If you have been paying attention to the news lately, you will have noticed that VMware announced a US$1.05bn purchase of Software Defined Networking (SDN) vendor Nicira, Oracle announced its entry into the SDN market through its acquisition of Xsigo and a further partnership between Juniper and Riverbed means Juniper will license WAN optimization company Riverbed’s softwarebased application delivery controller – at a cost to Juniper of $75m – for load balancing and single point management for applications in the Cloud. These announcements have been driving interest in network virtualization, which is driven itself by the growing interest in the Software Defined Network.

Many say developments in this space ought to have Cisco worried. One analyst even suggests Cisco stock should be avoided due to the threat posed to its core business. To understand why, we must first understand network virtualization and why, after years spent as the ‘poor relation’ to the more popular server virtualization, it is now having such a large impact on the data center industry.

What is network virtualization?

Virtualization was first introduced in the 1970s – back in the days of mainframe computing. It was superseded in the 1980s/1990s by the invention of x86 servers, personal computers and a move to a distributed computing model.

The term is usually used in reference to its application in servers and while virtualization of the server has had, and according to analyst figures will continue to have, a profound effect on the data center environment in terms of footprint, future proofing and functionality it is also a key driver of growth for the cloud computing model.

Network virtualization as a term first appeared around 2005/2006 and almost exclusively in Cisco marketing material where it was used to promote virtualization of an enterprise campus network to achieve multiple closed user groups on a single physical network. At its most basic, network virtualization refers to the segmentation of a physical network into one or more logical networks combining available bandwidth into channels. Each channel is independent and can be assigned to a particular server or device in real time. The network resources are effectively pooled and can be accessed regardless of physical location. The complication is in the fact that network virtualization is not a single definable technology but means different things to different people from the early days of virtual local area networks (VLANs) through to the latest
Software Defined Network (SDN).

The VP of marketing for Nicira, Alan Cohen (VMware is purchasing Nicira to enhance its efforts in network virtualization), says there are three attributes of network virtualization – “the network virtualization layer is decoupled from the physical layer, it is automated, and it allows you to reproduce all the capabilities of a physical network.”

The evolution of network virtualization
VLANs, Closed User Groups, Virtualized Switching, Dynamic Resource Allocation and fabric-based networking all form part of the network virtualization arena, not to mention SDN.

Network virtualization for closed user groups was introduced by Cisco, whose approach was aimed at maximizing existing infrastructure investment by consolidating disparate networks and service deployments onto a shared network.

Virtualization of the switching infrastructure was introduced to enable users to better utilize their networks but led to a situation where control and management was shifted from the network administrator to the virtualization administrator.

Dynamic Resource Allocation refers to the network’s ability to interact with a hypervisor and dynamically allocate resources as and when the hypervisor changes with the aim of freeing up capacity in the virtual server (which no longer has to use processing power to perform switching). This improves the speed of switching through the network, offloads the switching functionality from the virtual server to the hardware platform and still retains theagility benefits of virtualization. It also takes control of the network away from the server team and brings it back into the care of the network administrator.

We have recently witnessed the advent of fabric-based networking which allows the same infrastructure to be used for both IP traffic and storage traffic creating a boundaryless virtualized networking infrastructure on physical network hardware throughout the data center. With fabric-based solutions, storage and IP traffic are cascaded, effectively multiplexed together and their points of origin and destination are blurred.

Software Defined Networking

Much attention directed at ‘network virtualization’ and the spate of buying activity/ partnerships mentioned above is in actual fact related to SDN solutions.

Not very long ago relating SDN to network virtualization, as so often happens today, would have been controversial. The whole point of SDN is that it does not divorce the hardware infrastructure elements and represent them in a different form. According to Martin Casado, co-founder and CTO of SDN vendor Nicira, commenting on his personal blog Network Heresy: “SDN is definitely not network virtualization and network virtualization does not require SDN.”

Cassado describes SDN as a mechanism by which network virtualization is achieved. But as with any term in our fast-evolving industry, its true meaning and the meaning ascribed by the masses can differ to greater or lesser extent.

As journalists, bloggers and vendors continue to describe SDN as network virtualization it is likely that it won’t be long before the two terms are interchangeable.

Network virtualization drivers
The key drivers for interest in network virtualization/SDN have been – and will continue to be – the increase in network traffic, take up of server virtualization and the move to cloud computing. Demand will undoubtedly be led by sever virtualization. Server virtualization reduces the number of network devices in the data center as fewer physical servers mean fewer physical ports connected by physical cables to each server. There is also an effect on networking performance because of the need to get the same amount of bandwidth into a smaller number of physical servers.

Network virtualization demand
Despite the obvious issues network virtualization attempts to address, network virtualization is still on a ‘slow burn’. Take up has been hampered by a lack of real need amongst enterprises and the potentially high cost of implementation and complexity of the solutions prior to the introduction of SDN.

According to Bruce Hockin, Head of Solutions Strategy at Avnet Technology Solutions UK, unless the existing networks have come to their end of life, or there is a strategic line of business application that demands it, there is no compelling need for companies to virtualize their networks. This is why the introduction of SDN is causing such a stir. By offering a solution that allows virtualization of the network within the existing infrastructure (and also the possibility of less costly equipment upgrades) the possibilities for enterprise, cloud providers and data center operators to not only increase efficiency and achieve cost savings but also increase revenue by way of new service offerings are tempting.

Impact on the data center

Early network virtualization had little impact on the data center industry. Recent developments in network fabrics and SDN, however, could change this. Not in terms of data center footprint – there will be little impact directly as result of network virtualization in either reducing or increasing footprint. The more efficient use of equipment through network virtualization should deliver energy savings through lower power consumption as well as cost savings through a need to buy less equipment. A major barrier to the implementation of previous network virtualization technology was the cost and complexity involved in a complete ‘rip and replace’. The fact that SDN vendors are adamant that their solutions work with the physical network servers or hypervisors already in place add value to the existing network and data center without requiring new equipment. This means take up is likely to escalate.

Once the barriers to implementation are reduced, the main benefits of network virtualization will come from the increased network performance in terms of flexibility, scalability, improved capacity usage and – crucially – the ability to bring new services to market in shorter timespans. This has particular benefits for colcoation providers and their customers.

Those same colocation providers will be able to provide better levels of maintenance services in terms of speed to repair or investigate faults. Operators see this as a logical extension of their core business and an opportunity to grow revenue from additional services.

What about Cisco?
From being the company that coined the phrase ‘network virtualization’ and being at the forefront of providing solutions based on its own equipment (not to mention having a stranglehold on networking equipment and providing a barrier to companies taking up innovative solutions such as Juniper’s QFabric) Cisco now finds itself threatened by SDN. By allowing companies to implement network virtualization without costly infrastructure upgrades and offering the potential to purchase far cheaper hardware, SDN vendors effectively circumvent the Cisco stranglehold and threaten future revenues from hardware sales. Given that the problems that will be effectively resolved by the implementation of network virtualization are only likely to worsen, IDC’s estimate that the SDN market will be worth $2bn by 2016 does not seem far-fetched. Cisco should be worried.