Cisco Subnet An independent Cisco community View more

Arista's EOS subscription plan expands its cloud opportunity

How Arista is making it easier for customers to embrace the cloud.

Last week, Arista Networks announced a new way to purchase its network infrastructure that decoupled its hardware and its operating system, EOS. In a blog post on the announcement, Jim Duffy made the point that Arista hasn't really disaggregated the operating system from the hardware, and he's right. But the company is making the procurement of the product easier by separating the purchase of the hardware and software.

Jim also correctly notes that this doesn't follow the same path that other vendors have, where they have truly disaggregated their hardware and software to take advantage of lower-cost hardware platforms. Dell and HP customers, for example, can run Cumulus' operating system on their merchant silicon platforms.

However, I don't believe that strategy would have been right for Arista. Trying to compare Arista's product with a white box solution is really apples to oranges with respect to feature sets, resiliency and programmability, and overall performance. Arista isn't trying to compete as a lower ASP, lower feature set vendor. Rather, it is trying to create a pricing model that aligns more with the revenue flow that tier 2/tier 3 cloud providers have, or for businesses trying to shift to more of an Opex model.

Not every cloud provider or enterprise has the deep pockets of a Google or Facebook. The term "if you build it, they will come" may work fine for baseball fields in Iowa corn fields, but many smaller cloud providers just can't afford to drop a bunch of money on infrastructure and wait for the customers to come.

The EOS-as-a-subscription pricing model gives organizations more flexibility in purchasing so the spend on network infrastructure can match the inbound revenues. The Arista pricing structure is designed for a three-year breakeven point. This means for three years the cloud operator will be paying less for the Arista products than it would have with traditional pricing, giving it plenty of time to ramp its business. What happens after three years? It's possible that the cloud provider could wind up paying more for the hardware in the long run, but three years is typically the lifespan of high-performance network infrastructure, so most customers would be looking to swap the products out anyway.

Arista is definitely sacrificing some revenue today by enabling its customers to stretch the payments out over three years. However, the fact is that this customer base may not have been able to afford the Arista hardware without the new pricing model, so while Arista may be giving up a bit of revenue today, it is opening up a new market, a key to the continued growth of the company.

This may eventually lead to EOS running on white boxes, but I think that's not likely to happen anytime soon. A more likely scenario is to see the company offer a "pay as you grow" model that encompasses both hardware and software.

Join the Network World communities on Facebook and LinkedIn to comment on topics that are top of mind.
Related:
Must read: Hidden Cause of Slow Internet and how to fix it
Notice to our Readers
We're now using social media to take your comments and feedback. Learn more about this here.