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Recently years have seen a strong resurgence in investments and M&A in network infra. Acquisitions include Silverpeak, CloudGenix, Cumulus, Metaswitch, Affirmed... And new investments include Arrcus, Aviatrix, Alkira, DriveNets...
Let's break down the 4 trends driving this:
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Let's break down the 4 trends driving this:
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(a) Availability of high end merchant silicon - Broadcom and Intel's introduction of switching silicon led to the rise of Arista in the 2000s (no $100M+ spend on chips required!).
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Now, with new high-end silicon from Broadcom, Cisco and Intel, software vendors can address high end use cases and a much broader segment of the $60B networking market.
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(b) Rise of 5G - The performance and scale requirements of 5G require a complete rethink of the network infra by telcos. There's a strong demand for software running on off-the-shelf hardware, which is the only way to hit the cost and performance numbers being targeted.
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The above drove Microsoft’s acquisition of Affirmed and Metaswitch giving them a comprehensive offering for telcos. Expect other cloud vendors, as well as companies like VMware, HP, Cisco, Oracle, Ericsson, Samsung, Dell, Intel and others to start thinking along similar lines.
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(c) The criticality of the network - Increased digitization in enterprises has meant that networks are critical to businesses’ ability to do business, for their employees to be productive, for effective collaboration within & across companies (Covid19 put this trend on turbo)
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(d) Rise of multi-cloud infra - The rise of public clouds have evolved to the adoption of hybrid clouds, and now increasingly a multi-cloud world with enterprises running applications on-premises, in multiple public clouds.
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This places a large burden on the networking teams to implement and manage their connectivity needs across these multiple clouds in a way that’s scalable, performant, secure and most of all, cost effective.
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The above trends are creating a once in a generation opportunity for startups. Innovations in architecture, as well as the business model, open up the entire $60B network infrastructure market.
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We've seen this before in networking at @lightspeedvp, with investments in @riverbed, @Brocade, @AviNetworks, Nicira ( @VMware), @zscaler and more. Now excited to see how @arrcusinc, @Netskope, and several stealth companies continue reinventing this space! https://medium.com/@guruchahal/four-macro-trends-driving-network-infrastructure-investments-6404116243c
