Sramana Mitra: With so much is happening on the cloud right now, what do you see as the future of the core networking companies like Cisco and Juniper? How do you see them evolving? What are the opportunities and gaps opening up because of this shift?
Sumant Mandal: You can see that in their own strategies as well. They are buying software companies. That could defy logic because they also see that their core business is completely threatened. Big telecom companies still run on big iron. It’s not like that’s going away.
It is fast becoming commoditized and value is moving into the soft layer. You have companies like Amazon entering the data center now. They’re no longer just a cloud company. You’ve done a huge stretch to companies like Cisco, HP, or Oracle. Take your pick. It’s not going away today or tomorrow.
But the long-term trend is that big iron is getting commoditized and all of the intelligence and all of the value is moving into the soft layer. What that does is, it opens up the fields. Because for a startup to build boxes, it takes $100 million.
But today you can actually build a similar value company and show the value in less than one-tenth that money. Of course, for us, we have probably six to seven companies in our portfolio that ride on this trend and go right at the core of the networking business.
Sramana Mitra: Can you talk a bit more about what kind of problems are they solving in this portfolio that you just talked about?
Sumant Mandal: There are so many problems like if you have the Internet of Things and connected devices, instead of having five billion endpoints of cellphones and computers, you take that up to 30 billion because now your electric meters are connected to the internet. Then your house is connected. Your car is connected and everything gets connected.
The network that was built by companies like AT&T and others which was on big monolithic centralized devices cannot keep up with it. It’s too rigid. It needs to be more flexible. It needs to have more capacity at the edge – not at the center. So a lot of that is driving new companies to innovate and give that value.
We have a company in our portfolio called IoTium which is using a cloud orchestrator. If I have to now manage a billion devices, I can’t manage those devices by saying, “If I want to upgrade something, I have to send someone on a motorcycle, put a computer, plug it into your building automation, and upload something or download data.”
You have to do it remotely. You have to do it securely. You have to do it in a scalable fashion where every device doesn’t add another workload. If you think about their first application – building automation, the data that’s coming out of that today is your HVAC system and lighting system. It needs to be protected and needs to be differentiated from the data that’s coming out of your data center or your servers. It’s the way that they’ve gone about building their business. That’s one application.
They’re in manufacturing, in oil and gas, and in transportation. There’s a lot of that kind of work that is new that is probably more important 10 years from now than it is today. But it’s definitely very important to connect these devices, otherwise you can’t use them.