Amazon Web Services has denied publicly and privately to Cisco that it is targeting Cisco’s bread-and-butter network switching market after a report emerged a few days ago claiming AWS was intending to do just that.
A report in The Information last Friday said AWS was preparing to enter the network switching market, using off-brand “white box” products powered by open-source software. The news quickly made the rounds on Monday, when everyone started paying attention (including me), and the result was a big hit to Cisco’s stock.
But within days came the denial. A Cisco spokesperson told Business Insider that AWS CEO Andy Jassy told Cisco CEO Chuck Robbins that AWS is not “actively building a commercial network switch.”
“Commercial” is the weasel word here. AWS could still be designing some kind of hardware, just not one that competes with Cisco products (and HPE, and Juniper, and Cumulus).
Shamus McGillicuddy, senior analyst for the network management practice at Enterprise Management Associates, really unloaded on the story on Twitter.
“Half a dozen companies lost millions, maybe billions in market cap, and AWS doesn’t want to explain the situation beyond a terse denial. Cisco was forced to come out and issue a denial on Amazon’s behalf. That’s unacceptable behavior from a multi-billion dollar company,” he tweeted.
The move doesn’t make sense for AWS
Beyond lambasting AWS for its Apple-like silence, he also noted something I said: AWS doesn’t have the support mechanism for such hardware.
“AWS simply isn’t built to be a on-prem enterprise-grade vendor of core IT systems. It would require so many new competencies inside the company. For example, the company would need an entirely new customer support organization. A sales channel. Professional services. etc.,” he wrote.
Speaking to me, he said the story just didn’t make sense.
“Their whole mission is to move workloads to their public cloud. So, why sell hardware to make workloads more sticky and stay on private servers? They might see it as a conduit to have workloads across a hybrid model, but it would make more sense to have an appliance to facilitate Direct Connect between AWS and private cloud environments,” he said.
McGillicuddy also said he didn’t think Amazon would ever be interested in competing in a market like that.
“The margins for network hardware are going down. Many customers of AWS are small; they are not huge enterprises with large complex networks. They don’t want disaggregated hardware. They want integrated systems sold by vendors like Cisco,” he said.
McGillicuddy believes The Information must have some good sources and that things “got lost in translation.” He just thinks it’s for a different type of appliance.
“An adjacent appliance to help set up the connection would make the most sense for them, because it’s an adjacent market for them. They would be solving a problem their customers are asking them to do, to make Direct Connect easier to do,” he said.
Alexa for AWS. I can see it now. “Alexa, spin up a dozen VMs for me.”