For Network Accessories. Google, Amazon, and Microsoft Swarm China. exclusive;

Friday, March 30th 2012. | Internet News

jr-rivers1Google, Amazon, Microsoft, and Facebook buy more networking hardware than practically anyone else on earth. After all, these are the giants of the internet. But at the same time, they’re buying less and less gear from Cisco, HP, Juniper, and the rest of the world’s largest networking vendors. It’s an irony that could lead to a major shift in the worldwide hardware market.

Over the past few years, the giants of the web have changed the way they purchase tens of thousands of the network switches inside the massive data centers driving their online services, quietly moving away from U.S.-based sellers to buy cheaper gear in bulk straight from China and Taiwan. According to J.R. Rivers — an ex-Google engineer — Google has built its own gear in tandem with varous Asian manufacturers for several years, and according to James Liao — who spent two years selling hardware for Taiwan-based manufacturer Quanta — Facebook, Amazon, and Microsoft are purchasing at least some of their networking switches from Asian firms as well.

“My biggest customers were these big data center [companies], so I know all of them pretty well,” Liao says. “They all have different ways of solving their networking problems, but they have all moved away from big networking companies like Cisco or Juniper or [the Dell-owned] Force10.”

The move away from U.S. network equipment stalwarts is one of the best-kept secrets in Silicon Valley. Some web giants consider their networking hardware strategy a competitive advantage that must be hidden from rivals. Others just don’t want to anger their business partners in the hardware sector by talking about the shift. But cloud computing is an arms race. The biggest web companies on earth are competing to see who can deliver their services to the most people in the shortest amount of time at the lowest cost. And the cheapest arms come straight from Asia.

J.R. Rivers is one of the arms dealers. He runs a company called Cumulus Networks that helps the giants of the web — and other outfits — buy their networking hardware directly from “original design manufacturers,” or ODMs, in China and Taiwan. And he’s worked in this world for an awfully long time. He’s one of the Google engineers who secretly designed a new breed of networking switch for the company’s data centers, the massive computing facilities that drive its search engine and the rest of its web services.

Rivers joined Google in October 2005, after five ears as a distinguished engineer at Cisco, the company that dominated the worldwide market for networking gear. At the time, Google was still connecting its servers using standard networking switches from the likes of Cisco and Force10 Networks. But these mass-market switches just didn’t suit Google’s unusually large operation.

“When Google looked at their network, they need high-bandwidth connections between their servers and they wanted to be able to manage things — at scale,” Rivers says. “With the traditional enterprise networking vendors, they just couldn’t get there. The cost was too high, and the systems were too closed to be manageable on a network of that size.”

So Google drew up its own designs — working alongside manufacturers in Taiwan and China — and cut the Ciscos and the Force10s out of the equation. The Ciscos and the Force10s build their gear with many of those same manufacturers. Google removed the middlemen.

The search giant does much the same with its servers, buying custom-built machines straight from Asia rather than going through traditional sellers such as Dell and HP. Because its web services were used by such an enormous number of people, Google faced all sorts of data center problems no one else faced — problems of power and space as well as cost and logistics. So it built all sorts of custom hardware to solve those problems.

Now, the other giants of the web are running into the same issues, and they too are going straight to Asia for hardware. Following closely behind are companies that run large internal server farms, including financial houses and healthcare outfits.

As J.R. Rivers serves this market with Cumulus Networks, James Liao is doing much the same thing with a second startup called Pica8, offering networking gear that comes straight from the ODMs. Pica8 is a spinoff of Liao’s former employer, Quanta — one of the companies that manufactured Google’s original networking switches, according to Rivers.

According to Liao, tens of thousands of switches are already being sold by the Asian ODMs directly to the likes of Amazon, Facebook, and Microsoft. And that doesn’t include the gear Google has bought over the past seven years. “This is just the beginning,” Liao says, pointing out that these buyers operate the biggest data centers on earth. These companies account for only a part of the $7-billion-a-year Ethernet switch market, but as more and more outfits move their operations into the proverbial cloud, the influence of these web giants will only grow.

Liao estimates that Amazon, Microsoft, Facebook and others have bought Asian network switches spanning “millions” of network ports — i.e., connections to servers — and he guesses that in 2011, about 60 percent of these ports provided 10Gigabit Ethernet connections. According to Matthias Machowinski — a directing analyst with Infonetics, a research firm that tracks the networking market — the official market for 10Gigabit Ethernet spanned about 9 million ports in 2011.

J.R. Rivers declines to name the companies he’s working with at Cumulus Networks, but he confirms that some of the big-name web outfits are already buying networking switches from ODMs in Asia. In all likelihood, these companies are also purchasing switches from other sources as well. Cisco says it has a “significant presence and mindshare” in the big-name web market, and Juniper says it has a relationship with all of the top five web players, pointing out that data center networks require more gear than just switches. But the market is on the move.

The Future of ‘Web Giant 3.0′

“We are continuously exploring new infrastructure technologies that may evolve further efficiencies across our portfolio. We normally have discussions with ODMs and large and small OEMs to better understand their capabilities and evaluate their products,” reads a statement sent to Wired by a Microsoft spokesperson and attributed to Dileep Bhandarkar, a distinguished engineer who oversees the data centers driving Microsoft’s online services. But the statement did not specifically address the purchase of networking gear.

Amazon did not respond to a request for comment about its hardware practices, and a Google spokeswoman sent us a one-sentence statement: “We work with a variety of vendors to manufacture the equipment we use in our data centers,” she said. These two companies — particularly Google — are rather tightlipped about their data center practices.

Facebook declined to discuss how it purchases networking gear, but in response to secretive approach of Amazon and Google, the company has openly discussed some of its other practices, and it has actually shared its server and data center designs with the rest of the world. It purchases its servers directly from Quanta and Wistron, another Taiwanese ODM.

Martin Casado — the chief technology officier of a third Silicon Valley networking startup, Nicira — confirms that the hardware market is shifting to Asia. Offering a software platform that virtualizes networking gear in much the same way that VMware virtualized servers, Nicira helps some of the big web players build their networks. The Nicira platform was designed specifically for companies along the lines of Google that want to use cheap commodity switches to physically construct their network but then do all the complex management in software.

“If you’re building web giant 3.0, you can go to Quanta in Taiwan and buy crates … of switches,” he says. “This supply chain change is nascent. But it’s the most exciting thing going on in Silicon Valley right now.”

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