Alistair Croll’s written another thought provoking piece on Gigaom, this time discussing how the cloud will force networking vendors to change over the next few years. Having spent more than a decade building networking companies this is a subject near to my heart and I think Alistair did a good job identifying the pressure points and two potential change vectors for networking providers; building virtual appliances and selling to the cloud vendors.

Virtual Appliances - Intelligent networking functions like firewalls, load balancers, traffic shapers, caches and intrusion detection won’t be purchased as physical devices by cloud computing users. Instead, they’ll adopt this functionality as virtual appliances and pay by the hour. Thus vendors can participate in the growth of cloud computing by repackaging their products and adjusting their pricing model.

Selling to Cloud Operators - IMHO, this shift will actually be harder for many vendors. Alistair identified a couple of issues, including commoditization caused by the purchasing power of large data center operators. However, there’s a more fundamental issue - cloud computing has very different networking requirements than traditional data centers. Traditional data centers have purpose built deployments for specific applications. You can literally walk through the data center, point at racks, and identify the application. Many of these applications have local networks within the rack and uplink into the data center backbone. In contrast, cloud data centers are built for scale from homogeneous resources. Rack after rack of servers. Any application has to be able to run anywhere. Thus, while traditional data center purchasing decisions have been based primarily on features,  cloud computing favors large, high performance, switches with relatively few features.

The shift won’t happen overnight, of course, but vendors that recognize the trend early will have the opportunity to build market share.