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Cisco, others eyeing $3.7 billion SDN market

IDC sees it more than doubling each year over next three years, notes five start-ups to watch in 2013

By Jim Duffy on Thu, 01/03/13 - 5:04pm.

The worldwide market for software-defined networking products and services in the enterprise and cloud service provider segments will grow from $360 million in 2013 to $3.7 billion by 2016, according to IDC. This represents a compound annual growth rate of 117.42% and includes network infrastructure, SDN applications and control plane solutions, and related professional services.

By decoupling element policy and control from the elements themselves, SDNs are application driven and allow for greater flexibility, innovation, dynamism and scale in networks, IDC notes.  This makes SDNs particularly suitable to data center and cloud environments where many workloads and resources are virtualized and require a nimble, flatly-architected network.

For this reason, SDNs represent an opportunity - and threat - to established and start-up vendors alike. Vendors like Cisco, with a dominant installed base and vast legacy infrastructure, are contemplating how to add more SDN-like programmability into switches and routers. And while they grapple with that, start-up companies see an opportunity to attract customers looking for SDN solutions or vendors needing to offer some. Look no farther than VMware's $1.26 billion acquisition of Nicira as a gauge into how hot this market and opportunity is.

So, who's next after Nicira? Who knows... But IDC has identified five SDN start-ups to watch this year as they battle for the attentions of customers and potential buyers alike.

First up is Big Switch Networks, which had its coming out party just a few months ago. Big Switch is a pioneer in commercial-grade OpenFlow SDNs, and has a couple of high-profile customers in Fidelity Investments and Goldman Sachs. It also has an impressive roster of vendor partners, a handful of whom could view the company and its controllers and applications strategic enough to have to own.