Arista relies on its core EOS and CloudVision software, coupled with its 400G and 800G switches, as the cornerstone of its presence in the fiercely competitive networking equipment market. The company anticipates significant growth as Ethernet adoption accelerates within AI networks.
Arista Networks has been achieving historic milestones, led by CEO Jayshree Ullal, culminating in a remarkable $5.6 billion in annual revenue for 2023, marking a staggering 42% increase. This achievement is attributed to the company’s core business focus, selling cutting-edge switching hardware and networking software to hyperscalers, social media entities, and significant data center clients.
Setting its sights on a $10 billion target, Arista has devised an ambitious strategy aiming to diversify its product line by integrating routers, expanding into campus, WAN, and cloud networking spheres, and placing significant emphasis on AI and machine learning integration.
In the competitive networking market dominated by industry giants such as Cisco and Juniper, Arista has carved a distinct niche. The company has earned recognition for the speed and performance of its switches, as well as its software offerings, particularly the Linux-based Extensible Operating System (EOS) and the CloudVision management system. These tools empower customers to construct and manage adaptable, scalable, and diverse software-defined networks.
Tom Nolle, founder and principal analyst at Andover Intel, commended Arista’s targeted approach, stating that the company positions itself for specific missions and verticals like banking and finance, enabling a focused approach without attempting to create all-encompassing solutions for every market need.
However, this targeted approach creates a dilemma, according to Nolle. Arista does not aim to provide the entirety of products an enterprise might require, allowing competitors to offer a broader spectrum of infrastructure solutions compared to Arista’s offerings. To address this, Nolle suggests Arista should expand its total addressable market.
In line with this objective, Arista has made significant strides, announcing major additions to its product lineup in 2023. These additions include enhanced routing and security features and are aimed at fueling growth in areas such as cloud networking, campus switching, and generative AI.
Arista builds on core strengths
Martin Hull, Arista’s vice president of cloud, platform product management, and systems engineering, emphasized the company’s commitment to being a networking-first entity built upon software principles centered on quality and reliability, a philosophy that has remained consistent throughout the years.
A foundational strength for Arista lies in EOS, a revolutionary innovation upon its introduction to the industry. EOS, rooted in software programming and an early form of software-defined networks, significantly enhanced network gear’s customization, performance, and control.
Presently, EOS effectively manages Arista switches and routers across diverse environments. The company highlights its scalability in cloud architectures built with Arista EOS, capable of accommodating hundreds of thousands of compute and storage nodes. The programmability of EOS facilitates a range of software applications, enabling workflow automation, high availability, unparalleled network visibility and analytics, and seamless integration with various third-party applications for virtualization, management, automation, and orchestration services.
Enterprise users find the ability to employ a single operating system across data centers, campuses, and the cloud highly appealing, driving Arista’s continued advancement. Moreover, the compatibility of EOS with white-box networking hardware provides customers with options to avoid being locked into a specific vendor.
Arista further champions open-source programming, supporting the Linux-based Software for Open Networking in the Cloud (SONiC), which separates network software from underlying hardware and can operate across numerous switches and ASICs from different vendors.
Recognized as another vital asset for Arista, CloudVision stands as its centralized cloud-based management platform. Offering wired and wireless visibility, orchestration, provisioning, telemetry, automation, and analytics across data centers, campuses, and IoT devices on edge networks, CloudVision delivers a comprehensive overview of the entire network, facilitating swift problem identification and troubleshooting, performance monitoring, and resource utilization tracking.
CloudVision’s capabilities also extend to collaborative networking partnerships, allowing information sharing among Arista networking partners like VMware and Microsoft, providing customers with diverse management options.
The unified management package offered by CloudVision proves invaluable for customers handling multifaceted environments with various products. Boujelbene noted its suitability for managing large, intricate cloud networks, making it a highly practical tool in complex networking scenarios.
The cloud networking push
Arista has been actively harnessing EOS and CloudVision to bolster cloud networking, enabling seamless connectivity and management among applications and workloads across diverse environments, spanning clouds, cloud services, on-premises data centers, and edge networks.
The company perceives cloud computing as a pivotal shift away from traditional legacy network architectures. As organizations, regardless of size, transition their workloads to the cloud, there’s been a rapid surge in spending on cloud and next-generation data centers, outpacing the growth of traditional legacy IT spending. Arista positions its cloud networking platforms to effectively cater to the burgeoning cloud networking market, accommodating the escalating performance demands driven by the increased number of connected devices and the critical need for constant connectivity and access to data and applications.
In the fiercely competitive cloud networking solutions arena, analysts commend Arista’s performance against major rivals like Cisco, Juniper, and VMware. According to a recent cloud networking report by GigaOm, Arista stands out with its comprehensive cloud networking solution, distinguished by machine learning-based troubleshooting capabilities and a strong emphasis on network optimization and operations.
CloudVision, a pivotal component of Arista’s cloud networking strategy, provides a uniform operational model across different domains, simplifying network operations through a unified orchestration tool. Notable features encompass multicloud path optimization through dynamic path selection, prioritizing crucial production traffic while managing networking policies.
GigaOm highlighted CloudEOS’s capabilities, where instances autonomously discover available paths and establish IPsec-based data plane encryption for optimal forwarding and dynamic path selection. This involves real-time measurement of delay, latency, loss, and bandwidth across potential paths to determine the most suitable path to use. Additionally, CloudEOS seamlessly integrates with various tools like Terraform, Ansible, Puppet, and Chef, empowering users to declaratively provision and configure public cloud environments.
The cloud networking market is anticipated to witness rapid expansion in the coming years, with IDC forecasting global cloud-based IaaS networking reaching $19.4 billion in 2023. This sector is projected to sustain a compound annual growth rate of 28% through 2026, primarily driven by the proliferation of cloud-native application architectures, distributed workloads, and their integration requirements.
Arista adds routing capabilities
Arista encounters several challenges in the networking landscape, primarily due to stiff competition from larger and established players like Cisco and Juniper. Despite its strong presence in high-end markets, particularly with service providers and hyperscalers, which contribute over 50% of its revenue, Arista historically hasn’t been recognized for offering a broad range of products in areas such as security, SD-WAN, and SASE, unlike its competitors. However, this scenario is evolving as Arista is making strategic advancements.
Arista has expanded its support for SD-WAN and SASE environments through recent upgrades to the Cloud EOS package. Additionally, its 7200 series switches target edge networking deployments, addressing its previously limited offerings in these domains.
Furthermore, this year saw the introduction of WAN routing capabilities with new software, hardware, and services under the umbrella of the Arista WAN Routing System. This system integrates three key components: enterprise-class routing hardware, Pathfinder software for the CloudVision management platform, and the establishment of neutral peering points referred to as Transit Hubs. This architecture empowers customers to create carrier-neutral and cloud-adjacent facilities, facilitating self-healing and optimized links across core, aggregation, and cloud networking interconnects.
Industry experts recognize the significance of this WAN Routing package as Arista’s inaugural official routing platform. While Arista previously utilized L2/3 data-center switches for routing purposes, those were primarily geared toward data center functions. Now, Arista is purposefully targeting a wider array of routing use cases with a dedicated routing platform, particularly addressing the SD-WAN functionality gap previously observed in its portfolio.
Making strides in security
Arista, while not traditionally seen as a dedicated security vendor akin to Cisco, Juniper, or Fortinet, made significant strides in 2023 by introducing CloudVision Guardian for Network Identity—a SaaS-based service focused on bolstering network access control (NAC) for enterprises.
This service utilizes real-time telemetry from Arista’s network products, coupled with data sourced from the CloudVision management platform, leveraging AI to analyze information and enforce security policies. CloudVision Guardian can onboard new devices, authenticate existing users, segment network devices, and troubleshoot issues through a cloud-based system, according to Arista.
Moreover, in late 2023, Arista forged a partnership with zero-trust security vendor Zscaler, offering a cloud-based platform aimed at securing users, workloads, and devices across diverse networks and locations. This collaboration enables clients to access crucial domain and attacker infrastructure intelligence for Arista NDR, facilitating swift security diagnostics and responses to threats.
Additionally, Arista provides a Macro Segmentation Service (MSS), enabling the creation and implementation of micro-perimeters via edge switches. These perimeters protect or isolate assets without necessitating the deployment of firewalls throughout the enterprise network. Segmentation policies, defined within Arista CloudVision, can dynamically enforce real-time network, application, device, or user identity-based rules.
Experts note that Arista’s security strategy, particularly its emphasis on zero-trust, differs significantly from other vendors. Rudolph Araujo, Arista’s director of security, highlights the company’s approach as an open-standards-based ecosystem, allowing seamless integration via OpenAPI-supported APIs.
Araujo emphasizes that Arista’s perspective on security is rooted in the network context, aiming for evolution and innovation while understanding the company’s expertise. Instead of attempting to cover every aspect of security comprehensively, Arista focuses on what it excels at and strives to advance within the networking realm.
The opportunities are there
Arista sees a remarkable opportunity for growth in its campus networking business, an area where it’s still viewed as a relatively new player, according to Boujelbene. Hull, from Arista, echoes this sentiment, highlighting the considerable potential for growth in the campus network space, especially targeting high-end and enterprise customers in the years ahead.
He emphasizes that Arista’s current portfolio in the campus networking realm is strong, yet there’s ample room for expansion. Hull specifically identifies the midmarket or midsized enterprise campus as a focal point for future growth initiatives.
Arista’s advancements in data center and campus switching technologies have been bolstered by strategic acquisitions, notably integrating software-defined capabilities from Pluribus and Big Switch in 2022 and 2020, respectively. These technological integrations have continued to evolve within Arista’s product portfolio, as affirmed by industry experts.
In discussions with Wall Street analysts during a recent financial results call, Ullal emphasized the company’s recent shift in clientele. While historically attracting high-tech enterprises and financial sectors, Arista now observes a more diverse clientele, encompassing verticals like healthcare and education.
She expressed excitement about Arista’s role in shaping a two-tier defined architecture across enterprises and establishing a modern operational model rooted in CloudVision. This approach marks a significant stride for Arista in defining and implementing cutting-edge networking frameworks across diverse industry verticals.
Banking on generative AI
Arista’s focus on advancing AI-networking capabilities is poised to be a pivotal driver for the company’s future, according to Hull. The industry’s increasing emphasis on AI networking presents a substantial opportunity for Arista, especially given its strong foothold in high-end data center networking.
Hull underscores the concurrent development of 800G technology alongside AI networking as a critical trajectory for Arista. He anticipates the eventual introduction of an 800G capable product, aligning with the company’s commitment to staying at the forefront of technological advancements.
In early 2023, Arista revealed its early-stage work on AI Spine, an AI networking technology operated by Arista EOS. Leveraging data-center switches with deep packet buffers and specialized networking software, AI Spine efficiently manages AI traffic. This technology, based on Arista’s 7800R3 Series switches, is designed to facilitate high-bandwidth, low-latency Ethernet-based networks, capable of interconnecting thousands of GPUs at speeds ranging from 100Gbps to 800Gbps, as detailed in a white paper on AI Spine.
Arista’s involvement in the Ultra Ethernet Consortium (UEC) signals its commitment to fostering Ethernet technology as the foundational connectivity layer for high-capacity AI processes. This collaboration involves key industry players such as AMD, Broadcom, Cisco, HPE, Intel, Meta, and Microsoft, emphasizing the collective effort to drive advancements in AI-centric networking capabilities.
The essence of AI networking transcends mere performance improvements; it’s about enhancing overall network operations by preemptively detecting and mitigating potential network issues. This approach is expected to captivate enterprises and hyperscalers, fostering interest and adoption, notes Vijay Bhagavath, IDC’s Vice President for cloud & datacenter networking research.
Bhagavath underscores the potential for both Arista and Cisco to penetrate the backend networks of hyperscale and enterprise AI clouds. Over the ensuing years, there’s a projected surge in enterprise activity centered around training and fine-tuning generative models, subsequently integrating them into core business applications to streamline IT operations.
Arista has already observed an upsurge in AI networking development, with anticipated trials commencing in 2024 and wider production deployments projected for 2025. This signifies a growing commitment to advancing AI networking capabilities and a strategic step towards broader industry adoption in the near future.