News

Report of AWS Entering Enterprise Networking Market Roils Industry

• By David Ramel
• 07/16/2018

A report that Amazon Web Services Inc. (AWS) is considering entering the enterprise networking market sent incumbent stock prices lower and is roiling the industry.

Citing unnamed sources, The Information on Friday reported "Amazon Web Services Targets Cisco in Networking" (requires subscription), which immediately lowered the price of Cisco stock, along with Juniper Networks. Arista was also listed as likely to be affected by such a move.

According to the report, the AWS effort would leverage commodity -- or "white box" -- hardware and open source software, which are key tenets of the software-defined networking (SDN) movement that has also shaken up the traditional industry long dominated by Cisco.

However, while Cisco subsequently jumped on the SDN bandwagon and enacted other modern networking initiatives to stay relevant in new-age networking, it might have a harder time coping with cloud giant AWS.

"As it does in many other categories, Amazon plans to use price to undercut rivals," the report said. "The company could price its white-box switches between 70 percent and 80 percent less than comparable switches from Cisco, one of the people with knowledge of the program estimated."

While leveraging white-box hardware and open source software, the AWS offerings would reportedly connect that software with its own cloud services, providing another hard-to-beat advantage. Those services include servers and storage.

"For some time, Amazon has used similar white-box switches inside its own data centers, a practice in line with other big technology companies," The Information said. "AWS expects to launch the networking switches for outsiders within the next 18 months, said the person with direct knowledge of the project. It is working with white-box manufacturers such as Celestica, Edgecore Networks and Delta Networks on the switches, and is looking to work with more, the person said."

While Amazon wouldn't comment on the report and Cisco offered up a stock PR response quoting its leadership, other companies did weigh in, such as SDN and intent-based networking specialist Apstra.

"The combination of white-box hardware and open source software enables companies to reduce the cost of building their networks, said Mansour Karam, CEO of Apstra, a startup that sells software for managing networks with devices from multiple providers," the report said. " 'It’s not surprising that Amazon would want to participate in, as well as control, the data center as the onramp to their cloud services,' said Mr. Karam."