A new hype-cycle has emerged in the networking industry around the evolution of the service providers and enterprises towards SDN-based networks. According to a recent report from IDC, in 2013 the revenue from the SDN market will be ~$360 million, and by 2016 it will become a ~$3.7 billion industry.
The tech giant Juniper Networks, Inc. (NYSE:JNPR) recently acquired a SDN startup company named Contrail for ~$176 million to capture a part of the growing industry. Contrail is developing an OpenStack-enabled network controller for web-scale large enterprises and it could be the base for Juniper's SDN framework with commercialization by late 2013. This deal provides Juniper more flexibility and control over its SDN direction and suggests that the future SDN market will be increasingly fragmented and addressed by switch vendors and independent vendors. I anticipate that the introduction of SDN in Juniper's portfolio will be a key transition and could lead to long-term gains in the ~$23 billion switching market.
Peer Group SDN Strategies
Recently Citrix Systems, Inc. (NASDAQ:CTXS) implemented its plans for using SDN technology with the launch of its upgraded NetScaler SDX application delivery platform, along with a partnership with Palo Alto Networks that optimizes the unification of sales, technologies, and product roadmaps. Citrix's ideology is that in order to utilize SDN's full potential, it needs to become more application-aware. So NetScaler helps the user create a unified application control layer for third-party network services. This ability in NetScaler will help make the current Layer and controllers more app-aware. The Citrix-Palo Alto strategic alliance will run through phases, and the first one will be for policy and interoperability. Future phases will strengthen the technology integration, along with the go-to-market strategy.
Alcatel Lucent SA (ADR) (NYSE:ALU). has also declared its strategy for 2013 regarding SDN, and it is taking a different route from most of the network vendors. Instead of concentrating on OpenFlow to enable control and programmability it has expanded its Application Fluency approach to intelligent aware network by adding Representational State Transfer (REST) to its API's. This allows other applications, controllers, and platforms such as OpenStack and CloudStack to interact with the Alcatel-Lucent OmniSwitch tools at a faster speed and make overall application delivery more efficient. However, it is expected that the company will not provide direct support to OpenFlow until 2014, as it believes that focusing on API will benefit the enterprises in the short term.