Facebook Unveils Networking Switch to Take On Cisco, Juniper

Facebook Inc. unveiled a new networking-equipment system designed to displace products from companies like Cisco Systems Inc. and Juniper Networks Inc. with flexible hardware at the heart of large data centers.

The system, nicknamed 6-pack, will let Facebook build networks by filling large racks with a smaller switch called Wedge, introduced in June. Using its own design helped Facebook, whose social-networking website has 1.4 billion users, reduce spending on infrastructure and upgrade its capabilities without depending on outside suppliers.

The 6-pack is built to replace high-capacity spine switches that handle the bulk of traffic in data centers. Though it was originally marketed as a cheaper, top-of-rack switch, Wedge was designed to become a building block for systems to replace more expensive kinds of gear, said Najam Ahmad, Facebook’s vice president of infrastructure.

The spine switch market was worth about $2.9 billion in 2014, smaller yet more profitable than the $3.1 billion top-of-rack switch market, according to Infonetics Research, a unit of IHS Inc. In the past, Menlo Park, California-based Facebook bought its spine switches from traditional networking-gear providers like Cisco and Juniper, Ahmad said, without specifying the company’s suppliers.

The 6-pack system will replace these systems while encouraging traditional network-equipment makers to change their designs, he said.

“I see this as a challenge, as an opportunity for them, rather than a threat,” Ahmad said.

Cisco’s Business

Switches are the biggest business for Cisco, the world’s largest maker of networking gear. In the quarter that ended in January, 30 percent of revenue came from its switch product lines.

Since 2011, Facebook has been working with companies to develop new low-cost systems for its data centers, which house tens of thousands of server computers that store and dish out information for its website and other services. Suppliers such as Synnex Corp. and Quanta Computer Inc. have benefited from this strategy, while incumbents like Dell Inc. and Hewlett-Packard Co. have faced more competition.

Facebook shares its insights and technologies through a group called the Open Compute Project, which encourages multiple companies to work together to design lower-cost systems. Other Open Compute members include Microsoft Corp. and International Business Machines Corp.

“The OCP group of network users keeps growing,” Ahmad said. “It’s a very active, vibrant community.”

Building Networks

By using the 6-pack blueprint, more data-center operators could build their networks without buying any proprietary switches from traditional suppliers, according to Cliff Grossner, an analyst at Infonetics Research. Today, mainly large cloud providers and large companies such as Wall Street banks design and build their own equipment based on open standards, he said. The market for such gear could grow to 30 percent of data-center switch spending in five years from 6 percent today, he said.

Kelly Kramer, Cisco’s chief financial officer, downplayed the risk to Cisco, and pointed to strong sales of its Nexus family of switches in its most recent quarter. She noted that Cisco was also a member of the Open Compute Project, to “better understand where our customers are going.”

Juniper is more actively supporting the open approach. In December, it submitted a design for a new switch called the OCX1100 to the Open Compute Project. If accepted, any OCP member could build the machine or write software for it.

Arista Networks Inc., a fast-growing supplier specializing in data center switches, is the most threatened by the open approach, given that it gets a high percentage of its sales from a few large cloud providers, according to Jason Noah Ader, an analyst at William Blair & Co.

Amanda Jaramillo, a spokeswoman for Arista, declined to comment. The company is scheduled to report quarterly earnings on Feb. 19.

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