Recently I've been accosted by a spate of concerned venture-capital investors, entrepreneurs, and media about the Software Defined Networking (SDN) market. Is it dead, they say?
Of course not. The concerns come because the investors aren't getting rich as fast as they want -- which is usually the case. The valuations and customer deals in the SDN market have slowed a bit in 2014, much of it caused by public marketing wars waged by the big fish in the ocean, Cisco Systems Inc. and VMware. The market perceives this as "FUD" (fear, uncertainty, and doubt), and it has caused some confusion and hesitation on the part of some customers.
But this is mere short-term noise -- a ripple in the ocean. In the background, real innovation in the networking market continues apace. Despite concerns about the size and scope of the development of the SDN market, many SDN startups are making significant headway in showing a new robust and open ecosystem, behind the scenes. I detailed this ecosystem in my recent report, "SDN Revolution: An Ecosystem Report," a 30-page industry review.
The biggest signals that we are making progress come from global service providers that they are now working on serious trials with the SDN technology -- and involving startups. For example, my website recently published a report that Verizon is undertaking a large trial of SDN-based "white boxes," or standard server hardware loaded with interchangeable, open networking software. Some of startups involved include Cumulus Inc. and Pica8.
Cumulus, which markets a Linux OS specifically designed for networking white boxes, has made some the biggest waves in the networking startup world this year, striking a deal with Dell Inc. and attaining a valuation north of $300M in its most recent financing round, according to my sources. That has likely climbed further with the news that Cumulus is a key player in a trial by Verizon.
Others are also grinding it out to make progress in the SDN market. The aforementioned Pica8 raised a new round of funding and is running lean and mean, but gathering new customers, such as Verizon. Pluribus Networks has more than a dozen announced customers and recently announced promising test results in a financial trial.
All of this means that momentum continues to build in the SDN market, where more than $600 million has been invested in at least two dozen SDN and NFV startups so far, according to Rayno Report research.
So, SDN enthusiasts, there's no reason to panic. Changing a decades old paradigm does not happen overnight. It takes a lot of hard work.
Read about the details of the SDN ecosystem in "SDN Revolution: An Ecosystem Report," a comprehensive, 30-page industry review that includes detailed information about more 30 companies, including the position of leading incumbents. It is available now from the Rayno Report for $899.
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