& cplSiteName &

Embrane Helps Cisco Build Its SDN Strategy

Mitch Wagner
2/7/2014
50%
50%

With its investment in Embrane, Cisco gets a stick it can use to whack VMware Inc. (NYSE: VMW).

Cisco Systems Inc. (Nasdaq: CSCO) plans to invest $6 million in the software-defined networking (SDN) startup, part of a C round of funding by Embrane Inc. that will exceed $12 million, according to a source familiar with the deal. (See Cisco Investing $6 Million in Embrane: Reports.)

So what's Cisco up to with this investment?

SDN is at first glance a big risk to Cisco, which makes its living selling expensive, proprietary networking hardware -- precisely the kind of thing SDN is designed to make obsolete. CEO John Chambers "asked his top executives to do an analysis on what would happen if Cisco plunged into the SDN market. They concluded it would turn Cisco's '$43 billion business into a $22 billion business,' our source said," according to a report on Business Insider.

But SDN can be good for Cisco, ZK Research analyst Zeus Kerravala tells Light Reading. The real cost for IT budgets isn't hardware; that's less than 10% of IT spending. Operational costs account for 30%, and customers will pay a pretty penny to simplify network management. "Making products easy is difficult to do," says Kerravala.

$6 million isn't actually a lot of money for Cisco.
$6 million isn't actually a lot of money for Cisco.

He adds: "Cisco is trying to create a seamless automated datacenter stack through use of a lot of integration. Customers will pay up for technology that makes things easy to manage."

To that end, "Cisco poured a lot of money into SDN," Kerravala says. "Most of their portfolio revolves around Layer 2-3. Now, with the Embrane investment, it gains a stronger foothold in the higher layers of the stack rather than the lower layers."

Part of that investment was on Insieme Networks, the "spin-in" that Cisco brought back into its fold when it unveiled its Application-Centric Infrastructure in November 2013. (See Cisco Unveils Application-Centric Infrastructure and Cisco's ACI Gets Physical With SDN.)

(Who's responsible for "naming strategy" at Cisco? Insieme sounds like the name of a snooty French tailor, while spin-in sounds like something a hippie does after tuning in and dropping out.)

Embrane's expanded universe
What does Cisco bring to Embrane (aside from 6 million clams, of course)? A customer base. "The market being opened up for Embrane is huge," Kerravala said.

Embrane was founded in late 2009 by Cisco alumni, with staff from other companies. Its products focus on delivering network services as software, including firewall/VPN, and load balancers with SSL offloading. Companies can spin up a firewall, for example, in 90 seconds.

The Santa Clara-based startup has 40 employees, but had to lay off a handful in November. While there are customers and demand for Embrane's technology, the company got ahead of itself in hiring, marketing VP John Vincenzo told Light Reading. "We thought the hockey stick was going to happen because the hype was there, but the hype was a detriment," he said.

Embrane raised $18 million in Series B funding in 2011, for a total investment of $27 million. When Embrane cut jobs, it said a Series C round was under way.

Earlier reports suggested that next investment would be $12 million, but our source says it will be greater than that. Embrane and Cisco declined to comment on any investment activities.

Current Embrane investors include New Enterprise Associates, Lightspeed Venture Partners, and North Bridge Venture Partners.

Initial customers were cloud providers, such as Sungard and Peer1, looking to compete with Amazon, Vincenzo said, adding that he hopes the company will be able to announce enterprise customers in a week or two.

Embrane's philosophy is that there are two camps in SDN: The hypervisor-centric camp comes out of the enterprise, building on the momentum of success deploying virtual machines. VMware is the leading vendor there.

The other camp is the networking team, which has until recently been a bottleneck in deployments. "The reason the network team is the bottleneck is that they haven't actually had the tools to be more efficient and dynamic," Vincenzo said. But they can be more responsive with the right tools.

— Mitch Wagner, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profileFollow me on Facebook, West Coast Bureau Chief, Light Reading. Got a tip about SDN or NFV? Send it to mwagner@lightreading.com.

(11)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Page 1 / 2   >   >>
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
2/13/2014 | 7:00:37 PM
Re: Who's responsible for naming strategy?
I grew up in New York. Italian-Americans were my neighbors and friends. The only language I learned from them is swear-words, though. 
sam masud
50%
50%
sam masud,
User Rank: Light Sabre
2/11/2014 | 1:44:31 PM
Re: Klingon proverb
I see the hardware issue as capex, and management cost as opex.
DavidMcCullochCiscoPR
50%
50%
DavidMcCullochCiscoPR,
User Rank: Light Beer
2/10/2014 | 6:03:34 PM
Re: Who's responsible for naming strategy?
Trust me, my British and Dutch roots were equally useless in deciphering our Italian friends' naming preferences. Luckily, I know people....
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
2/10/2014 | 5:58:30 PM
Re: Market timing
DOShea - That's the big problem with the hockey stick. If demand is failing to materialize, it could be you're early, and it could also be the product is a turkey. 

You can see the same problem with the Gartner Hype Cycle. 
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
2/10/2014 | 5:56:17 PM
Re: Who's responsible for naming strategy?
Way to make me feel like a provincial American, David McCulloch! :)

 
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
2/10/2014 | 5:55:15 PM
Re: Klingon proverb
Is proprietary hardware a big deal, or is management the real cost to customers?

 
sam masud
50%
50%
sam masud,
User Rank: Light Sabre
2/10/2014 | 2:58:25 PM
Re: Klingon proverb
Whatever Cisco does at Layers 3 and above won't matter as far as SDN is concerned because it does nothing to resolve the tension arising from Cisco's proprietary hardware and SDN, which is about an open approach to the infrastructure.
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
2/7/2014 | 5:16:55 PM
Klingon proverb
Cisco is basically following the old Klingon proverb: Keep your friends close and your enemies closer. 
DOShea
50%
50%
DOShea,
User Rank: Blogger
2/7/2014 | 11:19:32 AM
Re: Who's responsible for naming strategy?
Is it wrong that this makes me yearn for a startup to be named Osso Buco Networks?
DOShea
50%
50%
DOShea,
User Rank: Blogger
2/7/2014 | 11:15:19 AM
Market timing
Re: Vincenzo's comments about the hockey stick, seems like we have been hearing that for some time now, yet there still seems to be so much certainty throughout the industry that there will be some huge market impact in another two years or so. Hope they're right.
Page 1 / 2   >   >>
From The Founder
Kicking off BCE 2017, Light Reading founder Steve Saunders lays blame for NFV's slow ramp-up and urges telecom to return to old-fashioned standards building and interoperability.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Interviews
CenturyLink: Let's Get Past SD-WAN Hype

6|23|17   |   04:02   |   (0) comments


Technology becomes a "shiny object" unless it's properly focused on solving business needs for enterprise customers, says Bill Grubbs, network solutions architect for CenturyLink. He explains to Light Reading why SD-WAN deployments have to be tailored to specific needs – and more.
Women in Comms Introduction Videos
Infinera's Sales Director Paints Tech's Big Picture

6|21|17   |   4:14   |   (1) comment


Shannon Williams, Infinera's director of sales, shares how she achieves work's many balancing acts -- between her role and the broader company, today and tomorrow's tech and more.
LRTV Custom TV
SD-WAN Innovation & Trends

6|20|17   |     |   (0) comments


Versa CEO Kelly Ahuja discusses with Carol Wilson the current status and trends in the SD-WAN market, Versa's innovation around building a software platform with broad contextualization, and the advantages that startups can bring to the SD-WAN market.
LRTV Interviews
Ovum's Dario Talmesio on 5G in Europe

6|20|17   |   02:16   |   (0) comments


At 5G World 2017, Dario Talmesio, principal analyst and practice leader on Ovum's fixed and mobile telecoms European team, explains the emerging trends amongst European operators as they prepare for 5G.
LRTV Custom TV
Putting Power on a Pedestal

6|19|17   |     |   (0) comments


ARRIS's John Ulm says a major accomplishment of SCTE•ISBE's Energy 2020 program is increased focus on power cost and consumption, including inclusion of energy requirements in operators' RFPs and RFIs.
LRTV Custom TV
Gigabit Access: The Last-Mile Pipe for All Future Services

6|19|17   |     |   (0) comments


A Gigabit access platform being deployed today must be able to deliver all types of services to an increasing number of devices. A non-blocking architecture is necessary to support the ever-increasing growth in bandwidth demand. The Huawei Gigabit access solution is based on a distributed design that is fully scalable to deliver a unprecedented performance.
LRTV Custom TV
Key Factors to Successfully Deploy an SD-WAN Service

6|19|17   |     |   (0) comments


As service providers transition their SD-WAN solution from trials and limited deployments into production at large scale, there are important considerations to successfully operationalize these solutions and realize their full potential, without adding complexity, introducing uncertainty or disrupting current business operations. Sunil Khandekar, CEO and Founder ...
LRTV Custom TV
IoT Solutions: Rational Exuberance

6|19|17   |     |   (0) comments


IoT solutions are morphing from hype into viable business opportunities. Huawei has the platform and ecosystem support to help carriers successfully address new business opportunities in the IoT space.
LRTV Custom TV
Realizing ICN as a Network Slice for Mobile Data Distribution

6|19|17   |     |   (1) comment


Network slicing in 5G allows the potential introduction of new network architectures such as Information-centric Networks (ICN) as a slice, managed over a shared pool of compute, storage and bandwidth resource. Services over an ICN slice can benefit from many architectural features such as Name Based Networking, Security, Multicasting, Multi-homing, Mobility, ...
LRTV Interviews
Ovum's Mike Roberts on 5G Uptake

6|19|17   |   04:08   |   (0) comments


Mike Roberts, research director for Ovum's service provider markets group, explains why he has boosted his 5G subscriptions forecast.
LRTV Interviews
AT&T's Hubbard on Intersection of SD-WAN & MPLS

6|15|17   |     |   (0) comments


Rick Hubbard, SVP of Network Product Management for AT&T Business Solutions, discusses how AT&T's approach to SD-WAN fits in with its overall virtualization strategy, explains how SD-WAN can improve enterprise customers' use of the cloud and addresses the intersection of SD-WAN and MPLS.
Telecom Innovators Video Showcase
Keep Connected IoT Devices Under Control With Allot

6|15|17   |     |   (0) comments


Allot AVP of International Pre-Sales, Daniel Keidar, explains how communications service providers can protect infrastructure and service availability from flooding attacks caused by malfunctioning or bot-infected devices connected to their network.
Upcoming Live Events
October 18, 2017, Colorado Convention Center - Denver, CO
November 1, 2017, The Montcalm Marble Arch
November 1, 2017, The Montcalm Marble Arch
November 30, 2017, The Westin Times Square
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
Netflix's Lesson in Culture Expectation Settings
Sarah Thomas, Director, Women in Comms, 6/21/2017
No Imagination: UK Chip Biz Goes Up for Sale
Iain Morris, News Editor, 6/22/2017
Kalanick Steps Down as Uber CEO
Sarah Thomas, Director, Women in Comms, 6/21/2017
BT Tech Chief Makes Plea to 5G Chip Vendors
Ray Le Maistre, International Group Editor, 6/20/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Following a recent board meeting, the New IP Agency (NIA) has a new strategy to help accelerate the adoption of NFV capabilities, explains the Agency's Founder and Secretary, Steve Saunders.
One of the nice bits of my job (other than the teeny tiny salary, obviously) is that I get to pick and choose who I interview for this slot on the Light Reading home ...
Animals with Phones
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.