Has Cisco Stopped The Arista Rising Tide?

While some solution providers say Arista Networks has grown to become a thorn in Cisco's side, it appears Cisco CEO John Chambers believes that battle is nearing an end -- with Cisco coming out on top.

During Cisco's first-quarter earnings call with analysts this week, Chambers -- without explicitly mentioning Arista -- stressed the progress Cisco and its Nexus line of switches has made against one of its top "merchant-based" switching competitors.

"Looking at our performance relative to one of our merchant-based competitors making a lot of noise in this market, in Q3 FY14, from a comparison perspective, we saw orders of the Nexus 3000 and 9000 -- our comparable portfolio -- surpass their total revenue for the first time," Chambers said.

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

"In Q1, orders for the Nexus 3000 and 9000 were approximately 50 percent larger than their reported total revenues, growing in excess of four times faster than their reported growth rates," Chambers continued. "Yet again, in just one year, we have blown by where they had gotten to in the whole history of their company."

While he didn't say it outright, it's more than likely Chambers was referencing Arista, a provider of merchant silicon-based data center switches running a Linux-based operating system called EOS. Santa Clara, Calif.-based Arista, which went public in June, reported this month third-quarter revenue of $155.5 million, up 53 percent compared to the same quarter last year.

Arista's revenue in 2013 grew 87 percent year-over-year, totaling $361.2 million. The company's profits, meanwhile, nearly doubled, growing from $21.3 million in 2012 to $42.5 million in 2013.

Arista's technology, which has been embraced especially by large service providers and Web 2.0 players like Facebook, has been dubbed highly disruptive to legacy networking vendors by partners and analysts alike.

"I believe [Chambers] was talking about Arista," said Zeus Kerravala, principal analyst at ZK Research. "In some ways, the amount of attention that Chambers has given Arista has legitimized Arista as a real player in the data center and a thorn in Cisco's side. I also believe that Cisco has Arista in the cross hairs and is actively going after them in deals."

Arista declined CRN's request for comment.

An executive at one Cisco partner, who asked not to be named, said he continues to see Arista "actively displacing Cisco" in deals. The partner said he thinks Arista's technology is "world class and highly disruptive," but that his company hasn't partnered with them because of the disruption it could cause his Cisco relationship.

"We have not partnered with Arista," he said. "But we see them often in our market."

Chris Becerra, vice president of sales at Terrapin Systems, a San Jose, Calif.-based solution provider, said Arista is on pace to become Terrapin's biggest growth partner this year. Becerra also said he frequently sees Arista switches displacing Cisco's.

"Our customers and our engineers love [Arista's] technology and their self-programmable EOS fits in with Terrapin's 'open networking' mantra," Becerra said.

According to data from industry analyst Infonetics, Arista's Ethernet switching revenue in the first quarter jumped 90 percent year-over-year, while Cisco's declined 7 percent.

In its fiscal first-quarter earnings released this week, Cisco's switching business was up 3 percent, following three consecutive quarters of declines.

Kerravala noted, though, that Arista might need more than a strong product offering to compete -- or at least win -- against a technology giant like Cisco in the long haul.

"[Arista] has a great product, but competing with Cisco is about more than product," Kerravala said. "We'll see if Arista has the energy and resources to go after Cisco in a bigger way now. Either way, the war is on in full."

PUBLISHED NOV. 14, 2014