The networking market in SA and the rest of the world is expected to enjoy robust growth over the next year as companies upgrade their infrastructures to cater for emerging demands such as cloud computing, mobility and video.
On the international front, IDC forecasts that the market will grow 8.7% in 2012 to reach a total value of around $39.4 billion. Ethernet switches will account for 51% of global enterprise network revenue, followed by IP telephony at 21% and WLAN equipment at 9%, says IDC. The market researcher says wide area network (WAN) optimisation technologies will enjoy especially strong growth this year.
South African networking vendors and integrators are just as optimistic about the growth of the local market. “This year looks like an exciting year judging by what we have in the funnel,” says Louis Helmbold, Axiz Workgroup's networking business development manager.
The networking market is fairly buoyant at the moment because many companies are under pressure to replace ageing infrastructure. “There are a lot of legacy networks out there,” says Helmbold. “Many companies are still running local area networks (LANs) at 10Mbps, and not only at the lower end of the market.”
“Some organisations still have legacy technologies that are deeply engrained in their infrastructures,” says Wayne Speechly, communication services executive at Internet Solutions (IS). “But there has been a lot of innovation in the communications market. The question many are asking is how to augment what they have with new-age technology.”
Beneath the top-tier companies, there's a huge need for network upgrades among South African companies, says Greg Wilson, MD of Reflex Solutions. “Networking won't be their biggest expense, but companies need to allocate budget and make sure they get it right.”
Given the specialised skills networking demands and the amount of day-to-day admin it involves, it's an idea for companies to outsource, he adds.
Paul Luff, country manager at SMC Networks SA, says end-users are making their networking investment decisions from a hard-nosed, financial perspective. They are looking at both price and performance from their network gear, in some cases opting for the cheaper solution that meets their present needs and in other instances investing with future-proofing in mind.
Fuelling the hunger
IDC identifies cloud computing, video applications and mobility as the major drivers of the global enterprise networking market for the next year or so. Similar factors are also driving the South African enterprise networking market, with many companies deploying strategies for network convergence, workforce mobility and data centre virtualisation.
Meanwhile, the amount of data from more traditional applications that the network must handle is also growing at a quick pace. Data warehousing, for example, is taking a toll on the enterprise network.
The combination of massive investment in telecoms infrastructure by the network operators and the challenges organisations face in renewing and managing their technology environments is spurring growth of cloud computing, says Edwin Thompson, GM of technology and infrastructure at MTN Business.
“Just three years ago, you wouldn't have considered putting everything at the back of a telecoms line,” Thompson says. But MTN Business is seeing a lot of movement in the voice market, with virtual PBXs and hosted VOIP solutions spearheading cloud adoption in SA. This will lay the foundation for moving further systems such as mail and financial apps to the cloud.
Some organisations still have legacy technologies that are deeply engrained in their infrastructures.
Wayne Speechly, IS
Even though the telecoms infrastructure has improved and bandwidth prices have fallen, Anthony Laing, head of networking at XON, says the major challenge for companies as they roll out cloud solutions such as infrastructure-as-a-service still lies in the last-mile of the telecom infrastructure.
“We need cost-effective, high-performance connectivity for cloud services,” he adds. “We have progressed in leaps and bounds, and now have good national and international connectivity. The last-mile is still a massive challenge and we are still at the mercy of Telkom.”
The trends of virtualisation and cloud computing feed into the trend towards mobility, note Cisco CEO John Chambers and CTO Padmasree Warrior in an article about the trends that will shape the networking market in 2012.
“Virtualisation and cloud services will deliver content whenever they provide a lower cost of ownership,” they write. “The network will unify wireless and wired access to support the proliferation of devices.”
One implication of cloud computing and mobility is that core enterprise networks must be access-agnostic to support remote and mobile users accessing the network through a range of connectivity options such as ADSL, 3G and WiFi, as well as users in the LAN or campus, says Gary Hart, executive head of managed network services of Vodacom Business.
Video, the network killer
The growing importance of video in applications such as e-learning, security and collaboration is also expected to punish enterprise networks within the next few years, especially if bandwidth prices tumble. Vodacom, for one, is starting to see acceleration of the convergence of video onto the same networks organisations use for voice and traditional data services.
Applications such as video-streaming, video-conferencing, and surveillance via IP cameras are all putting networks under more strain, demanding that companies upgrade WAN capacity as well as local area networks, says Hart.
The addition of video to the mix comes at a time when many South African companies are still grappling with what voice/data convergence means for their networks. The convergence of legacy voice and data networks has forced a conversation at the board level about what the role of the network is in the organisation, says Speechly.
The emergence of converged applications such as unified communications and mobility means companies need to understand how the network enables the business to transact. “For the first time, C-level executives want to know what the role of the network is in the business strategy,” Speechly says.
The convergence of voice, video and data on the LAN has created a host of challenges for SMEs and the service providers that work with them, says Jaco Voigt, non-executive director at TeleMasters. The introduction of voice has brought along with it new complexities for LANs that were once fairly simple to manage.
Convergence crunch
Many SMEs still rely on legacy hubs to run their networks and should refresh their technology to cater for new applications, Voigt adds. But many IT managers are passing responsibility for the LAN on to their telecom service providers.
For now, Telemasters provides its customers with tools that help them understand the performance of LANs. But in future, there might be opportunities to work for Telemasters with enterprise networking firms to provide LAN solutions to its customer base.
In the longer term, telecom and Internet service providers will need to look at addressing the local area, whether through partnerships or through building their own capabilities, agrees Thompson. Clients want a single number to call for all their networking needs - from the wide area down to the desktop, he adds.
Rob Lith, director of Connection Telecom, says the introduction of voice into enterprise data networks has resulted in capacity and quality problems for many companies. Though many companies have spare capacity at the core of their networks, slow speeds at the network mean links are often overloaded.
The problem is that the Point-to-Point Protocol over Ethernet (PPPoE) requires heavy overheads being added to each packet to ensure delivery. This, in turn, exacerbates the spikes in the packet flow and leads to packet bottlenecks, packet loss and jitter.
Lith says companies need to be looking towards alternatives such as Vibe (Voice over IP Bandwidth Enhancement) to manage quality of service.
Quality of service is implemented in a way more suited to slower South African telecom links. Voice isn't just treated as type of data that happens to have a high priority, but as a data stream with specific requirements in terms of priority and spacing between packets
Ramping up speeds
The Ethernet switching market appears to be benefiting from the explosion in network traffic. Sales of 10Gbps Ethernet switches are on the rise across the world, with specialist research firm Dell'Oro Group projecting that this market will account for $13 billion of the $28 billion Ethernet switch market by 2016.
Dell'Oro points to continued adoption of server virtualisation as a major driver for the adoption of 10Gbps Ethernet because virtualised servers run at higher usage rates than non-virtualised servers and need more network capacity.
Falling prices of 10Gbps products is one reason this market segment is experiencing such healthy growth. Dell'Oro says the average price of 10Gbps Ethernet product across all major vendors was $388 per port in 2011, down from $818 per port in 2008.
Growth of 10Gbps Ethernet switches will peak in 2013 and 2014 as enterprise data centres spend on the technology to support connectivity needs for virtualised blade and rack-mounted servers, according to Dell'Oro. The researcher says sales of 40Gbps and 100Gbps Ethernet switches will also experience an uptick this year.
Similar trends hold true in SA. “We see 1Gbps dominating the market for a while, but 10Gbps is gaining maturity,” says Luff. “In addition, 40Gbps switches are available, and actually being sold and implemented. A lot of guys are looking to the future, preparing for applications such as IP cameras on the network.”
A lot of companies at the higher end of the market are beginning to investigate the potential of dual-core 40Gbps switches, concurs Helmbold. Companies may be cost-conscious, but they are also looking for performance and long-term payback from the networking solutions they invest in, he adds.
There is a big move towards 10Gbps in the core of the enterprise network, where companies need speed and resilience to cater for applications such as VOIP, Helmbold adds. Where companies are looking to save money, says Helmbold, is by consolidating vendors to reduce complexity in their networking environment.
How to manage
In some cases, companies are looking to better governance and management to improve networks rather than network upgrades, says Luff. Rising demand for bandwidth means enterprises and service providers alike need to concentrate on network optimisation, and not just on upgrading network infrastructure, he adds.
“If you keep throwing more bandwidth at the problem, there will be no discipline in networks,” Luff says. “Service providers need to find more efficient ways of delivering bandwidth to their clients.”
“We have performance management for people, but when it comes to our networks, we tend to set a baseline and manage exceptions rather than manage it proactively,” says Speechly. “But with bandwidth-intensive, real-time apps like voice and video on the network, we need to have performance metrics in place to ensure they don't impact on performance.”
The last-mile is still a massive challenge and we are still at the mercy of Telkom.
Anthony Laing, XON
According to Hart, there is a growing focus on technologies such as compression and caching as companies try to get more bang for their bandwidth buck. “WAN optimisation is becoming a bigger trend - perhaps because companies are becoming more educated about its benefits,” Hart says.
“Because corporates will be accessing a lot of their data in the cloud, they need delivery technologies that spare their network resources.”
Yet companies don't always see the value in management and optimisation tools, says Helmbold. Smaller companies shy away from spending a significant amount of money on network management tools, but larger enterprises are investing in network management, he says.
The drawback of solutions for network optimisation and acceleration is that they involve adding another expensive device onto the network, increasing complexity, Speechly says. “You need to have a clear idea of prioritisation on your network to leverage these tools effectively,” he adds.
Wilson says Reflex has not seen a huge uptake of network management tools because the applications are expensive and because they become less necessary as networking equipment improves.
Some vendors, notably Cisco, increasingly see management and optimisation tools as part of the feature-set of their networking equipment.
Technologies to watch
A host of up-and-coming technologies mean that the networking market is likely to be dynamic for the next few years. Ethernet fabrics are rapidly emerging as an alternative to classic Ethernet with Spanning Tree protocol. An Ethernet fabric is a flat, intelligent network architecture that can be managed as a single logical entity.
One important emerging technology Chambers and Warrior pinpoint in their article is power over Ethernet, a technology that integrates power into a standard LAN infrastructure. This enables power to be provided to the network device, such as an IP phone or a network camera, using the same cable as that used for network connection.
Another trend to watch for in the wide area is bandwidth-on-demand, which allows companies to dramatically scale up the capacity of a link when they need to rather than paying for a large pipe that is underused a great deal of the time.
Vodacom Business, for example, has a bandwidth-on-demand offering in development that hopes to launch by the middle of the year.
The offering is aimed at companies that make occasional use of services such as high-definition video and want the capacity of their pipes to expand and contract in response to demand, says Hart. Given the cost of large, dedicated capacity lines, it makes sense for companies to temporarily boost their capacity when they need it and pay for services when they are needed.
Reliable and secure WiFi access is also growing in importance. Chambers and Warrior point to the growing number of smartphones, tablets, and wireless IP phones that need performance and stability as well as support for quality of service. Solutions that allow companies to add new access points by clustering and wireless routers with integrated security will be high on the shopping list.
Network security - like network optimisation - is increasingly becoming part of the set of features that enterprise networking equipment ships with. Hart says the major vendors are building security into the core of their enterprise products rather than treating it as a bolt-on.
Vendors such as Cisco also see elements of security such as firewalls, content security, and policy and identity management converging. The goal is to provide context-aware security that provides access to services based on who users are, what applications and services they access, what devices they are using, and from which network points.
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