When Cisco's John Chambers cited SDN as one of the company's strengths in an earnings call with analysts Wednesday, at least one industry watcher heard "SDN" as code for "crush VMware."
"A cheerful John Chambers told Wall Street analysts on Wednesday that his plan to crush his biggest threat, a new technology led by VMware, is working well," Julie Bort wrote on BusinessInsider.com. (See Cisco Earnings Suffer From Carrier Weakness.)
Bort described SDN as "being led" by VMware Inc. (NYSE: VMW) following its acquisition of Nicira. She called Nicira's founder "more or less" the inventor of SDN. (See Defining SDN & NFV and Does Cisco Need Nicira?)
A year ago, Cisco had no SDN product and dismissed the technology. Now its Application Centric Infrastructure (ACI) is the company's SDN offering, using technology from Insieme, which Cisco bought. Chambers said Wednesday that Cisco is taking almost all the customers it lost following VMware's Nicira acquisition. (See Cisco Asks the Killer SDN Question.)
More than 50 customers are testing Cisco's ACI SDN software, he said, and it has sold 175 Nexus 9000 routers running ACI. Bort said its goal is to get those customers, not necessarily to commit to ACI, but simply to wait and not jump to competitors. (See Cisco's ACI Gets Physical With SDN.)
As SDNCentral's Craig Matsumoto noted in a blog post Wednesday, Chambers said the number of ACI customers has gone from more than 20 last quarter to 175 this quarter, and the pipeline is "approaching 1,000 customers.
However, that's only a small part of Cisco's customer base. And Matsumoto said the number appears to count all Nexus 9000 customers, the majority of which aren't actually using SDN.
Cisco shares were trading at $24.355 around 3:00 p.m. EDT today, up $1.5451 from this morning. The stock closed at $22.8099 Wednesday.
I'm not sure I agree with Bort's analysis. I see Cisco's ACI as a reaction to the SDN threat as a whole, not just VMware. And even though VMware is one of the leaders in SDN, I would not say it's driving the movement.
Nevertheless, big technology incumbents often fixate on a single competitor, and VMware is as good a target as any for Cisco's hostility. Certainly, when I talk with VMware people, they seem to be fixated on Cisco -- as are those at every other company that attempts to compete with it.
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