SDN DisruptionSDN Disruption

Driving the Next Wave of Telecom InnovationDriving the Next Wave of Telecom Innovation

Ronald Gruia

Director, Emerging Telecoms

December 12th 2013December 12th 2013

© 2013 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.

Today’s Presenter

Ronald Gruia, Program Leader, Principal Analyst - Emerging Telecoms

Frost & Sullivan

Functional / Industry Expertise:

•16 years of telecom industry expertise accumulated at Frost & Sullivan (12 years) and Nortel Networks (4 years). Particular expertise in:

-NGN Transition: LTE (4G), IP Multimedia (IMS), Software Defined Networking (SDN), services and standards

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services and standards

-Telco 2.0: business models, next-gen VAS (Value Added Services), RCS, service brokering

-The Enterprise of the Future: IP Telephony, WLANs, UC, Speech, FMC, and VoIP apps

• Strong experience base covering telecom and power systems industry:

• U.S. Patent holder: principal inventor of an algorithm optimizing a multimedia application

• 100+ speaking engagements at telecom conferences and industry shows

• Featured columnist at TheStreet.com, IMS/NGN Magazine, Processor Magazine and TMC.net

• Quoted on Business Week, Financial Times, Forbes, Wired, API, Reuters, MarketWatch, etc.

• Appearances on CNBC (US), Business News Network (BNN), RoB TV and TechTV (Canada), Decision TV (Brazil), TeleSemana (Latin America), and Telecom TV (UK, live from Spain)

SDN Disruption

Agenda

• SDN Defined

• Have We Seen This Concept Before?

• What is Different This Time Around?

• SDN Benefits & Caveats

• SDN Competitive Landscape

3

• SDN Competitive Landscape

• Other Related Ongoing Efforts

• SDN Use Cases

• Early SDN Deployments

• SDN Layer Disaggregation of Traditional Networks

• How SDN is Disrupting the Market

• SDN: Hot Investment Opportunity

• Conclusions

SDN Defined

• SDN (Software Defined Networking) is a novel approach to networkingenabling carriers to achieve a more efficient control of their infrastructure, drawing upon customization and optimization to deliver innovative network services. SDN allows a controller to determine how packets are forwarded by networking elements, separating the control and data planes within switches/routers. There are 3 key distinctive features in an SDN architecture:

• Separation of the control plane from

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• Separation of the control plane from the data plane

• A centralized controller and view of the network

• Programmability of the network by external applications

• This is yet another instance of the ongoing “ITfication” of the telecom Industry.

Source: SDN Central

Have We Seen This Concept Before?

• Layer separation concept not new (e.g. IMS)

“Stovepipe” Service Model IMS Service Approach

IP Multimedia Subsystem

Application Servers

ControlLayer

ApplicationLayer

...

Pu

sh

to

Ta

lkS

erv

ice

Qo

S

Billin

g /

OS

S

Pre

sen

ce

. . . . . . . .

Inte

rac

tiv

eG

am

ing

Se

rvic

e

Qo

S

Billin

g /

OS

S

Pre

sen

ce

. . . . . . . .

Vid

eo

Str

ea

min

gS

erv

ice

Qo

S

Billin

g /

OS

S

Pre

sen

ce

. . . . . . . .

Billing / OSS

QoS

Session Management

and control

5

PSTNWLANRAN

IP Multimedia Subsystem

. . .

Network Subsystem

Base Station Subsystem

Layer

TransportLayer

AccessLayer

...

...

Multi-service IP Network

Qo

S

Billin

g /

OS

S

Pre

sen

ce

. . . . . . . .

Qo

S

Billin

g /

OS

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sen

ce

. . . . . . . .

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S

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g /

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Pre

sen

ce

. . . . . . . .

Presence

Common functions are replicated Common functions are reutilized

Source: Frost & Sullivan

Have We Seen This Concept Before? (Cont’d)Tech

no

log

y A

dvan

ces

Distributed

Control Plane

w/in Switch

All Data w/in

Control Plane

Early ‘00’s

Separated

Control & Data

Planes

Late ‘00’s

History of SDN Before OpenFlow (BO)

6

Source: Frost & SullivanTime

Tech

no

log

y A

dvan

ces

Source: Frost & Sullivan, adapted from Wiretap Ventures/ SDN Central presentation

Separated

Control &

Data Planes

Early ‘90’s

w/in Switch

Mid- ‘90’s

What is Different This Time Around?

Open Open InnovationInnovation

Open Open InnovationInnovation

SoftwareSoftware

Defined Defined

NetworkingNetworking

(SDN)(SDN)

SoftwareSoftware

Defined Defined

NetworkingNetworking

(SDN)(SDN)

3rd party apps

ecosystem

creation

Lower CAPEX,

OPEX reduction

Control plane

separation

fosters quicker

innovation

Source: Frost & Sullivan

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Network Function Network Function

Virtualization (NFV)Virtualization (NFV)

Network Function Network Function

Virtualization (NFV)Virtualization (NFV)

� SDN has two other pillars to stand on: openness and NFV

OPEX reduction

and enhanced

agility

• NFV and SDN: very complementary, mutually beneficial but not inter-dependent; SDN can improve NFV performance (simplify compatibility, ease operations), NFV enhances SDN via virtualization, IT orchestration and management techniques

• ONF (Open Networking Foundation) handles SDN, ETSI/NFV Forum manage NFV

• IT value chain now has more experience under its belt with the “ITfication” of the telco industry and realizes that over-provisioned networks do not yield a winning model

• OpenFlow spec openness; standards driven by operators and vendors

What is Different This Time Around? (Cont’d)

NFV and SDN are closely related, but really meet different goals:

NFV versus SDN:

• NFV: re-definition of network equipment architecture

• NFV was born out of a need to meet Service Provider (SP) needs:

• Lower CAPEX by reducing/eliminating proprietary hardware

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• Consolidate multiple network functions onto industry standard platforms

• SDN: re-definition of network architecture

• SDN comes from the IT world:

• Separate the data and control layers, while centralizing the control

• Deliver the ability to program network behavior using well-defined

interfaces

SDN Benefits & Caveats (Operator’s Perspective)

Benefits:

• Faster provisioning: improving “service velocity” is a key catalyst

• Applications / APIs - Service exposure: new revenue generation opportunity

• Single, central point of network control: network intelligence

• CAPEX/OPEX reduction: reduces up-front costs, improves resource utilization and simplifies provisioning and operations

• Programmability (operator’s own processing, QoS, control, program, etc.)

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Caveats:

• Interoperability (multi-vendor, multi-operator environments, etc.)

• Limited internal skillsets: achieving operational excellence is sine-qua-non

• Lack of OSS tool support: enterprise CIOs / operator CTO execs need better orchestration and management tools

• Scalability (single controller: single point of failure, inter-domain issues, etc.)

• Increase in infrastructure complexity: the lack of technological maturity exacerbates this issue

SDN Competitive Landscape

• Current SDN market still at a nascent stage

• Startups and established players still refining their solutions

• OpenFlow emerging as a de-facto SDN standard, though spec is still being worked on

• SDN market participants can be divided in the following categories:

• Large NEVs (Network Equipment Vendors): Alcatel-Lucent, Cisco,

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Ericsson, Huawei, Juniper, NEC, NSN, etc.

• New entrants, including startups and SDN specialists: long list comprising most of the 200+ companies listed on SDN Central

• Specialists: vendors tackling different areas such as network security, policy (PCRF), OSS/BSS, etc. embracing the SDN architecture, including Radware, Amdocs, Oracle/Tekelec, etc.

• Others: Large IT Vendors: Dell, HP, IBM, etc. and data center providers/specialists such as VMware

Other Related Ongoing Efforts

• Project OpenDaylight

• Open-source project being led by Cisco, IBM and other vendors

• Goals: accelerate SDN adoption under the auspices of the Linux Foundation; spur third-party app development via common platform

• Well received initially; HackFest happened on Sept.10th

• Project Clearwater

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• Collaborative open-source effort led by Metaswitch and a few carriers to implement IMS for massively scalable cloud computing environments

• Goals: provide open-source core IMS codebase embracing NFV; enable massive scale and telco grade reliability in private/public cloud setups

• Open Compute Project (OCP)

• Facebook-led initiative to create specifications for more efficient servers, storage and networking infrastructure. First meeting took place in May at MIT in order to stimulate knowledge transfer

SDN Use Cases

Early SDN use cases:

• Data center and distributed clouds (enterprise/private cloud/regulated)

• Home network management

• Mobile operator (MVNO extensions, video optimization, etc.)

• Network visualization

SDNCTL

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Other use cases:

• Cloud service provider data center (hyper-scale, Web 2.0)

• Service provider cases: WAN edge/optimization, mobile backhaul, mobile LTE core (EPC), RAN, metro aggregation, wired core / edge

• Specialist cases: network security, OSS/BSS (“elastic” PCRF, etc.)

Customer types:

• Enterprise, operators, cloud/SaaS players, public sector

Early SDN Deployments

• NTT Communications:

• Deployed NEC infrastructure to deliver its Enterprise Cloud Service (as part of its virtualized data center infrastructure)

• Optimized ICT costs while managing global corporate ICT ops.

• Google B4 Software Defined WAN (transport SDN foundation)

• Announced at ONS 2012; built custom switches with OF agent

• Filling up the G-scale backbone network pipes for efficiency

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• Deutsche Telekom TeraStream project:

• IPv6 network in Croatia for broadband services

• Tail-f NCS controller running Netconf, Yang; Cisco network equipment

• Colt Telecom Carrier Ethernet Service:

Leverages SDN to offer a multi-vendor carrier Ethernet service using Cyan’s:

• Blue Planet software to orchestrate, provision, and control Accedian EtherNIDs

• Z-Series optical platforms to automate service provisioning

SDN Layer Disaggregation of Traditional Networks

APIs / Apps

Orchestration

Big Tap (Big Switch),

Embrane, Gigamon, Infoblox,

Arista, Amdocs, Cyan, Embrane,

Ericsson, NEC, NSN, Oracle,

Piston, PLUMgrid, Rackspace

“Classic” Network SDN Network Function

The orchestration layer

automates a sys admin day-to-

day tasks, such as change

management and provisioning,

which reduces OPEX.

Applications reside on the app

layer on top of the controller,

which is accessed via APIs.

These APIs allow applications

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Cisco or Juniper

customer HW

IOS / JUNOS

Hardware

Controller

Broadcom

Switchx86 server

Cumulus Linux

Floodlight (Big Switch), Open

Daylight (Cisco, Juniper, HP),

NSX/Nicira (VMware), PLUMgrid

APIs / Apps Embrane, Gigamon, Infoblox,

RadwareThese APIs allow applications

to tap network functionality.

The controller abstracts

routing information away from

hardware to a centralized

point, containing routing and

configuration data.

Packet forwarding function

or what sends packets on

their way is in the hardware

How SDN is Disrupting the Market

Services

Services Apps

Apps

Hardware

Hardware

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• SDN will bring a shift away from hardware towards software and services

• The “ITfication” of the Telecom industry: SDN is just another instance of that phenomenon

• Vendors will have to focus on their core competencies and know who to partner with

• Services can be a backdoor to winning future business

2013 2017Note: Pie charts are only for illustrative purposes

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SDN: Hot Investment Opportunity

• Despite long sales cycles, strong incumbent competitors and the high capital intensity that’s required, investors are remaining bullish on SDN, as they regard it as a long-term investment opportunity. As a result, venture capital funding in SDN startups has gone up from <$10m in 2009 to ~$500m in 2013 (a 50x increase in 5 years).

• Also popular is the large NEV “spin-in” concept, with examples such as Nuage (Alcatel-Lucent) and Insieme (Cisco).

VC Investment in SDN Technology

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$0

$100

$200

$300

$400

$500

2007 2008 2009 2010 2011 2012

$10 $12 $25$49

$202

$454

$m

illi

on

VC Investment in SDN Technology

Source: Lightspeed Venture Partners

Conclusions

• SDN is real, offering tangible CAPEX and OPEX savings.

• Key drivers: improved efficiency, enhanced network utilization, richer configurations, reduced OPEX, new revenue generation (via service exposure / APIs), better third party service integration.

• The SDN market is in its infancy, with a more widespread adoption still remaining 2-3 years away. Many vendors have product SKUs in the market today, and have started proof-of-concept trials but a more accelerated

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uptake will take time as standards mature. In the interim, we anticipate hybrid SDN implementations.

• Venture capital investment expected to remain strong as more SDN use cases get developed and larger vendors need a quicker answer to some customer pain points (i.e., M&A versus organic growth).

• Hardware commoditization not likely to happen in the short run. While some control plane functions in existing switches will move to the controller, the switch will still remain an important component in terms of empowering SDN scalability and enabling programmability.

Q & A Session

Frost & Sullivan recently issued a global multi-

client SDN study packed with forecasts, and

enterprise CIO/carrier CTO opinions based on

global interviews conducted with 35 execs from

4 regions. For more info, please contact me.

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Ronald F. Gruia

Director, Emerging Telecoms

�rgruia@frost.com � +1-416-490-0493

About me: about.me/rgruia

Thank You

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For Additional Information

Ronald Gruia

Director

Emerging Telecoms

(416) 490-0493

rgruia@frost.com

Brian Cotton, PhD

Vice President

Information & Communication Technologies

(416) 490-0983

bcotton@frost.com

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