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At the top of April, Nokia, a replacement entrant within the data center switching space, made the groundbreaking announcement that it might supply its 7250 IXR network equipment to Microsoft, the world's third largest cloud service provider (SP). Let's take a glance at Dell'Oro Ethernet switch analyst Sameh Boujelbene's analysis of the event.
As the analyst noted during a 2022 forecast blog published earlier this year, she has been expecting a good amount in 2022 as hyperscalers outside of Google and Amazon begin 400Gbps upgrade cycles of latest switch vendors enter the market. Chip diversity are going to be one among the most reasons for these potential changes within the supplier landscape, as these hyperscalers got to maintain pricing pressure on Broadcom, the hitherto dominant commercial chip supplier. additionally , supply challenges further accelerate the demand for silicon diversity. Interestingly, however, Nokia's 7250 IXR is predicated on Broadcom's commercial chip, not Nokia's FP5 proprietary chip. So what is going to Nokia bring?
What's in it for Microsoft?
Although Nokia may be a fairly new entrant within the data center switch space, the corporate is one among the leading suppliers within the router market and a number of other other telecom service providers. Clearly, Nokia has extensive experience in system design, which enables it to realize energy savings at the system level. As a reminder, as network speeds reach 400Gbps and beyond, power consumption is one among the most important limiting factors for cloud service providers to create and deploy data centers. In fact, Microsoft is already facing this challenge in its 400Gbps deployment, because it had to attend for Broadcom's Jericho 2C+ chips to consume less power than the previous-generation Jericho 2 chips.
In addition, Nokia has made a big contribution to the SONIC ecosystem. (SONIC is open-source software built by Microsoft to run in its network of knowledge centers.) Analysts believe Nokia's win this point around are often seen as a gift from Microsoft for its contributions. In fact, this exchange relationship extends far beyond the info center and into several other areas. for instance , Nokia is additionally working with Microsoft to develop 4G LTE and 5G private wireless for the enterprise sector. The partnership brings together Nokia's virtualized radio access network (vRAN) and multi-access edge cloud (MEC) with the Azure private edge platform.
In addition, Nokia has the potential to use its coherent optics technology acquired through the acquisition of Elenion to drive system-level cost and power savings in data center interconnect (DCI) applications.
Last but not least, while Nokia's 7250 IXR is made on Broadcom chips that do not meet chip diversity requirements, it'll still provide Microsoft with another route to Broadcom chips, which is crucial during a supply-constrained environment important.
Where will the Nokia 7250 IXR be deployed?
The initial deployment of Nokia's modular switches will happen within the backbone, which Microsoft refers to as Layer 2, but could also be extended to DCI applications at a later stage. As a reminder, Microsoft has been primarily deploying Arista gear in Spine/DCI, but recently also certified Cisco (using its Silicon One-based 8000 chassis). Nokia also will offer fixed form factors for top-of-rack (ToR) applications. it's worth noting that Microsoft has been adopting a multi-vendor strategy for its ToR applications, with large volumes but thin margins. So far, the corporate has deployed products from Cisco, Dell and Mellanox (Nvidia).
What does this mean for existing suppliers?
While analysts see the announcement as a serious win for Nokia and a confirmation of its competitive position within the data center switch market, analysts also believe that Microsoft will attempt to keep its existing suppliers happy and provides them enough momentum to compete for its business. consistent with the interview, Arista will remain the well-liked supplier for Microsoft's Spine/DCI applications during the 400Gbps upgrade cycle. additionally , Dell'Oro expects Microsoft to undergo massive expansion and upgrades this year, and its data center spending are going to be strong enough to profit all vendors -- both existing and new entrants.
