May 2023 - Dell'Oro Group

Recently, the U.S. Department of Energy (DOE) announced $40 million in funding to accelerate innovation in data center thermal management technologies intended to help reduce carbon emissions. The funding was awarded to 15 projects, ranging in value from $1.2 to $5 Million, to universities, labs, and enterprises in the data center and aerospace industries. It will likely take 1 to 3 years for these projects to start impacting the data center industry, but following the money can provide an early indication on the potential direction of future data center thermal management technologies.

Before we assess what we can learn from the selected projects, it’s important to understand why the DOE is investing in the development of next-generation data center thermal management. It’s simple –Thermal management can consume up to 40% of a data centers’ overall energy use, second most to compute. This energy is consumed in the process of capturing the heat generated by the IT infrastructure and rejecting it into the atmosphere. The data center industry has been optimizing today’s air-based thermal management infrastructure, but with processor TDPs rising (think CPUs and GPUs generating more heat), liquid is likely required to achieve the performance and efficiency standards desired by data center operators and regulators in the near future. The type of liquid and how it is applied to thermal management has divided the data center industry on the best path forward. The COOLERCHIPS program provides a unique lens into the developments happening behind the scenes that may impact the direction of future liquid cooling technologies.

To assess the impact of the COOLERCHIPS project awards, each of the 15 projects was segmented by the type of thermal management technology and the heat capture medium. The projects were placed into the following categories (Not all projects could be applied to both segments):

Funding by Technology (n=14)
- 1. Direct Liquid Cooling: A cold plate attached to a CPU with a CDU managing the secondary fluid loop.
  2. Immersion Cooling: A server immersed in fluid within a tank or chassis.
  3. Software: Software tools used to design, model, and evaluate different data center thermal management technologies.
Funding by Heat Capture Medium (n=10)
- 1. Single-phase: A fluid that always remains a liquid in the heat capture and transfer process of data center liquid cooling.
  2. Two-phase: A fluid that boils during the heat capture process to produce a vapor that transfers the heat to a heat exchanger, where it condenses back into a fluid.
  3. Hybrid: Combined use of a single-phase or two-phase fluid and air to capture and transfer heat in the thermal management process.

The results for funding by technology showed that direct liquid cooling accounted for 73% of awarded funds, immersion cooling 14%, and software 13%. This isn’t a particular surprise, given that direct liquid cooling is more mature than Immersion cooling in the data center industry, primarily due to the use of direct liquid cooling in high-performance computing. Additionally, the planning, design and operational changes in implementing immersion cooling have proved to be a bigger hurdle for some end-users than originally anticipated. Despite only receiving 14% of the awarded funds, there is still significant maturation occurring with immersion cooling as the installed base grows among a variety of end users. Lastly, software rounded out the projects with 13% of the awarded funds. This was a welcome addition, as software plays a critical role in thermal management design and evaluation when comparing the use of different thermal management technologies in different scenarios. Environmental factors such as temperature and humidity, computational workloads, and prioritization of sustainability can all influence which technology choice is best. Software must be utilized to align an end users’ priorities with the technology best suited to reach those goals.

The results for funding by heat capture medium showed that two-phase solutions accounted for 48% of the awarded funds, hybrid solutions 38%, and single-phase solutions 14%. It was surprising to see two-phase solutions garner the most funding since the significant majority of data center liquid cooling today is single-phase solutions. Between 3M announcing their exit of PFAS manufacturing by 2025 and evolving European F-Gas regulations, certain manufactured fluids have been under pressure. But that may be the very reason two-phase solutions were awarded such funding – They may a play critical role in thermal management as CPU and GPU roadmaps reach and surpass 500 watt TDPs in the coming years. Inversely, it’s possible that the level of maturity in single-phase solutions is what limited the awards to only 14% of funding. Furthermore, single-phase solutions aren’t always a 100% heat capture solution, so it makes sense that hybrid solutions that bring air and liquid technologies together that do capture 100% of the heat, received more funding. Afterall, end users are increasingly interested in holistic solutions when it comes to the never-ending cycle of deploying more computing power.

Based on these results conclude data center thermal management is headed towards two-phase direct liquid cooling solutions in the medium to long term. However, it’s important to remember the maturity that is already emerging in single-phase liquid cooling solutions. This maturity is what has driven the data center liquid cooling market to account for $329 million in 2022, which is forecast to reach $1.7 billion by 2027. The liquid cooling technology and fluids will most certainly evolve over the coming years, with investments from the DOE, among many others, helping shape that direction. But most importantly, the COOLERCHIPS project awards aren’t about closing doors to solutions that already exist, but opening doors to new technologies to give us more choices for efficient, reliable and sustainable thermal management solutions in the future.

Spring is time for renewal and we are fresh off some energizing discussions at vendor conferences by HPE Aruba, Juniper, and Extreme Networks. May is a great time to round up some of the major Wireless LAN (WLAN) vendor announcements of the first part of the year. We’re seeing four key themes emerging in manufacturers’ strategies and these trends will have impacts on the WLAN market and its evolution.

AI is everywhere – WLAN is no exception

Artificial Intelligence promises to solve some of the world’s most intractable problems, and the intractable problem in WLAN is network management complexity. Enterprise IT teams are struggling to solve bad coverage, interference, and congestion while at the same time, dealing with trouble tickets that are caused by application or WAN-level issues. When user experience is bad, it’s always the Wi-Fi that gets blamed.

Juniper Mist has led the market’s mindshare around AI-Ops and micro-services architectures for enterprise networking. Further enhancements to Mist were announced at Mobility Field Day, with Marvis (Juniper’s virtual assistant) now leveraging the summarization skills of ChatGPT. Juniper has also announced they will be gathering network and user feedback from Zoom’s videoconferencing application which will allow their AI engine to predict the quality of videoconferences that take place in the future.

Meanwhile, HPE has introduced the next generation of Aruba Central in Greenlake, with a whole new solar-system look. In their slick demo at Atmosphere, they highlighted the Time Travel feature that allows the IT team to rewind to the moment of a moment of network degradation and visualize the network metrics at exactly that moment.

High-end AI features tend to arrive first with the public cloud-managed solutions. In 4Q22, only 25% of the world’s units were shipped into public-cloud managed networks, giving them a premium feel and demonstrating that there is room to grow the market. These solutions generate the recurring revenue streams the vendors are chasing, with the added bonus of boosting margins.

AI-Ops is the next frontier of innovation in campus networking and manufacturers are hoping that the savings in enterprises’ IT expenses will be transferred to their bottom line. We are predicting the revenue from these features will continue to grow, and that pubic-managed WLAN solutions will make up over 40% of WLAN manufacturer revenues in 2027.

Wi-Fi 6E expands its foothold

Wi-Fi 6E APs have been slow to take hold in the market (for an explanation as to why this is, see Checking in on enterprise-class Wi-Fi 6E) with vendors such as Extreme, HPE Aruba and Cambium leading the pack in Wi-Fi 6E adoption. However, in the first part of the year, there have been some announcements that will help accelerate 6E take-up.

Commscope Ruckus kicked off the year by announcing a new 2×2 Wi-Fi 6E AP (the R560) aimed at the MDU market. Then, a couple of weeks ago, Arista presented the C330 AP, a 2×2 product that will be available in June. In their Atmosphere conference, HPE pointed to the 615 AP as their affordable 6E option and promised a new 6E AP to come for the hospitality segment. Juniper then introduced the AP24, a lower cost, 2×2 product. Finally, at their conference in Berlin, Extreme Networks revealed the availability of the AP3000, claiming it to be the world’s smallest and greenest Wi-Fi 6E AP.

The introduction of more Wi-Fi 6E 2×2 products will help to bring the average price down, which until now has remained higher than historical precedents set by WLAN technologies. However, we are predicting that the life-cycle of the protocol will be shorter than previous technologies. While some major vendors point out that Wi-Fi 7 standards have not yet been ratified by the IEEE, manufacturers in China are already shipping low volumes of Wi-Fi 7 enterprise-class APs, and Ruckus has revealed that the company is working on a Wi-Fi 7 / cellular combination product. Dell’Oro group is predicting that Wi-Fi 6E shipments will hit their peak in 2024 as the new 802.11be (Wi-Fi 7) APs gain traction.

Network Access Control moves to the Cloud

The Network Access Control market is dominated by Cisco ISE and Aruba ClearPass. Last year, Juniper made a move to shore up this leak in its portfolio by acquiring WiteSand, a startup focusing on cloud-native zero-trust Access Control solutions. Arista has made no secrets of its ambitions in enterprise networking sector, and at the end of April, the company announced Agni, its cloud-based NAC, expected in the second quarter. Tellingly, Arista has put effort into ensuring that a customer can easily migrate from an existing NAC system, such as ClearPass. At the end of April, Extreme Networks CEO, Ed Meyercord, let it slip on their earnings call that Extreme would also be “cloudifying” their NAC solution, with an official announcement to come.

The Network Access Control market is small, but these recent vendor announcements demonstrate that placing this function in the cloud is a strategic move to lock up WLAN and campus switching revenues. These are wise choices as we approach what Dell’Oro Group is predicting will be a difficult 2024. We expect campus networking revenues will contract as the market digests the tsunami of orders that have been tangled in backlogs. Vendors will be looking for all the enterprise stickiness they can get.

Campus NaaS broadens its appeal

The Campus NaaS market is emergent and messy, giving ample opportunity for new players to differentiate themselves. We’ve already discussed a framework for the types offers available, showing that new entrants like Shasta Cloud, Meter, Nile, and Ramen Inc have thrown down the gauntlet to incumbents (Dell’Oro Campus NaaS & Public Cloud-Managed LAN Advance Research Report) –but the Camps NaaS market just became even busier.

HPE Aruba announced Agile NaaS at Atmosphere, touting that the standardized NaaS SKUs will enable their MSP partners to sell 75 cents on the dollar of additional services. In Extreme Network’s April earnings call, CEO Ed Meyercord announced investing in R&D to package a solution that will simplify MSPs’ delivery of managed services. Our confidential discussions with several vendors confirm that there is a wide interest in this type of offer, with new announcements on the horizon.

Different service providers mean different things when they sell Campus NaaS; however, one common element is the generation of recurring, high-margin revenues. The size of the dent that new offers will make in the market, and the likelihood they can create new revenue streams, are two market uncertainties that are playing out at this very moment.

With these four key trends in the WLAN industry, manufacturers are increasing both the depth and breadth of their offers, enhancing their technological and commercial appeal. The WLAN industry has seen record growth over the past two years. As we enter a more challenging market environment, manufacturers will need improvements such as these to maintain their customer base while they turn their sites to expand to new markets.

Last week was the RSA Conference 2023 in San Francisco, the annual gathering of security vendors and their customers to review the latest in cybersecurity. This year’s theme was “Stronger Together.” According to the conference, it was selected to highlight that when the cybersecurity community works together, it strengthens the community. Over 600 vendors heeded the call to come together in the vast halls of the Moscone Center. While I had no intention of meeting with even a tenth of the vendors at RSAC 2023, I did meet with nearly 30 vendors across a swath of the vendor landscape. (If you are a client of my research services, I will shortly send an email with thoughts from my meetings.)

For me, RSAC 2023 ended up a glass-half-full and half-empty event. While there was tangible progress and innovation, it lacked the same buzz of the 2022 and 2020 editions (2021 was canceled due to the pandemic). In this blog, I examine the three reasons I believe this was.

1) Zero Trust, Data Security, and Software Security were hot buzzwords but no common winner across the show. Meanwhile, SASE/SSE lost some intensity.

During the worst of the pandemic, the rise of remote/hybrid work and attacks on Internet-based applications caused the industry to rally behind SASE and runtime app security solutions. But all good parties must start winding down.

SASE appears to have come down from an apex in the last couple of years because, at RSAC 2023, it was no longer a pivotal conversation. Perhaps there is some marketing fatigue, but other externalities are at play, such as a reduced number of full-time remote workers as some have returned to the office full-time.

Similarly, the hot discussion about runtime application security (such as API security) has spread out as part of the “left shift” movement to greater design/coding security. Now, there’s a greater breadth and depth of solutions to consider as part of a comprehensive cloud application security that inevitably has shifted the conversation to more generalized concepts like data and software security. As a result, cloud application architects now have an abundance of tools to contemplate. But, unfortunately, where to start is daunting, and the market fragmentation isn’t making it any easier.

Beyond what I noted above for SASE and cloud security, there was the factor of increased macroeconomic pessimism. Enterprise IT is no longer on a spending spree as it had been just last year. For vendors, it seems to have led to playing RSAC 2023 conservatively.

2) AI (artificial intelligence)-drive ChatGPT is coming to security, but we’re just scratching the surface of possibilities with AI

Unless living off the grid, you probably have heard, or even have tried, ChatGPT, the chatbot driven by AI technology that eerily feels human. From passing law exams at the University of Minnesota to writing computer code, ChatGPT has shined a bright light on AI and generated many new discussions about the possibilities for AI. So, it wasn’t surprising to hear ChatGPT dropped by more than a few vendors at RSAC 2023.

ChatGPT wasn’t part of the formal vendor marketing messages on the show floor – the arrival of ChatGPT happened too recently have made it into any of the marketing – but many vendors in discussions talked up adding AI-driven natural language processing (solution-specific ChatGPT-like chatbot engines). Natural language processing promises that it will make solutions easier to use and increase the effectiveness of security admins. For example, rather than hunting through dashboards or reams of events, the security admin will be able to ask questions such as, “Where is my greatest security risk?”

Though ChatGPT brought AI awareness to the masses, AI has been in play for several years in the security industry, specifically in threat detection. One of the first examples I remember was the 2020 firewall announcement by Palo Alto Network. It added machine learning to the firewall to improve malware and phishing detection. Since then, I’ve run across other examples of AI-powered threat detection. Still, the maturity and power of AI-drive detection need to improve. Of course, human security researchers are still vital, but I suspect AI will incrementally enhance and reduce the reliance over time.

3) Applications and IT infrastructure security are still top of mind but were – unfortunately –worlds apart.

It used to be that IT infrastructure teams held the keys to the security kingdom since applications could only get deployed once the infrastructure team did so. Infrastructure owned the servers, storage, and networking that applications relied upon.

From a security perspective, infrastructure teams tended to put significant thought into the application data security lifecycle because, over many years, they had come to understand the security implications of data in motion, in use, and at rest.

However, applications teams hated having to wait for the infrastructure teams. The infrastructure teams lost most of the security control when the cloud-based paradigm arrived with its continuous integration/continuous development (CI/CD) on ephemeral infrastructure (also known as a cloud DevOps culture). Applications teams could now do as they pleased without involving or waiting for the infrastructure teams. But unfortunately, cloud application security is far from as mature as it had been in the traditional monolithic days involving the infrastructure team. Consequently, security posture has suffered and led to notable cloud breaches. However, as the saying goes, necessity is the mother of invention.

The last seven years have seen a bumper crop of new cloud workload security vendors (from acquired startups like Dome9, Twistlock, and PureSec to more recent pure-plays like Lacework, Orca Security, and Wiz). These vendors are in tune with application developers’ operations and have identified key points in their workflows to insert security. The space is evolving quickly, and seeing how many were represented at RSAC 2023. For the interested reader, in October 2022, I put out my first Advanced Research Report on Cloud Workload Security detailing market evolution and TAM (total addressable market).

Nonetheless, it was disheartening how these two camps, the infrastructure and application security, literally lived in different worlds at RSAC 2023. The north expo hall had the infrastructure security vendors, and the south hall had the applications security vendors. Enterprise infrastructure and application teams must work together for the common security good. Still, developing beneficial synergies will be impossible if the vendors they rely on occupy different worlds. In addition, because application development moves to be “cloud-native,” it doesn’t eliminate the need and possibilities with the enterprise infrastructure teams.

Yes, the glass was half full and half empty on several fronts at RSAC 2023. But, then again, nothing is ever perfect, nor will it be. So rather than ending on this bittersweet note, I’ll end on a positive and highlight that my conversations at RSAC 2023 were enthusiastic, rich, and insightful, which demonstrated that as we come together, we do get stronger.

I look forward to RSAC 2024.

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AI is everywhere – WLAN is no exception

Wi-Fi 6E expands its foothold

Network Access Control moves to the Cloud

Campus NaaS broadens its appeal