Arista published its Q3 results yesterday and there are some interesting things in the highlights that they presented to investors. I’m going to pick a few and discuss them here.
The Transition To 25G
While many companies are still using 1G today, the transition to 10G is over and 25G is starting.
Most Enterprise IT companies don’t run workloads to use 10G but 25G will be where it’s at because this year’s merchant silicon is 100G already. As the footnote says: “Almost all 25/50GE servers ports are expected to connect via QSFP-100G break out to 100 GE switch ports.”
Still Growing By Taking Cisco Customers
Arista told investors that it is growing the market in part by taking Cisco’s customers. People I’ve spoken to say that single EOS software image makes automation and operations much easier.
Cheaper pricing is strong motivator, but Arista says it is keeping its profit margins at 65% because it uses merchant silicon and modern software methods. Nothing seems to contradict that position.
Being A Core Router
There have been rumors that Arista is positioning the 7500R as a router for the last few months. This slide suggests that customers see a use case for 7500R as a high-density 100G router. There are technology limitations around TCAM, routing table size, etc., but the Cloud Optimized Routing (aka Flexroute™) is workable solution for at least some customers.
Given that the cost reduction compared to traditional routers is something like 80%, you can deliver this solution on a five-year replacement and make big ROI. It’s an opportunity but how big ?
FlexRoute™ is the technology that enables IP forwarding capacity in excess of 1M+ prefixes in hardware on the Arista 7500R Universal Spine and Arista 7280R Universal Leaf platforms.
HPE & Arista
This isn’t in the financial results, but HPE and Arista have announced a partnership. There are some reasons for this after internal changes in HPE have put networking products into the Data Center Business unit and HPE’s DC switching is somewhat weak.
The EtherealMind View
There is a lot of concern about Arista’s struggles to produce enough product, with customers indicating that lead times are increasing. It’s hard to tell if Cisco’s legal attack is having an impact or the 33.5% year-over-year growth is making predicting demand difficult.
Either way, Cisco continues to decline in the data center market according to some analyst firms. It must be galling for the kings on Tasman Drive to realize that they seem to be heading towards “pauper princes” status.