Dell Moves Toward Cheap Networking


Almost three months after the collapse of the personal computer industry forced it to become a private company, Dell is moving on its new strategy. It involves destroying the computer-networking business.

On Tuesday morning, Dell announced it would offer networking equipment that is built with nonspecialized semiconductors and an open-source operating system, as opposed to the highly proprietary gear and software from Cisco Systems, Juniper Networks and Hewlett-Packard.

While that is unlikely to be a huge business soon for Dell, it lends credibility and muscle to what has been a growing effort to dislodge these incumbents through cheaper, easier-to-build equipment.

If Dell and others can do that, a result would be lower costs at the large data centers run by Google, Facebook and very large banks and companies. Cheaper networking could also make the Internet even more ubiquitous.

That is, of course, if Dell and its low-cost brethren succeed.

Dell’s operating system for the new networking switch is made by Cumulus Networks, a company co-founded by former senior engineers at Cisco and VMware, a pioneer in lowering the cost of computer servers via clever software. It plans to offer other operating systems on its cheap boxes as well.

In 2011, Dell paid a reported $700 million for Force10 Networks, a company that already used so-called “merchant” chips.

“One of our goals is to accelerate the heck out of this market,” said Tom Burns, Dell’s vice president of networking. “I see a big level of excitement from the financial business — they see this as a way of moving away from proprietary, restricted networks.”

While costs were still being worked out, he said, Dell equipment could be 25 percent cheaper than the gear from the established networking companies.

Jonathan LaCour, the head of product development at a Los Angeles-based computer hosting provider called DreamHost, has been testing the Dell product over several hundred servers. He said purchasing and operation costs were 50 percent less than usual, but the real advantage was in running a machine that worked more like a server. “All the moves are easier when you don’t have specialized people yelling at you,” he said.

J.R. Rivers, the co-founder of Cumulus, went even further, suggesting in a recent blog post that a Cumulus product cost one-half to one-tenth as much as Cisco.

CumulusJ.R. Rivers, the co-founder of Cumulus, a pioneer in lowering the cost of computer servers via clever software.

“The same thing that happened to servers is happening to networking,” said Mr. Rivers, who added that his company and Dell will target Internet service providers, or ISPs, like cable and telecommunications companies, as well as banks and Google-type Internet companies. “We want to be the next Cisco,” he said.

He has some company there. Arista Networks, another advanced switching company that works with merchant silicon, has for several years been selling boxes that appear to deliver high performance at a lower price. Jayshree Ullal, the company’s chief executive, said Arista was also prepared to offer Arista’s operating system by itself, but said the market for that would grow slowly.

“I have that, and I’m absolutely prepared to do it,” she said. “We were prepared to do that when we started this company, but customers insisted on getting a box. There aren’t a lot of people who want to build things from scratch.” Having the likes of Dell and other commodity manufacturers in the game, she said, underlines the reality that “no one in networking is invincible anymore.”

Cisco was not impressed. “The ‘white box’ strategy is laden with hidden costs, and forces customers to compromise on performance,” David McCulluch, a Cisco spokesman, wrote in an email. “A ‘white box’ running Cumulus, for example, may cost 38 percent more than Cisco over a three-year lifetime, and its total cost of ownership may be 75-percent higher than a Cisco network.”

While Dell is using off-the-shelf chips, he said, Cisco has over 600 specialist engineers “and unrivaled scale and purchasing power, enabling us to always deliver greater functionality at lower cost.”

Ms. Ullal, who has also written about the changing economics of networking, said her business now has four basic types of customers: financial firms, traditional corporations, smaller ISPs and the “cloud titans,” which depend on enormous global cloud computing systems. This last group, which includes Yahoo, Facebook, Microsoft, eBay, Apple, Google and Amazon, is so far the only significant market for software-only networking products, since it takes considerable engineering talent to install and run these systems.

Dell’s involvement could take over some of the headaches of installing and running them, and that would grow the market faster. Expect others. Dell’s announcement was made at the start of a gathering of the Open Compute Project , a Facebook-led group involved in lowering the cost of data center operations through open source engineering.

Source: http://bits.blogs.nytimes.com/2014/01/28/dell-moves-toward-cheap-networking/?_php=true&_type=blogs&_r=0

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