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Arista's Big Switch buy adds customers, engineers, network software

The Arista-Big Switch deal adds significant software-defined networking technology to Arista's EOS operating system. Also, Arista will acquire 300 customers and dozens of engineers.

Arista Networks has acquired data center networking company Big Switch Networks. Arista bought the company for its 300 customers, engineering team and software for managing switching fabrics.

Arista announced the acquisition this week, along with its earnings results. The company reported that revenues fell 7.2% year-over-year in the fourth quarter ended Dec. 31. The drop was due to reduced spending by cloud and communication service providers, which are the company's most lucrative customer segments.

From a product perspective, Arista was particularly interested in Big Switch's Big Monitoring Fabric (BMF) and its Big Cloud Fabric (BCF), Arista CEO Jayshree Ullal said in a conference call with Wall Street investors. BMF is a network packet broker for BCF, which is software for managing physical switches as a single fabric. Switch makers that support BCF include Accton Technology, Quanta, Hewlett Packard Enterprise and Dell EMC.

Jayshree UllalJayshree Ullal

Arista expects BMF to be a "perfect complement" to Data Analyzer (DANZ), the network packet broker within the company’s EOS network operating system. BMF will bring more extensive packet-based analysis to DANZ, Ullal said.

"BMF is just icing on the cake," she said. Arista planned to continue supporting BMF and BCF as separate products.

Arista plans to offer BCF as a management tool for converged infrastructure. The latter is a data center architecture that packages compute, networking, servers, storage and virtualization tools in a prequalified turnkey appliance. Ullal expects partner Dell to use BCF within its infrastructure bundles.

Big Switch's 300 customers included 100 that were also Arista customers, Ullal said. Arista hired 75 Big Switch employees, the majority of whom were engineers.

Arista did not provide financial details of the acquisition.

Arista sales down

The Big Switch purchase was part of an earnings report that showed Arista taking a significant revenue hit from a downturn in sales to cloud and communication service providers. Arista did not expect much improvement during the first half of 2020. It predicted flat or just slightly higher spending by the two customer segments combined.

Arista said communication service providers that are currently testing its 400 Gb switches would begin deploying them in production environments in the second half of the year. In 2021, sales of the hardware would pick up significantly, according to the company.

Arista was less optimistic about cloud providers. Total revenue from them could dip a bit because of a pause in spending by one of the vendor's largest customers. Arista did not name the customer.

For the current quarter, Arista forecast revenue between $522 million and $532 million. That's down from $595.4 million in the same period a year ago.

Arista is diversifying its product portfolio to lessen its financial dependence on organizations with hyperscale data centers. In 2018, the company launched its first campus LAN switches and acquired Mojo Networks.

Mojo provided Wi-Fi infrastructure that included cloud-based management software. Arista rolled Mojo technology into its CloudVision network operations platform, which offers monitoring, automation and management capabilities.

In the last two quarters of 2019, Arista's campus portfolio was approaching $100 million in revenue, Ullal said.

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