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As enterprises move more workloads to the cloud, the data center networking business is also changing. Recognizing new market demands, Cisco aims to continue to meet enterprise needs, but also capture more business from hyperscalers and other large cloud providers by producing the networking equipment they want: switches fast and energy efficient, and among the cloud giants, switches that are disaggregated.

In the latest step in its strategy, Cisco recently introduced two new 800G data center switches: the Cisco 8111 Disaggregated Switch for hyperscalers, which allows them to run a third-party network operating system; and the Cisco Nexus 9232E Switch for enterprises, webscalers (tier 2 cloud companies), media providers, and telecom service providers who prefer to use Cisco’s NX-OS operating system.

The switches, powered by Cisco’s own 7nn Silicon A G100 processor, delivers 25.6 Tbps bandwidth throughput in a compact 1RU form factor. It also uses 77% less power and 83% less space compared to using multiple 12.8 Tbps switches.

Cisco executives said the new 800G switches will appeal to customers because they allow them to better manage the continuing explosion in network traffic, while reducing power consumption and energy costs for their network. One of the key use cases is the need to support compute clusters running artificial intelligence/machine learning workloads, said Thomas Scheibe, vice president of product management for Cisco. Cloud Networking.

“Our customers need very fast, energy-efficient networks,” Scheibe said. “They have so much energy that they walk into the data center. On top of that, energy prices are rising, so it needs to be energy efficient.

Why disaggregation is necessary

Brad Casemore, IDC research vice president for data center and multicloud networking, said Cisco’s adoption of disaggregation, coupled with its decision to design and build its own processors for betting equipment. networked, positions the company to capture more market share in the lucrative hyperscale market.

In 2018, Cisco joined the trend towards disaggregation of data center networks, claiming that this allowed customers to use any network operating system on Cisco switches or run Cisco’s NX-OS on third-party switches.

Cisco executives at the time said they were separating its operating system from its switches to meet the demands of hyperscalers and large service providers. It was a trend led by hyperscale giants like Meta who preferred to use their own operating system because it simplifies data center management, enables faster innovation, reduces cost and risk, and prevents vendor lock-in.

But disaggregation was also a strategy Cisco needed to adopt because Cisco’s largest network equipment competitors, Arista Networks and Juniper Networks, had already adopted disaggregation.

Cisco dominates the overall data center switch market, which reached $13.1 billion in revenue in 2021. But Cisco saw its market share grow from 40.6% in 2020 to 38.1% in 2021, according to IDC. During the same period, Arista’s share increased by 2.1% to 16.5% of the market, followed by original design manufacturers (ODMs), which hold a 13.3% market share after a 1.3% year-on-year increase.

Casemore said Cisco’s decline in overall market share in data center switches is directly attributed to companies increasingly moving their applications and workloads to the cloud. In fact, ODMs – which build switches to the custom requirements of hyperscalers – captured 51% of the hyperscale data center switch market, followed by Arista at around 30%. Cisco ranks third at 10%.

“Enterprises are putting workloads in the cloud, so the cloud buyer is becoming increasingly important,” Casemore said. “When you have the majority of the market which is basically direct ODM, that just tells you how disaggregated the market is.”

Why the New 8111 Switch is Critical to Cisco’s Hyperscale Strategy

To buck its market share, Cisco is targeting the large-scale data center switch market with the new Cisco 8111 disaggregated switch, he said.

“This allows Cisco to capture business from the fastest growing data center network infrastructure consumers, namely these hyperscalers and other large cloud providers,” Casemore said.

In fact, while enterprise switch sales are expected to grow from $4.6 billion in 2021 to $3.7 billion in 2026, switch sales to hyperscalers are expected to more than double from 2.9 billion to $6.9 billion over that period, IDC said.

When Cisco initially announced support for disaggregation in 2018, they initially focused on the wide area network (WAN) market by introducing disaggregated routers – and the company made inroads with hyperscalers wanting solutions. disaggregated in that part of the networking market, Casemore said.

Cisco also offered disaggregated data center switches in the past by adding support for Switch Abstraction Interface (SAI), an Open Compute Project (OCP) specification, on its existing switches. This allowed hyperscalers to run any network operating system, such as Microsoft’s SONiC operating system on any SAI-capable Cisco Nexus switch.

Cisco Nexus 9232E_Front Angle .jpg

However, the new 8111 switch is Cisco’s most concerted effort to capture data center switch sales in the hyperscale market, he said.

“This is the first time Cisco has come out and really pushed a model for this. This is their most aggressive foray into disaggregation,” Casemore said.

Cisco versus the competition

Cisco executives believe that the company’s disaggregation strategy and Cisco’s custom Silicon One family of processors, first introduced in 2019, give the company a competitive advantage over competitors in terms of flexibility and performance.

Cisco Fellow Rakesh Chopra said customers can now purchase Cisco networking solutions in three ways: a fully integrated system, which includes Cisco’s hardware, processor and operating system, or choose between two disaggregated models. They can buy the hardware and processor from Cisco, but use a non-Cisco OS, or choose the silicon-only option, where they use a Cisco chip on a switch and a third-party OS.

“All of a sudden, we erased the borders. You can consume our technology in any way that suits you,” Chopra said. “We’re not going to lock you up.”

For example, while the new Cisco 8111 switch is designed for hyperscalers who want disaggregation, most other organizations — such as enterprises, web companies, media providers, and telecom service providers — want a solution. that runs Cisco’s NX-OS, the company said. The Nexus 9232E is aimed at these customers.

There is a crossover. Some webscalers want to emulate the hyperscaler operating model and embrace disaggregation, in which case they would choose the Cisco 8111 switch over the Nexus 9232E, the company said.

Can Cisco take market share in the hyperscale market?

Cisco announced the two new data center switches at the OCP World Summit 2022 in San Jose, Calif., on October 18. The Cisco 8111 switch is currently shipping in limited quantities, while the Cisco Nexus 9232E switch will be available in the first quarter of 2023, Scheibe said.

Both switches support 32 ports of 800G, 64 ports of 400G, or 256 ports of 100G. Cisco also announced two new optical transceivers.

Analysts say 400G Data Center Switches just now seeing great adoption. But when 800G switches become available, customers will start to adopt it — with hyperscalers and other large cloud companies among the early adopters — because they have the bandwidth needs, said Principal Analyst Will Townsend. security, operators and enterprise networks at Moor Insights & Strategy.

“Hyperscalers aim to maximize speed, throughput and reduce latency. They absolutely need it,” Townsend said.

The faster throughput combined with lower power consumption and space savings will resonate with customers. Power consumption is one of the biggest operational expenses for them in the data center, he said.

“This announcement offers public cloud providers the opportunity to significantly reduce power consumption, which impacts their bottom line,” Townsend said. “It also allows them to meet their sustainability and net zero goals that have been aggressively set for 2030 or 2040. Improving performance is also critical as cloud providers must always scale to meet growing demand. .”

Result: With the Cisco 8111 switch, Townsend believes Cisco can capture market share in the large-scale data center market.

“This positions Cisco well to take more market share as they expand the capacity of their portfolio,” he said.

Cisco has already won hyperscale deals in the data center. The company plans to announce a new non-US-based hyperscale customer on November 5. A Q200L processor and the social media giant’s own FBOSS operating system.

In fact, Casemore said selling its Silicon One processor as a standalone offering for hyperscaler ODM switches could be a lucrative opportunity for Cisco and give Broadcom competition in this space.

“Hyperscalers always want choices, and by offering Cisco its networking silicon separate from its integrated switch, it’s giving hyperscalers more options for networking silicon,” he said.

Overall, Cisco has developed a solid strategy for the hyperscale market, from custom chips and optics to delivering disaggregated routers and switches.

“Cisco has a foothold there and wants to expand it,” Casemore said. “All of this has put them in a better position.”


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