Nokia Rolls Out Data Center Fabric for Cloud Providers

Nokia (NYSE: NOK) has released new data center networking solutions to help cloud providers ramp up webscale services.

In a virtual launch presentation, Basil Alwan, president of IP/Optical Networks at Nokia, said the announcement represents a two-years-plus effort to generate a ground-up "third generation" data center fabric. He said “cloud builders — be they hyperscalers, content providers, service providers, or enterprises” need faster, more scaleable ways to meet burgeoning data center demands.

Nokia's rollout includes switches for top-of-rack, leaf/spine, and super-spine applications (the 7250 IXR, 7220 IXR-D, and 7220 IXR-H); a new Linux-based network operating system (the Service Router or SR Linux NOS) and NetOps development kit, all incorporating Nokia’s routing stack; and a Fabric Service Platform (FSP) based on Kubernetes-driven microservices.

The FSP is aimed at cloud providers who want to quickly automate data center operations, such as device configuration, network monitoring, and network backup. According to Alwan, the FSP's interface lets NetOps personnel generate apps by entering information such as the number of racks to monitor or the speed of a connection.

Nokia’s Direction Gets Service Providers’ Blessing

Nokia developed its new fabric architecture with help from Apple (Nasdaq: AAPL), and the announcement features endorsements from BT Group, Equinix, LINX, and Turkcell, among others. Even though trials may not have started, these hyperscalers seem ready with approval. Here’s a quote from Neil McRae, BT Group Chief Architect, published in Nokia’s press release:

Nokia’s new data center fabric solution promises to provide full programmability with deep telemetry, along with a modern operational toolkit to drive the extreme automation and scaling of our telco cloud, which is critical to drive future 5G services.

That’s a solid show of support, despite the qualifying phrase “promises to provide.” Apparently, some of these service providers have been struggling with homemade applications to wrangle their fast-growing data center environments, and they’re ready for solutions.

A Revenue Ramp for Nokia?

This rollout moves Nokia into the data center networking market, where it’s been a bit player against Arista (NYSE: ANET), Cisco (Nasdaq: CSCO), and Juniper (NYSE: JNPR). But it also opens up possibilities for Nokia, which has built a solid mobile edge platform ready for 5G. This expertise should give Nokia a boost with hyperscale providers seeking to offer services based on faster mobility.

Even a modest uptick in data center switching sales could bring Nokia billions in fresh revenue, according to Simon Leopold and colleagues from financial analyst firm Raymond James. The analysts state in a note that despite a lack of enterprise momentum, Nokia’s “focus on openness and software” is reminiscent of Arista’s approach, which succeeded with Facebook (Nasdaq: FB) and Microsoft (Nasdaq: MSFT).

Growth may be slow. “We consider this a positive initiative for Nokia, but we do not expect rapid progress,” state the Raymond James analysts. Still, by advancing the cause of cloud networking at scale, Nokia has scored a win for customers, even if it faces an uphill climb to big rewards.