $35 billion in 2018 – surpassing Cisco’s current combined enterprise router and Ethernet switch revenue of about $17 billion.

This $17 billion installed base is also expected to be a boon to ACI’s prospects in the market, perhaps allowing it to attain No. 1 SDN market share. States the Seeking Alpha post:

If around 60% of Cisco's customers stick with its SDN technology, then Cisco will end up with about 42% share of the SDN market, worth roughly $15 billion by 2018. The new revenue source is likely to more than offset its declining revenue from traditional networking products.

NSX will likely appeal to smaller and newer enterprises with not as much invested in entrenched Cisco gear. NSX could eat up the lion’s share of the remaining SDN market that doesn’t belong to Cisco, which means FlexPod and Vblocks might be irrelevant to roughly one-third of it:

Cisco and NetApp should reconsider their hardline stance. Even if NSX ends up with just 20%-30% of the SDN market, that's a sizable market they will not be addressing.

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