Arista Partners: Our Business Is Booming As Competition With Cisco Heats Up

Fresh off a hot June debut on the New York Stock Exchange that made it one of the most buzzed-about networking companies in Silicon Valley, Arista Networks is turning up the heat on competitors such as Cisco Systems. And, according to Arista partners, the company now has the channel chops to back that up.

"They are a very hot up-and-coming company and, because of that, we are seeing a lot of traction and we are seeing a lot of growth," said Jason Gress, co-founder and president of InterVision Systems, a Santa Clara, Calif.-based Arista partner. "In a very short period of time, we have seen a lot of customer interest and a lot of opportunity with Arista."

Founded in 2004, Arista specializes in what it calls "cloud networking" for the data center. The Santa Clara-based company offers a range of low-latency, modular switches based on merchant silicon and running its own Linux-based software called the Arista Extensible Operating System (EOS).

Related: Arista Networks Shares Soar On Hot IPO Debut

EOS is the secret sauce, according to Arista, that makes its data center architectures more scalable, more programmable and more interoperable with third-party network management and automation tools than competing architectures from the likes of Cisco or Juniper Networks.

And, judging by Arista's growth, it's an approach that's working.

In an S-1 form Arista filed in March with the U.S. Securities and Exchange Commission disclosing plans to go public, Arista said its revenue in 2013 soared 87 percent year over year, totaling $361.2 million. Net income for 2013 nearly doubled, growing from $21.3 million to $42.5 million in the course of that same year.

Arista said its customer base has grown from 570 customers in 2010 to roughly 2,340 by December 2013, among them tech heavyweights Facebook, Microsoft and Yahoo.

Solution providers, meanwhile, say they are seeing similar growth in their own Arista business, with the company's switches, in some cases, even displacing legacy Cisco or Juniper infrastructures.

John Quinn, vice president of sales, North America, at IGX Global, a Rocky Hill, Conn.-based Arista partner, said IGX did more than $7 million in Arista sales between the fourth quarter of 2012 and the first quarter of 2014. IGX expects Arista sales to accelerate this year, he said.

"It has grown exponentially," Quinn said of IGX's Arista business. "As our product portfolio has grown and our global enterprise accounts have grown to where there is a lot of data center consolidation, and SDN and cloud requirements -- which is kind for where the industry is going -- we absolutely see growth in Arista technology."

Arista switches are selling especially well into Web 2.0 and financial services companies, Quinn said, which demand the level of scale and speed Arista technology provides.

Andrew Fisher, CEO of Myriad Supply, a New York-based Arista partner, said Myriad Supply already has done more Arista business in the first half of 2014 than it did in all of 2013.

"We are on pace to double, but my expectation is that we will do three to four times what we did last year and that’s because there is certainly growth within existing customers, but we are also picking up new customers," Fisher told CRN.

Fisher agreed that Arista seems to have a significant foothold in financial services, but noted that adoption also is picking up pace within the enterprise.

"A nanosecond can make the difference between getting your trade executed and not, and so the ROI on buying [Arista] switches over something that is even just a hair slower is significant," Fisher said. "Arguably, [financial services] is a pretty tough vertical to find success in. So I think when people saw [Arista's] prevalence in that vertical, they started scratching their heads and saying, 'Wow, we need to find out what that's all about.' "

An executive at another Arista partner, who asked not to be named, said his company's Arista business is on track to grow tenfold this year compared with 2013. The partner said he expects his company's Arista sales, coupled with sales from other companies that Arista is partnering with, such as Palo Alto Networks, is expected to grow from between $8 million and $10 million to $40 million in "very short order."

"When you look at what [Arista] has put together, and the way they are positioning it, I think a lot of customers are of the mindset now that they would look at it as an alternative to Cisco," he said.

NEXT: Arista 'A Thorn In Cisco's Side'?

Some Arista partners say the vendor's use of a Linux operating system and merchant silicon are positioning the company as an emerging threat to Cisco and other networking incumbents, especially in environments where customers are looking to embrace SDN.

"[Customers] are putting Arista in legacy -- candidly, Cisco, Juniper and Brocade -- shops in their data centers while maintaining their incumbent switching technology in their remote offices," said another Arista partner who requested anonymity. "Given Arista's portfolio it might not be a complete replacement, but they are definitely taking hold in the data center."

InterVision's Gress said that one of the reasons Arista's technology takes aim specifically at Cisco is that its Linux operating system can easily be adopted by customers who are already familiar with Cisco's own networking OS.

"[Arista] created a CLI [command-line interface] that looks and acts very much like Cisco's," Gress said. "Cisco is the market leader with probably 65 percent market share in Layer 2 and Layer 3 switching, so there are a lot of folks out there that are proficient with the Cisco command-line and user interface. Arista is a real natural fit for them."

An executive at one Gold-level Cisco partner, who also asked not to be named, said his company is starting to see customer interest in Arista, especially on the West Coast.

"Short of [Cisco] buying them [Arista], and at this point they’ve gone public and would be too expensive, I think they are just going to continue to be a thorn in Cisco's side," the partner said.

The partner also noted that Arista has poached several Cisco executives to fill out its own management ranks. Arista CEO Jayshree Ullal, for instance, headed up Cisco's $10 billion data center switching and services group before leaving for Arista in 2008.

Partners also pointed to Arista's partnership with VMware -- which enables Arista's EOS and Software Defined Cloud Networking (SDCN) Infrastructure to integrate with VMware's NSX platform -- as a shot across the bow at Cisco, since NSX is a direct competitor to Cisco's Application Centric Infrastructure (ACI).

Arista, it seems, agrees.

"The fact that Cisco is called out, and it's been in the press a ton that Arista and VMware are partnering against Cisco, that's created a great situation for the channel because they want an alternative to Cisco," said Mark Smith, senior vice president of sales, operations and business development at Arista. "Cisco hasn't provided an innovative product for many years, and they love the innovation that's coming out the VMware-Arista combination."

Cisco, in response, said ACI and its new Nexus 9000 switches that support it are customers' best bet for data center efficiency and SDN deployments.

’The Nexus 9000 represents the most innovative networking solution in the industry, with the lowest power, highest density line rate 40G, future-proofed backplane free design, and more than twice the reliability of comparable systems,’ said Soni Jiandani, senior vice president of Cisco's Insieme business unit, in an emailed statement provided to CRN. ’Application Centric Infrastructure is an open system that goes beyond today’s SDN offerings and provides customers automated application level policy, security, telemetry, optimized forwarding and visibility across both physical and virtual environments.’

Another Cisco and Arista partner, who also requested anonymity, said he does expect ACI to gain significant traction in the market, once Cisco ships its ACI controller and customers can start deploying the technology.

"On paper, the ACI story looks great, the Nexus 9000 story looks good, but to a certain extent they might be playing catch-up [to Arista] if you just go feature-to-feature on a box or port basis," he said. "But I do think, overall, the ACI story is a great one."

NEXT: Partners Applaud Arista's Evolving Channel Strategy

Arista's Smith joined the company in 2012 from Infloblox, where he headed up global operations. Prior to that, he was vice president of enterprise sales at Juniper.

Now, Smith said, he is focused on growing Arista's partner base but, even more so, on working more closely and investing more heavily in the partners it already has.

"We use a single-tier channel in the U.S. and if I went to distribution, I could probably add 3,000 partners in a day, but that's not our goal," Smith said. "Our goal is to grow our partners one at a time, [especially] those who we have a personal commitment and relationship with."

One of the big differences between Arista's partner program and other vendors' programs is simplicity, he said, adding that Arista only has two tiers -- Authorized and Elite -- and doesn't require partners to go through a lengthy certification process.

"We feel like we have the best product, the best technology and the best people, and if you have that, you don’t need to do the excessive certifying that a lot of vendors do to try to gain control," Smith said. "If a partner sells a competitor's solution, we are fine with that. We feel like, let the customers decide what's the best solution for them."

Arista currently has about 400 partners in North America, 100 of which came on board throughout the past year, he said.

Partners say Smith has played a key role in evolving Arista's channel strategy.

"In the very beginning, they were not the most channel-friendly company out there. They just didn't know how to do channel," said Myriad Supply's Fisher. "They had a phenomenal product but some of the infrastructure around really utilizing the channel as that force multiplier that a legion of great resellers can offer, they just weren’t taking advantage of it."

Fisher attributed Arista's slow start in the channel to the fact that the company was narrowly focusing on the financial services vertical. Now that Arista's looking to broaden its reach into other verticals and the enterprise market at large, Fisher said it's embracing the channel in a whole new way.

"Mark Smith was a big catalyst behind some of the progress we are seeing in the channel," Fisher said. "We are finding much more support and we are finding a willingness to invest in co-marketing efforts, in events and in things that really build a relationship which has been extremely positive."

InterVision's Gress agreed.

"They've been adding a really good management team and, with the advent of having a strong channel advocate in Mark Smith, I think they are really in a good position," said Gress. "They are going to create a channel and they are going to convert a lot of partners that didn’t previously pay attention to them."

PUBLISHED JULY 2, 2014