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

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.

Second is Embrane, which was founded by some ex-Cisco engineers. Embrane's Heleos platform is a multiservice, distributed software architecture that delivers virtual Layer 3-7 network services -- like load balancing, firewalling and VPNs -- for both traditional networks and SDNs. It allows cloud service providers and enterprises to create cloud infrastructure-as-a-service (IaaS) models for their customers by enabling on-demand procurement, provisioning and configuration of these services.

Next up is Midokura, a Japanese company that began as a cloud provider but morphed into a vendor for cloud providers. The company develops MidoNet, which, like Embrane's Heleos, is also a distributed SDN product designed for IaaS. MidoNet virtualizes the network for multi-tenant public and private cloud computing, and supports the industry-defined OpenStack platform for cloud computing virtualization, automation and orchestration.

Plexxi is the fourth start-up on IDC's SDN companies-to-watch list. Plexxi has raised almost $50 million, and it products include a switch and Plexxi Control, a server-based software controller that allows service providers and enterprises to model affinities between workload resources to ensure that the underlying network supports them. Plexxi Switch provides low-latency 10G and 40G Ethernet access connections, and interconnect using the company's LightRail optical interface.

Last but not least on the IDC Top Five is Vello Systems, a maker of OpenFlow and SDN cloud switches for enterprises. Vello products allow for the construction of large-scale networks optimized around the  locality of application workloads and corresponding data, IDC notes. Vello also notes that its products, and SDNs in general, allow for the customization of the network on behalf of the application without having to touch hundreds or thousands of elements in the network.

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Copyright © 2013 IDG Communications, Inc.

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