Cloud providers and carrier edge networks are "crystallizing" as real deployment opportunities for Brocade's Vyatta Controller, a company executive said during the vendor's quarterly earnings call Monday following the release of better-then-expected fiscal fourth-quarter results.
"Use cases are crystallizing here," stated Jeff Lindholm, Brocade senior vice president, worldwide sales, who noted that cloud service providers are trying out Vyatta inside multitenant data centers. Carriers, he noted, are also evaluating the software in "classic carrier environments" to eliminate proprietary hardware, reduce operational complexity and cut costs. The deployment of virtual CPE (customer premises equipment) is one emerging use case.
"A couple of the larger carriers" are evaluating the Vyatta Controller, Lindholm said, though he declined to specify who they are or when they might deploy. However, "the investment they're putting into working with us is extremely robust," he said.
Multitenant data centers are those shared by multiple businesses; each business's virtual network must be secured and protected against interference from others. Virtual CPE refers to virtualized customer premises equipment, running in software rather than specialized appliances.
Multitenant data centers are often early candidates for virtualization because the virtual networks must be configured and partitioned more rapidly than manual techniques permit. Likewise, virtual CPE eliminates the need for truck rolls to deliver, install and configure equipment -- in software, the CPE can be spun up and configured remotely.
Brocade is investing internally in DevOps skills to help carriers integrate the controller with orchestration and the supporting network infrastructure.
The Vyatta Controller is software that is key to Brocade's push to dominate the IP data center market. Introduced in September, it's designed to provide network operators with the flexibility of programmable networks, using open source to minimize vendor lock-in. It controls switches, routers, firewalls, VPNs, load balancers and other elements of the network in both virtual and physical network environments. (See Brocade Debuts OpenDaylight SDN Controller.)
Discussion of the controller came up on an earnings call during which Brocade announced fourth-quarter revenue of $564 million, up 1% year-over-year, beating expectations by $1.81 million. Non-GAAP EPS was $0.24, beating expectations by $0.01, though essentially flat year-over-year.
But the controller likely had little or nothing to do with Brocade's current success. Asked by an analyst when Brocade expects to "monetize" the Vyatta Controller, CEO Lloyd Carney said he expects it to happen the "back end of the year," when "numbers will come out that are meaningful."
For now at least, Brocade is driven by its storage-area network (SAN) and data center networking businesses.
For fiscal year 2014, the company had revenue of $2.21 billion, down 1% year-over-year, and non-GAAP EPS was $0.90, up 12% year-over-year.
"Fiscal 2014 was a great year for Brocade," Carney said on the call, reading from a prepared statement. It was the most profitable year ever for Brocade.
The New IP was a big part of that. The New IP is Brocade's term for virtualized networks that allow carriers and large enterprises to increase agility, get new services online faster, ease innovation and generate additional revenue. "We are rapidly emerging as a leader for the New IP technologies, and are aligning our focus, investment, and innovation with the evolving cloud, social, and mobile requirements," the company said in a statement. The company strategy is to "enable open, software-driven, agile, and secure network architectures." (See Introducing 'The New IP' , Brocade Wants to Be Red Hat of OpenDaylight and Brocade Weaves Software-Based Networking Strategy .)
Focus on the New IP is "a guiding principle of our product and technology roadmap, as well as our acquisition strategy," the company said in a statement. The goal for next year is to grow the "overall IP networking business at twice the market rate, with an emphasis on the critical data center market," Brocade said.
The outlook for for the first quarter of 2015 falls in the revenue range of $560 million to $580 million, compared with first-quarter 2014 revenue of $565 million. IP networking revenue will be down 8-14% quarter-to-quarter, "principally driven by lower federal and service provider revenue, as well as normal seasonal enterprise spending patterns," the company said.
Service provider spending is a dark cloud for the networking sector. Cisco said in its most recent quarterly earnings that service provider revenue was down 10%, although it finished with overall revenue modestly up. Also seeing problems from carrier demand: A10 Networks Inc. , Juniper Networks Inc. (NYSE: JNPR) (which has other problems too), Spirent Communications plc , EZchip Technologies Ltd. (Nasdaq: EZCH) and Adtran Inc. (Nasdaq: ADTN). On the other hand, Infinera Corp. (Nasdaq: INFN) and Ericsson AB (Nasdaq: ERIC) are faring better. (See Cisco Busts Slump Despite Carrier Slowdown, Turmoil at Juniper as CEO Quits, Arista's Q3: Smooth Not Lumpy With the Cloud Titans and A10 Latest Victim of Carrier Spend Slowdown.)