Open source to bust up Cisco Borg collective?

Can't beat that Sun Microsystems' feelin'


Open...and Shut Microsoft gets all the press for being a reformed monopolist, but in the hoary world of networking, no one has dominated longer or more tenaciously than Cisco Systems. And while Cisco has seen upstart competitors come and mostly go, perhaps none has the chance to up-end the networking giant's comfortable position more than Vyatta.

No, really.

Vyatta has been aspiring to topple Cisco from its throne for several years. Based on Cisco's most recent earnings, it doesn't seem to be working. At all.

It's not for lack of trying, or for a lack of chutzpah. Vyatta chief execuive Kelly Herrell has been putting an expiration date on Cisco's fortunes since the small open-source startup was formed, but to little effect.

But something seems to be changing. That something is virtualization, and it's putting a strong wind at Vyatta's back.

A little context is necessary. Cisco competes in a dizzying array of markets. Even within the generic "networking" market, it has a broad portfolio. Probably the best way to describe the meeting point for Vyatta and Cisco is the "secure routing" market. Think of it as "when traffic enters or exits your building on the way to or from the Internet."

Sound niche? It's not. It's an $8bn enterprise market. The average price of traditional, proprietary Cisco hardware in this market ranges from $1 to $100,000.

But don't expect to pay Cisco $1.

It doesn't have to. This particular market exploded in the 1990s when everyone was building out distributed networks. In the process Cisco cornered the market and at its height had 90 per cent market share. With legions of Cisco-trained network engineers, proprietary software locks (it had its own IOS well before Apple's), Cisco had monopoly power that commanded a hefty price in customer conversations.

No one else, including Juniper Networks, was anywhere close.

But something happened on the way to Cisco's absolute dominance of the networking market. Standards happened.

Networks used to rely on Cisco-proprietary protocols, which were the company's technology lockup. Over time, however, networks shifted to Internet Protocol. Vendor interoperability became the reality. Cisco's grip started to loosen on its customers, dropping from 90 percent of the market to roughly 75 per cent in consequence. Other vendors are gaining ground, but it will take years (decades?) to see Cisco slip into the 30 to 40 per cent market share range.

But standards have started the ball rolling.

That ball has been helped along by an unlikely assistant: Intel, a monopoly force in its own right.

Intel back in the game

In the old days, Intel used to have a separate business unit that sold networking chips, which the company sold in December 2007. Pundits speculated that this meant Intel was killing its focus on networking, but they were wrong: Intel had a roadmap that absorbed network processing into the standard x86 architecture. It just wasn't on the market yet.

But it was coming.

The 2010 Intel Developer Event featured more than 10 separate tracks on x86 networking performance. Attendees could attend sessions on "Line rate 10Gb/s," "virtualized networking," "cloud networking." Suddenly Intel had networking in spades.

Chip prices in the networking market hit free-fall mode, to the point that today an x86 server costing $1,000 to $2,000 will outperform more expensive hardware that runs $15,000 to $50,000 per box. Vendors like Vyatta based its chip strategy on Intel, and has seen dramatic performance improvements over the past few years, all paid for by Intel's R&D budget.

Just as Unix gave way to Linux, in large part due to the cost benefits of Linux's x86 hardware, so, too, has Vyatta been banking on a shift from expensive Cisco to a low-cost, open-source Vyatta router platform (PDF).


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