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VMware has outpaced Cisco in the fast-growing market for software-defined networking in the data center, as the two vendors battle for the lion's share of billions of dollars in corporate spending.
In the second half of 2018, businesses spent 34% more on SDN products than they did in the first six months of the year, according to IHS Markit, based in London. At the end of the year, companies had spent a total of $7 billion on SDN technology. By the end of 2023, the SDN market will nearly triple to $20 billion, the research firm said.
VMware captured 22% of the money businesses spent in the second half of last year, with Cisco coming in second at 19%. VMware's focus on selling hardware-agnostic virtualized networking software beat Cisco's approach of pitching its SDN architecture, called Application Centric Infrastructure (ACI), as an option for its Nexus 9000 data center switches.
"Many customers are still buying Nexus 9000s without ACI," said Josh Bancroft, an analyst at IHS Markit. However, having a large installed base of Nexus switches could lead to mass adoption of ACI in the future.
"If Cisco can increase adoption of ACI on their switches, the race for top spot will certainly heat up," Bancroft said
Meanwhile, VMware surely won't make it easy for Cisco to capture more SDN business. At the end of 2018, VMware had 10,000 organizations using NSX, which is the vendor's virtualized networking technology for SDN.
VMware leads in SDN controllers, Cisco in switching
The recent IHS Markit report covered a mix of hardware and software organizations use in data centers. The technology included Ethernet switches, SDN controllers, software-defined WAN appliances, and SD-WAN control and management software.
VMware reached the top of the SDN market by capturing the largest share of SDN controller sales. Cisco, on the other hand, led in sales of branded Ethernet switches.
Cisco and VMware were not the only vendors listed in the report. Arista Networks captured 15% of SDN revenue to grab the No. 3 spot, followed by white box vendors with 10% and Huawei with 8%.
Huawei's SDN revenue is increasing faster than that of white box vendors; therefore, it could take the fourth spot soon, Bancroft said. Sellers of the commodity switches for SDN will have to build a much more extensive network of channel partners and systems integrators to get the hardware in front of more enterprises.
Intent-based networking and SDN
The software on white box switches also needs to improve, IHS Markit said. Companies developing network operating systems for white boxes are doing that by pursuing Intent-based networking, or IBN.
IBN is a form of network management that uses artificial intelligence, machine learning and network orchestration to automate administrative tasks across a network. Cisco is a significant force behind IBN adoption. Makers of white box operating systems also pursuing the approach in different forms include Arrcus, SnapRoute, Cumulus Networks and Pluribus Networks.
A survey of enterprises found 46% listing IBN as an essential driver of SDN adoption, IHS Markit said.