Print Friendly, PDF & Email

I recently had the opportunity to moderate a panel for the Business Innovation Leaders Forum that brought five veteran security executives together to discuss contemporary CISO demands and challenges. On the five-person panel, I had two CISOs at major multi-billion firms, the former Deputy Director of the U.S. National Cybersecurity division, the godfather of Zero Trust, and the Executive Vice President for the cloud and security business at a major telecommunications company.

This blog summarizes five takeaways that stood out from our discussion.

  1. The COVID pandemic has been both a crisis and an opportunity

The pandemic has been an enterprise crisis. The pandemic compounded the rate of technology and threat change, which was already a source of discomfort for many enterprises. Two key examples are the shift to remote work and the acceleration of enterprise digitalization (the shift and embrace of public cloud for enterprise apps), each of which has thorny security problems to solve.

But the pandemic has also been an opportunity for enterprises. The massive disruption caused by the pandemic has provided the impetus for new ways of looking at security problems and has driven investment that in a non-pandemic environment would not have been possible.

  1. Enterprise users have and will continue to pose a complex security challenge

If a CISO’s job wasn’t already challenging enough, they need to contend with enterprise users being humans that flourish off three Cs: curiosity, convenience, and comfort. Curiosity will lead to users doing unexpected things that may open security holes. Likewise, users will defeat security measures they find inconvenient. Passwords on a post-it note, anyone? The pandemic-induced need to work remotely has caused many users to appreciate the comfort of working at home and no longer want to commute to the corporate office. Yet, remote work has enormous security implications compared to the traditional office environment.

Rather than fight the users and change behavior, a CISO needs to continually evolve and always look for new security controls that match the current user landscape and behaviors.

  1. The threat landscape is not only more brutal but innovating faster than enterprises can counter

Not only has the Internet threat landscape gone from being a tough neighborhood to open warfare, but the threat actors are moving at a blinding speed. Threat actors aren’t constrained by processes like enterprise change control, which is valuable in preventing unintended IT instability, but often leads to slow, glacial response during an active attack.

So what’s a CISO to do? While there’s no panacea, the panelists repeatedly remarked on the need to focus on the security fundamentals, like knowing what in the enterprise needs to be protected and developing a solid security plan focused on that needed protection.

  1. Security vendors are a double-edged sword: New products are distractions, yet relationships are key

The security vendor landscape is highly fragmented, with hundreds of products vying for CISOs’ attention. New products are a dangerous pitfall. Persuasive vendor marketing for new products may lull CISOs into thinking they need the product even though the reality could be the opposite. Unless a CISO is working off the knowledge of what needs to be protected in their enterprise and a robust security plan, a CISO can’t assign security value to any new product.

However, a CISO is not to shirk all vendors.   The panel agreed that relationships play an essential role, particularly with those select vendors seen as trusted and willing to listen to the CISO. Bi-directional communication is vital to help vendors develop security controls and technologies that benefit the enterprise.

  1. Zero-trust is a strategy, not a product: The folly of mixing up strategy and tactics

Among hot industry buzzwords, “zero trust” has been white-hot recently. Vendors of all stripes have applied the buzzword to their products and looking to turn zero trust into a product sale. “Buy my product, and you will have zero trust,” say many security vendors. However, the clear consensus of the panel was that zero trust isn’t a product but a strategy–and a valuable strategy at that.

Putting the value of zero trust aside, this situation highlights how easy it is to mix strategy with tactics. A CISO that buys a “zero trust” product from a vendor may think they are covering all necessary security bases. But, the reality is that this CISO is stuck in the tactics that may or may not align with the strategy that the enterprise needs to follow. A CISO that doesn’t have a coherent strategy – anchored to knowing what needs to be protected and having a good plan – is at best wasting IT budget on products that minimally improve security posture. Still, at worst, creating a false sense of security that eventually will lead to an enterprise being compromised.

There are several more key takeaways from the discussion, and I highly recommend watching the playback. However, if there were a common thread among all, it’s that CISOs face a wide variety of challenges that can only begin to be addressed by a diligent focus on doing the fundamentals right.

 

Watch the on-demand video:

CYBER SECURITY – MEETING CISO DEMANDS

Print Friendly, PDF & Email

We’ve just wrapped up the 4Q21 reporting period for Dell’Oro Group’s enterprise network equipment programs, which include campus switches, enterprise data center switches, SD-WAN & enterprise routers, network security, and Wireless LAN. Enterprises include businesses of all sizes as well as government, education, and research entities. The equipment tracked in these programs can be used for wired or wireless data communication in private and secure networks.

Sales Hit Record Level in 2021

Despite a macro-economic environment that continues to be defined by supply constraints, our reports showed a strong rebound in the overall Enterprise Network Equipment market in 2021, following some stagnation in the prior year. Sales jumped 12% year-over-year (Y/Y), propelling the market to a record- level in 2021.

The strong performance was broad-based across all technology segments. Enterprise Routers, Wireless LAN, and Network Security were all up double-digits. In the meantime, Campus and Enterprise Data Center Switches were up mid-to-high single digits. All technology segments hit record-revenue level in 2021.

 

2021 Worldwide Enterprise Network Equipment Market

 

We have calculated that spending on enterprise network equipment rose by nearly $6.0 B in 2021.  Security accounted for 40% of the increase in spending, while campus switches accounted for a quarter of the increase.

We attribute this broad-based recovery to the following:

  • Continuing improvement in macro-economic conditions.
  • Continuing government spending and stimulus around the world.
  • Network upgrades in preparation for workers returning to the office full or part-time.
  • Digital transformation initiatives, accelerated by the pandemic, are driving new network requirements and putting pressure on IT managers to upgrade their networks and add different security layers.
  • Orders pulled in from future quarters, to mitigate ongoing supply challenges that are adversely affecting product availability, lead times, and prices.

The 2021 robust performance in the Enterprise Network Equipment market was broad-based across all regions, except the Caribbean and Latin America, which was flattish (although showing a significant improvement from the high-single-digit decline registered last year).

2021 Worldwide Enterprise Network Equipment Market by Regions

Cisco Loses Some Ground — Still Leads the Enterprise Network Equipment Market

The analysis shared in our reports showed no major change in vendors’ ranking. Cisco remains the only vendor with more than 10% share in the market, although the firm lost three points of revenue share in 2021. This share loss was broad-based across all technology segments, except WLAN. In the meantime, HPE Aruba, Palo Alto Networks, Fortinet, H3C, and Arista, gained one point of revenue share, each.

Nevertheless, we would like to note that the vendor landscape continues to be defined by a challenging supply environment and that some of the share shifts witnessed in 2021 may not be necessarily reflective of competitive displacement, but rather the timing of order fulfillment.

 

 

Robust Market Outlook for 2022

Despite a challenging supply environment that is expected to persist through most of 2022, Dell’Oro analysts are projecting strong double-digit revenue growth in the Enterprise Network Equipment market in 2022. This optimism is underpinned by healthy outlooks provided by most vendors as a result of increased visibility and robust backlogs. Additionally, ongoing supply challenges will continue to encourage customers to place advance orders, which will have a positive effect on bookings first, then a few months later, on revenues, depending on lead times.

Dell’Oro Group Enterprise Network Equipment research programs consist of the following: Campus switches, Enterprise Data Center Switches, SD-WAN & Enterprise Routers, Network Security, and Wireless LAN.

Print Friendly, PDF & Email

 

Scoring 2021 Predictions and Looking to 2022

Happy New Year! It’s an excellent opportunity to reflect on our 2021 predictions and share what we believe 2022 has in store. First, though, we need to temper our enthusiasm for projection by the fact the Covid pandemic continues to throw unexpected curveballs. Let us hope that the latest omicron variant is one of the last, if not the last. Nonetheless, let’s take stock and grade our predictions from a year ago first.

A year ago, we made three predictions for 2021:

  1. Enterprises will embrace the Work Anywhere securely mentality and make cloud-native SASE solutions mainstream
  2. Cloud-centric security will continue to grow faster than the overall market
  3. Firewall revenue will rebound after a meager 2020

On our first prediction, we can definitively say that enterprises embraced Work Anywhere based on the pandemic still forcing remote work in 2021. But beyond being forced remote workforce, we continued to hear how enterprises codified officially the role hybrid work will play long-term.  Full-time remote work may not the new normal, but a blend between some days on-site and some remote will be. Hybrid work is no longer an employee perk but an expectation.

However, we did get wrong that SASE solutions would go mainstream in 2021. While SASE as a mandate did gain in importance, only a minority of enterprises deployed SASE fully. Moreover, a larger than expected swath of enterprises chose to stay with a traditional Firewall architecture.

Our second prediction of cloud-centric security revenue growing faster than the overall market has been spot on. We predicted revenue growth to be north of 20%, which has been for most of 2021 for the Software-as-a-Service (SaaS) and virtual appliance form factors that we categorize as cloud-centric security. While 4Q21 numbers are not in, we don’t expect any significant shift in their growth trajectory. As enterprises shift towards being entirely digital, multi-cloud, and mobile-friendly, they have been voting with their wallets and favoring SaaS and virtual solutions.

 

 

Our third prediction proved correct, with the physical firewall appliance market rebounding in 2021 from a tepid 2020. Enterprises that halted upgrades in 2020 are back in full swing doing refreshes to get greater capacity and the latest features.

 

 

Looking into 2022, we make the following three predictions:

1 – Only a minority of enterprises will fully deploy SASE in 2022, but all will force SASE of their vendors

If there’s any maxim in enterprise IT, change comes slowly for most enterprise IT teams. With SASE being a new architectural approach and causing a significant shift in networking and security operations, most enterprises are taking a methodical approach to SASE. Sure, there are a minority of enterprises capable and willing to give their entire WAN networking and security budget to a single pure-play SASE vendor to do full-blown SASE in one fell swoop. Still, the emerging reality is that in 2022 most enterprises will do things piece-meal by focusing on either the networking or security aspect of SASE first or using multiple vendors in their SASE deployment.

However, this doesn’t let vendors off the hook from SASE since most enterprises want their vendors to prove they know SASE and will help them in the journey. No enterprise wants to undertake either network or security transformation only to find out that their vendors can’t take them all the way.

Our 2022 SASE prediction is based on tracking the SASE market in two ways. The first is by what we call the SASE-related technology market, which is the total sum of all networking and security technologies that conceivably could be deployed in a SASE configuration. The second is by what we call the SASE technology market, which is the subset of the SASE-related market deployed in a SASE configuration. For full-year 2021, we expect the SASE-related technology market to nearly reach $4 B with year-over-year (Y/Y) growth topping 30%, while the SASE market may hit $500 M, representing highly robust growth of over 100% Y/Y.

 

2 – The physical Firewall market rebound will modulate, while cloud-centric security will continue to grow faster

Although we predicted a rebound in the physical Firewall market a year ago, its strength has surprised us. However, we expect the growth in the firewall market to level off. We believe the future of network security isn’t with the physical Firewall market, as it once was, but with those cloud-centric network security solutions that favor SaaS and virtual appliances as preferred embodiments.

 

3 – Firewall-as-a-Service will begin to cannibalize carrier-class Firewall physical appliances

In the last couple of years, Firewall-as-a-Service (FWaaS), or Cloud Firewalls, have started to pop up as an upsell feature of SaaS-based security solutions, notably in SaaS-based SWG and SASE solutions. The FWaaS in those solutions was primarily aimed at per-user or per-application type firewalling in remote user deployments. It wasn’t meant to replace the super-heavy iron of carrier-class physical firewalls that are still good hygiene in any large enterprise or carrier network. However, we have started to see both pre-IPO and public companies making motions and looking to use the power of the cloud to dethrone one of the last bastions where physical security appliances rule.

We predict that in 2022 at least several of the Fortune 100 will ditch their classic carrier-class Firewall hardware and go all-in on cloud-powered Firewalls.

A year from now, we’ll circle back and see what came true. We hope to repeat our good performance.

 

Print Friendly, PDF & Email

 

At the beginning of each year, we analysts like to look backward and reflect on our predictions for the prior year to review what we got right and what we got wrong, and then look forward in order to predict how the new year may unfold and what technology trends may shape our forecast.

In reviewing my 2021 predictions, published a year ago, I’m delighted to report that the 2021 data center switch market unfolded pretty much in line with my expectations, with sales up high single-digit-to-double digits.  Growth was broad-based across the Cloud segment (up by double digits) as well as the non-Cloud segment (up in the mid-single digits). Note that the growth in the non-Cloud segment was mostly driven by large enterprises (comprised mainly of the Fortune 2000 companies).

 

The Data Center Switch Market Spotlight Will Continue to Shine in 2022 if Supply Permits

We are currently projecting that the data center switch market will grow by double digits in 2022, with the Cloud segment growing almost at twice the rate of the non-Cloud. Although the panic purchasing behavior fueled by ongoing supply challenges is one of the major drivers for such a robust market forecast, there are also some fundamental catalysts behind the strong demand we expect to remain in the market. For the Cloud segment, we expect increased network spending propelled by the following:

  • accelerated adoption of 200/400 Gbps at Microsoft and Facebook, as explained later in this blog
  • expansion cycles at some of the large hyperscalers, further fueled by new AI (artificial intelligence) workloads
  • ongoing pent-up demand at Tier 2/3 Cloud Service Providers (SPs)

As for the non-Cloud segment, we expect the demand to be fueled by an accelerated pace of digital transformation.

Despite our optimism, supply constraints may continue to threaten market performance. As a reminder, despite the robust sales growth witnessed last year, supply fell short of demand. Based on our interviews with system and component vendors, as well as some of the Value Added Resellers (VARs) and System Integrators (SI), we do not expect the supply situation to improve until the second half of this year.

 

200/400 Gbps adoption to Accelerate Beyond Google and Amazon

Although 2021 market performance was pretty much in line with our predictions, 200/400 Gbps shipments fell short of our expectations. 200/400 Gbps shipments have been so far consumed mostly by Google and Amazon, and we have been predicting that deployment at Microsoft and Meta (Formerly known as Facebook) should start to accelerate in 2H21. However, while shipments were on track with our predictions, recognition of the revenues from some of those shipments has been deferred due to a pending qualification cycle. Hence, we did not reflect these 200/400 Gbps deployment at Microsoft and Meta in our reports. We expect revenue from these shipments to be recognized this year, and project the 200/400 Gbps ports to more than double in 2022.

 

800 Gbps Shipments May Debut at Google

While 200/400 Gbps shipments have barely started to take off at Microsoft and Meta, we expect Google to deploy 800-Gbps this year. 800-Gbps deployment will be propelled by the availability of 800-Gbps optics, which provide significantly lower cost per bit than two discrete 400-Gbps optics (about 25–30% lower cost). Additionally, 800 Gbps enables lower cost per bit at a system level. With the availability of 100 G SerDes technology, switch chip capacity will essentially double, from 12.8 Tbps to 25.6 Tbps. 800 Gbps ports will allow those chips to be configured in 1 U fixed factor as 32 ports of 800 Gbps (with each port potentially configured as 2×400 Gbps or as 8×100 Gbps).

 

Silicon Diversity Will Become More Pronounced

Silicon diversity at large Cloud SPs’ networks has been a theme over the past few years, fueled by the need to put pressure on Broadcom, which has dominated the merchant silicon space to date. We expect the increased number of viable merchant silicon suppliers such as Cisco and Marvell/Innovium—along with industry-wide supply constraints—to further accelerate this trend in 2022. As a reminder, in 2021, Marvell announced the acquisition of Innovium, giving the latter access to more engineering and financial resources, and at OCP 2021, Cisco announced that it will be supplying Meta with its Silicon One chips on the Wedge400C for Top of Rack applications.

 

AI-Driven Workloads to Continue to Shape Data Center Network Infrastructure

Dell’Oro Group projects that the spending on accelerated compute servers targeted to AI workloads will reach double-digit growth over the next five years, outpacing other data center infrastructure. However, AI applications are power- and bandwidth-hungry, and may require different ways to architect the network. We expect these requirements to drive faster adoption of high-speed networks and, in some cases, even some proprietary type of network architecture, which may not necessarily be Ethernet-based.

For more detailed view and insights on the data center switch market, please contact us at dgsales@delloro.com

Print Friendly, PDF & Email

 

Last week’s 2021 OCP (Open Compute Project) Global Summit marked its tenth anniversary. Fittingly, the vendor and partnership announcements were significant.

Meta (formerly known as Facebook) once again dominated the show’s headlines with product, architecture, and partnership announcements that will have a far-reaching impact on switch vendors and component suppliers. As the fourth-largest cloud service provider (SP), Meta accounts for a significant portion of total network and IT spend. Thus, the supplier ecosystem always pays close attention to upcoming changes in Meta’s data center architecture or procurement strategy.

Meta continues co-development efforts with Arista with the minipack 2 chassis design

Historically, Meta has mostly used white-box vendors in its Top of Rack (ToR) applications, running Meta’s home-grown Network Operating System (NOS) called the FBOSS, whereas in the leaf, spine, and data center Interconnect (DCI) layers, this cloud SP has mostly deployed Arista’s switches with Arista’ EOS. There has been, however, a recent concern that this relationship is in decline, as Meta’s spending with Arista has been weak in recent quarters. Some thought that white-box suppliers are muscling in on Arista’s share. However, based on multiple industry checks, we, at Dell’Oro Group, thought the softness in Meta’s contribution to Arista’s revenue was due to an interim pause in Meta’s data center capex spend.

Arista is expected to ship its recently announced 7388X5 switch to Meta in 2H21. This chassis is compliant with the minipack2 design and will support both Meta’s FBOSS and Arista’s EOS. We expect that Meta will run mostly the latter.

Meta partners with Cisco on Wedge400C for Top of Rack applications

In December 2019, Cisco announced its entry into the routing and switching merchant silicon market by allowing its latest Silicon One chips to be consumed both internally, in Cisco’s systems like Cisco 8000, and externally by customers who want to use the chip to build their own systems. The goal of this development is to help win a new footprint at the major cloud SPs, where Cisco has been losing share to white-box switch vendors. For some time, Cisco has alluded to its strong, early traction at the hyperscalers with its Silicon One chips. Yet this was the first major public announcement highlighting the new switch chip footprint at one of the top-four Cloud SPs—Meta.

Silicon diversity at large Cloud SPs networks has been a theme over the past few years, fueled by the need to put pressure on Broadcom, which has dominated the merchant silicon space to date. The increased number of viable merchant silicon suppliers—such as Cisco and Marvell/Innovium—along with industry-wide supply constraints—have further accelerated this trend.

The new Wedge400C switch is expected to be deployed in the ToR layer at Meta’s data center network, using Cisco’s Silicon One chips inside a white-box switch supplied mostly by Celestica and running Meta’s FBOSS.

How big is this opportunity for Cisco and what does it mean?

Based on our estimates as well as industry checks, we estimate the size of this opportunity will represent only less than $50 M in 2022. This move, however, will be very strategic for the firm, as we expect Cisco to penetrate other data center network tiers (leaf, spine, and DCI), where we anticipate expansion will accelerate when Meta starts to adopt some form of co-packaged optics. When this occurs, it will be crucial to dual-source network chips as well as optics. Optics represents a much greater opportunity for Cisco because it accounts for more than half of the networking spend at 200 Gbps speeds and higher.

For more details, insights on cloud service providers’ data center network design, and the list of suppliers, please contact us at dgsales@delloro.com