Network Virtualization: A Tale of Two VMware Layers — Greene’s/Rosenblum’s Compute vs. Casado’s Network

Network Virtualization: A Tale of Two VMware Layers — Greene’s/Rosenblum’s Compute vs. Casado’s NetworkFirst, I would like to clear a lingering misconception. Some practitioners and investors have assumed that just as compute virtualization has been a headwind for server vendors, network virtualization would potentially impact networking vendors with similar order of magnitude. While, it is true that adding an abstraction layer on-top of physical networking resources would drive commodization of traditional switches and routers (i.e., accelerate the transition to merchant silicon), network virtualization (as opposed to server virtualization) does NOT lead to hardware consolidation (i.e., higher utilization value prop).

So network virtualization does NOT deliver capex savings IN THE ORDER OF MAGNITUDE of that of server virtualization. Customers still need to purchase as many switches (albeit cheaper switches). Virtualization impact on server shipments: According to IDC, total server units shipped in 04, 08, and 14, were 6.7m, 8.5m, and 9.2M, respectively. In other words, total server shipments growth plateaued from 08 to 14. As many of us remember 2007 is when EMC floated VMW shares, increasingly VMware’s visibility to CIOs. While causation does not equal causality, these…