UPDATE: July 19, 2018: Cisco CEO Chuck Robbins confirmed on a call with AWS CEO Andy Jassy that AWS is not pursuing its own commercial network switches, reports MarketWatch. There are no further details of the call or AWS' plans regarding switches, but the two executives spoke after Cisco's stocks fell when the report broke Friday.
Amazon Web Services (AWS) is reportedly eyeing the global data center switch market with open source software and unbranded hardware, called "white-box switches," according to The Information. The move is reportedly born out of AWS deploying white-box hardware and software for its operations. The cloud platform may sell networking switches, or hardware responsible for moving traffic throughout networks, to enterprises, according to the report.
AWS' prices will "undercut rivals" by pricing its white-box switches 70% to 80% less than Cisco's switches, according to the report. The cloud company wants the switches to help streamline customers' "computing chores" between on-premise data centers and the AWS cloud, with the ultimate goal of moving entirely to the cloud.
- The market for data center switches is owned by incumbents like Cisco, Arista Networks and Juniper Networks. After the report broke on Friday, Cisco's shares dropped 5%, wiping an equivalent of $11 billion from its market capitalization, reports Reuters. Arista and Juniper both fell 4%, leaving investors fearful of a total market disruption from Amazon.
Amazon could be looking to dominate another field in enterprise tech. Ultimately, Amazon is making the transition to full cloud migration easier for its customers.
About half of organizations already use more than one infrastructure as a service vendor, and hybrid clouds exist primarily for the companies that are not prepared to completely migrate off of on-premise systems. Cloud providers like Microsoft offer stacking solutions to make transitioning to the cloud easier.
Amazon already ranks as the top cloud provider partially because it was one of the first major providers on the market. The company's offerings set it apart from its competitors, including its "trust advisor" program and a pay-for-second billing model. The thought of Amazon intruding on a market it has yet to tap into sends a message to other cloud competitors and to existing data center switch providers.
Cisco and Microsoft already have a working collaboration for data center innovation, but if Amazon moves into the market to help customers' cloud computing needs, other companies will likely join in too.