The 10 most powerful companies in enterprise networking 2020

Between the pandemic and the subsequent economic upheaval, these are challenging times for everyone. But the networking industry has some elements in its favor. Technologies such as Wi-Fi, VPNs, SD-WAN, videoconferencing and collaboration are playing an essential role in maintaining business operations and will play an even greater role in the reopening and recovery phase.

At the same time, it has become obvious that as enterprises continue to migrate applications to the cloud, data-center networking will cease to be a high-growth industry. So what are the most powerful networking companies doing? They’re diversifying, expanding into new product areas, and moving up the stack beyond nuts-and-bolts connectivity and into areas such as hybrid-cloud management and the automation of networking processes.

This year’s list of the 10 most powerful companies in enterprise networking includes traditional networking powerhouses, with an emphasis on the extent to which they’ve embraced these new approaches, along with pure-play market leaders in areas such as wireless networking and hyperconverged infrastructure. (Editor’s note: Power is a subjective quality, and this list is not a ranking based on simple, quantifiable metrics. Our list is ordered, with input from industry watchers, to reflect the companies that are making the biggest power moves and the broadest impact on the network industry.)

1. Cisco looks to extend hardware dominance to network monitoring, automation, security

Why they’re here: Cisco continues to maintain its leadership position in just about every networking hardware category. Cisco sports a 51% market share in Ethernet switch revenue, and it’s the leader in combined service provider and enterprise router revenue at 37%. It dominates the WLAN market, with 44.6% market share (Aruba-HPE is a distant second at 13.9%, according to IDC.) Cisco also ranks at the top in SD-WAN equipment with a 16% market share. When the pandemic hit and workers shifted to their home networks, Cisco was sitting pretty. Not only does it have the dominant VPN, it’s the only networking player that had its own videoconferencing/collaboration platform – WebEx – just waiting in the wings.

Power moves: Bought ThousandEyes, a leader in intelligent network and application performance monitoring for hybrid cloud environments. ThousandEyes is expected to complement AppDynamics, also an app performance management company, which Cisco acquired in 2017.

By the numbers: $1 billion. That’s the estimated amount Cisco paid for ThousandEyes. (That comes out to $1 million per eye.)

Outlook: Cisco faces a double whammy. The Ethernet switching and routing market is not a high-growth area anymore. According to IDC, for the full year 2019, the switch market grew only 2.3% and the router market was flat compared to 2018. And Cisco’s market share continues to erode as competitors like Arista and Huawei chip away. In response, Cisco has begun a transition to a revenue stream that includes software, subscriptions and security. Cisco needs to continue executing on that strategy.

2. Arista diversifies with Big Switch acquisition

Why they’re here: With its laser focus on delivering the highest performing switches for enterprise data centers and hyperscale cloud providers, Arista has continued to gain market share against Cisco. But Arista also knows that diversification is vital. The company now offers network monitoring, automation and analytics across hybrid-cloud environments. Arista is also a supporter of open networking. Its own network operating system (EOS) is based on a Linux kernel. And Arista recently announced that its switches will run Microsoft’s SONiC (Software for Open Networking in the Cloud) OS.

Power moves: Acquired Big Switch, a leader in network monitoring and SDN.

By the numbers: 18.8%, which is Arista’s share of the high-speed data-center switching market during the first half of 2019, according to Crehan Research. (Cisco was at 46.6%.)

Outlook: Arista isn’t known for making acquisitions, so it will be interesting to see how well it integrates Big Switch’s Big Cloud Fabric (BCF) software, which also runs on hardware from vendors that compete with Arista, such as Dell and HPE. Arista doesn’t have a security or SD-WAN play, and that could become a weakness over time, especially if the enterprise data-center market stagnates and if hyperscale cloud vendors turn to white-box switches. However, Arista does have opportunities to grow revenue in areas where it has not been strong in the past, such as campus switching and WLAN.

3. Juniper embeds AI across cloud, Wi-Fi, SD-WAN environments

Why they’re here: Juniper has made numerous acquisitions over the years and few, if any, have provided the spark needed to give the company much in the way of forward momentum. This time may be different. Juniper bought wireless innovator Mist Systems in 2019 for $405 million and is starting to roll out products that leverage Mist’s artificial intelligence capabilities. Mist is unique in that it features an AI-driven virtual assistant named Marvis, who uses natural-language processing to provide insight into the Wi-Fi user experience and to offer prescriptive guidance for fast troubleshooting.

Power moves: Juniper’s goal is to deploy Mist-based AI across cloud, data center, Wi-Fi and SD-WAN environments

By the numbers: 97%. The Gap reported a 97% improvement in point-of-sales system errors across its 1,500 stores through the use of Marvis.

Outlook: Juniper shows up as a leader in Gartner’s Magic Quadrant for data-center networking and as a leader in the latest Forrester Wave for data-center hardware platforms for software-defined networking (SDN). But Juniper has struggled to translate that technical leadership into sustained revenue growth. As the post-pandemic pendulum swings toward WLANs, remote access, SD-WANs, network automation, and COVID-19 related in-building tracking and tracing, the Mist acquisition puts Juniper in a strong position. (See also: Juniper’s big push is AI in all areas of enterprise networking)

4. VMware continues deal-striking with Carbon Black, Pivotal 

Why they’re here: VMware is on a tear. In late 2019, the company closed on two significant acquisitions: endpoint protection company Carbon Black and Pivotal Software, a cloud application platform that enables developers to containerize and manage applications across multiple clouds. It’s true that VMware doesn’t sell routers or switches, but those commodities are becoming less important as the physical hardware layer is being decoupled from the control plane through SDN or NFV. VMware is positioning itself as a company that helps enterprises move to hybrid cloud through its server virtualization, hybrid-cloud management and platform-as-a-service offerings. It is also a leader in SD-WAN. (See also: VMware’s ongoing reinvention)

Power moves: VMware’s flurry of acquisition activity shows no sign of slowing down. In January, VMware announced plans to acquire Nyansa, a fast-growing innovator of AI-based network analytics. It bought cloud-native security platform Octarine in May. And this month, VMware acquired Lastline, which offers cloud-native threat detection services.

By the numbers: $4.8 billion, which is the combined amount that VMware shelled out for Pivotal ($2.7 billion) and Carbon Black (2.1 billion).

Outlook: Despite the grim economic environment, VMware announced solid first quarter earnings of $386 million, with revenues of $2.73 billion, up about 12% from a year ago. VMware CEO Pat Gelsinger attributed the upbeat quarter to the shift to work-from-home sparked by the coronavirus pandemic. Not long ago, VMware looked like a company that was stuck in a data-center virtualization rut and was in danger of being left behind as enterprises migrating to cloud platforms. Today, VMware seems to have its mojo back and is continuing to innovate, both internally and through acquisition. In March, VMware launched VMware Tanzu, a suite of products and services aimed at automating the modern Kubernetes-based app lifecycle, and it also delivered a sweeping upgrade to its vSphere virtualization portfolio.

5. Extreme tackles Wi-Fi 6, cloud management, AI and network automation

Why they’re here: Extreme Networks has embarked on an ambitious extreme makeover that has its roots in the company’s realization that just treading water was not going to cut it in the new world of cloud, automation, SD-WAN, and IoT. In 2016, Extreme bought Zebra Techologies’ wireless LAN business. In 2017, Extreme snapped up Avaya’s networking business and also bought Brocade’s switching, routing and analytics business. Today, Extreme has revenues approaching $1 billion and is prepared to compete with the big boys in emerging areas like Wi-Fi 6, cloud-based network management, AI and network automation. (See our test and review of 4 Wi-Fi 6 routers: Who’s the fastest?)

Power moves: Last August, Extreme bought Aerohive Networks, a leader in cloud-managed wireless LAN services, AI and machine learning.

By the numbers: $272 million, which is the amount Extreme paid for Aerohive.

Outlook: Gartner places Extreme among the leaders, along with Cisco and Aruba, in the category of wired and wireless LAN access infrastructure, so that’s a good foundation. But Extreme needs to integrate its acquisitions into a seamless platform and it must execute on its strategy to “cloudify our portfolio and continue to roll out new products,” as CEO Ed Meyercord said during the company’s most recent earnings report.

6. NVIDIA looks beyond gaming to full-stack enterprise data-center networking

Why they’re here: It’s always fascinating to watch a disruptor come along and try to shake up an industry, particularly one that has had the same handful of companies at the top of the heap for decades. NVIDIA has the proven technical chops and the financial wherewithal to just maybe disrupt the networking industry by ushering in a new era based on open source. If you think of NVIDIA as just a GPU maker for gaming devices, keep in mind that the company racked up a cool $1 billion in enterprise and hyperscale cloud revenue last year providing the GPUs for data-center networking gear. NVIDIA bought InfiniBand and Ethernet-switch maker Mellanox last year and just announced plans to buy Cumulus Networks, which sells a data-center switch pre-loaded with the Cumulus Linux open networking OS. Add it all up, and NVIDIA can deliver a full-stack enterprise data-center networking offering for high-performance workloads and AI. (See also: NVIDIA’s aggressive purchases could signal the era of open networking)

Power moves: In April, NVIDIA closed on its acquisition of Mellanox. In early May, it announced plans to acquire Cumulus.

By the numbers: $6.9 billion, which is the amount NVIDIA paid for Mellanox.

Outlook: In the early days of Linux, the real traction began when companies like SuSe and Red Hat came along to provide enterprise-grade support and services. That’s what Cumulus, listed as a visionary in Gartner’s latest Magic Quadrant for data center networking, provides for open networking. Cumulus also sells its own network management tools. The challenges for NVIDIA are two-fold: First, having the components for a full networking stack isn’t the same as delivering a fully integrated stack. And second, when companies were experimenting with open source servers, they could take a server, isolate it and use it for application development or some other non-critical function. Introducing open source switches into a production network is still a leap for many companies.

7. Aruba (HPE) delivers AI-powered edge networking platform

Why they’re here: Five years ago, when HP was in the midst of the turmoil of being split into two companies, it gobbled up WLAN leader Aruba for $3 billion. The question on everyone’s lips at the time was, “How’s that going to work?” Turns out, it worked out pretty well. And for one key reason. As Aruba president Keerti Melkote explains, “When they (HPE) acquired Aruba, they reverse-integrated the HP networking team into Aruba, so rather than integrating Aruba into an organization that is already there, it said it needed a different way to think about the market and about innovation. They wanted to infuse the big company with the small company.” The results speak for themselves as Aruba has consolidated its position as the main competitor to Cisco in the WLAN market.

By the numbers: 65,000. That’s the number of unique customers using Aruba Central, the company’s platform that unifies network management for wired, wireless and WAN networks, and soon 5G and edge computing.

Power moves: Aruba just announced Aruba Edge Services Platform (ESP), a new cloud-based platform that uses AI to reduce the burden of mundane tasks on IT departments across virtually all areas of networking, including identity and access management for remote workers and automated onboarding of ‘headless’ Internet of Things (IoT) devices.

Outlook: The pandemic has certainly upended the normal course of business, but Aruba is in good shape to capitalize on the increased reliance on remote workers and on other trends such as edge computing and IoT, which require moving data across both WLAN and LAN infrastructures.

8. Dell advances data-center automation

Why they’re here: With a deep bench that includes PCs, servers, storage and networking, Dell’s power play is to offer enterprises a single-vendor solution to all of their IT infrastructure challenges. Whether an enterprise is looking to modernize its data center, embark on a hybrid-cloud journey, delve into advanced data analytics or deploy VDI, Dell has an answer. It has successfully leveraged the storage assets from its EMC acquisition four years ago and the hybrid-cloud management and NFV capabilities from VMware (in which Dell owns an 86.6% share of stock) into a business that racked up $92 billion in revenues last year.

Power moves: How about addition by subtraction? Dell’s most recent power move was shedding the legacy security vendor RSA, which it acquired as part of the EMC deal. Dell said the move was aimed at simplifying its product portfolio.

By the numbers: $2.075 billion. That’s that amount of money that a consortium of investors paid for RSA. The deal includes the RSA product lines as well as the RSA Conference.

Outlook: Dell can rightfully lay claim to a market-leading position in a number of storage, server, cloud management, virtualization, SD-WAN and hyperconverged infrastructure markets. The challenge for Dell is to help customers connect all of those dots. To that end, Dell recently announced PowerOne, which takes best-of-breed components in compute, storage and networking, ties them together through its PowerOne Fabric, and manages them through an automation engine named the PowerOne Controller.

9. Nutanix extends hyperconvergence tech with cloud services

Why they’re here: The fast-growing market for hyperconverged infrastructure (HCI) has turned into a two-team race between Dell (34% market share) and Nutanix (13%). According to Q1 numbers from IDC, the hyperconverged-systems market was up a solid 8.3% year over year. But longer term, the handwriting seems to be on the wall in terms of data-center hardware growth. Enterprises were already shifting resources to the cloud, and the pandemic seems to be accelerating that migration. The good news for Nutanix is that the company is well along on a strategic shift from hardware to software and from on-prem to the cloud. (See also: 8 reasons to consider hyperconverged infrastructure for your data center)

Power moves: Added new capabilities to its desktop-as-a-service offering, which has been going gangbusters during the pandemic.

By the numbers: 15,000, which is the number of Nutanix customers worldwide

Outlook: Nutanix’s growth plan is centered on broadening its product portfolio beyond HCI appliances, as well as moving to cloud-style subscription billing. Gartner puts it this way: “Over the last two years, Nutanix has evolved from a vendor of HCI system appliances and data services, to a provider of a broad portfolio of software solutions and cloud services.” These include database-as-a-service, application self-service and application life-cycle management, object storage, file storage services and a disaster recovery service. Going forward, the Nutanix strategy is to help companies manage remote workers, simplify and modernize their data centers, and manage their apps across cloud and on-prem platforms.

10. Huawei keeps fighting against sanctions, political pressure

Why they’re here: China-based networking vendor Huawei finds itself in the middle of a power struggle of epic proportions between the U.S. and Chinese governments. How epic? So epic that the Wall Street Journal’s editorial board wrote a column on June 9 warning about “the magnitude of what is happening,” as Commerce Dept. regulations threaten to “forcibly decouple computing technology supply chains from China, a move that will accelerate the fracture of at least part of the world economy into two spheres of influence.” Bloomberg recently ran a story with this headline: “A Quiet Panic is Growing in U.S. Boardrooms Over Huawei Ban.” Without getting into the complexities, U.S. policy set to take effect in August would prohibit American companies that do business with the government from having Huawei technology in any part of their global supply chain. That could be interpreted to mean, for example, that a U.S. company couldn’t do business with a supply chain partner in India, if that Indian company has a telecom supplier with some Huawei gear buried deep in its network.

Power moves: Huawei CEO Ren Zhengfei told the leadership of the company in February, “The company has entered a state of war.”

By the numbers: 10 and 30 (roughly). According to IDC, Ethernet switch revenue was up 7.8% in 2019, giving Huawei 9.6% market share for the full year. Huawei’s enterprise and service provider router revenue rose 4.1% for the full year, giving the company 29.8% market share.

Outlook: On May 15, in a move separate from the supply chain ban, the Commerce Dept. banned all sales of advanced semiconductor technology from American suppliers to Huawei. New Street Research described Huawei’s current situation this way: “As things stand, Huawei has 12 months left to live. Without leading-edge chips, Huawei cannot sell competitive networking equipment, and there is no alternative to fabricators powered by U.S. technology to manufacture such chips.”