UPDATED 12:21 EDT / FEBRUARY 13 2014

Andreesen on: Predicting the unification of smartphone + datacenter supply chains | #OCPSummit

fireside-chat-andreessen-bectholsheim-metzThe first Fireside chat of Day Two at the recently concluded Open Compute Project Summit V was hosted by Cade Metz, Senior Editor of Business and Enterprise with Wired Magazine. He was joined on stage by two prominent guests: Marc Andreessen (Co-founder and General Partner with Andreessen Horowitz) and Andy Bectholsheim (Founder, Chief Development Officer and Chairman with Arista Networks), and together they tried to focus their attention and discourse  towards the trends in the industry.

“Marc Andreessen is famous for stating that ‘software is eating the world,’ joked Metz, “and yet here he is at a hardware conference.”

“It makes perfect sense,” argued Andreessen. “A lot of what’s being discussed here, around this project, was made possible by software. The implications of open source + open hardware are enormous for radical reductions, price and costs of building systems. Which makes it possible for the software to do many more things than it was able to do before.”

He continued: “I think software is becoming much more important in fundamental industries: education, healthcare, financial services, media and many other areas. Being able to have more very inexpensive hardware makes it possible to build more software.”

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“What that does, in taking down the costs of hardware,” said Metz, “that feeds this new breed of cloud services, which allows start-ups to get off the ground so much easier: I don’t have to buy hardware, servers, storage and networking gear.”

There’s two things happening often, noted Andreessen: “We see start-ups come in, doing some sort of software innovation, and it’s two or three kids with laptops, deploying it entirely onto cloud services, and the amount of money required to start a software business is tiny compared to any historical precedent. $500,000 gets these companies two years of runway.”

Projecting into the future, some really interesting questions come to mind: if services like Facebook and Google are made possible today because of much lower costs of high volume hardware, and one projects the curves for hardware over the next 10 years, the services that are going to be made possible 10 years from now are going to be mindblowing in their sophistication and in their power. They will make things that we perceive today as powerful and compelling look completely trivial in comparison.

“We’re entering a whole new era for what software is going to be able to do, as a direct result of what’s going on in the hardware,” clarified Andreessen.

Cade Metz directed his attention to Andy Bectholsheim: “you sell hardware into the data center. Do you think the data center is dead?”

“These days the computer is the data center. It is no longer an individual computer, but a whole thing, and what the traditional IT industry kind of missed is that it is a completely different optimization required to build things cost-effectively for the very large scale data centers,” explained Bectholsheim.

“At scale you can optimize for power, efficiency, connectivity, fabrics, in a very different way. At the same time the spending has actually shifted, and the growth of the market is for hardware vendors, the traditional IT is either not growing at all or declining,” Bectholsheim noted. “All the growth is in the cloud. Cloud companies have grown 30-40 percent a year. Extrapolating a couple of years into the future, we are predicting that by 2020 the cloud Capex spending will exceed all the North-American carriers combined. These days all the action is in the cloud,” reiterated  Bectholsheim.

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In the networking world we see a separation of the hardware from the software – much as what we saw with servers; now we’re seeing baremetal switches, where you can put anything you like on it. “How do you see that world changing the way we do things?” Metz asked of his guests.

“The thing with networking is that you need a software stack to actually work. Building the software stack is actually a lot harder than building the hardware,” laughs Bectholsheim. “At Arista we are joking that ‘hardware’s easy and software’s hard‘. Ninety percent of our engineers are working on the software stack.”

Andreessen added: “We work with two companies that we think are right in the leading edge of this movement: Nesira (recently acquired by VMware) who we think it’s fundamental for this new generation of software-defined networking, and Cumulus Networks, which is bringing Linux into the switch.”

“We think that storage is the next wave to get transformed in the way that networking has been transformed now,” said Andreessen.  He thinks that “After servers, networking and storage we think the fourth wave will be the unification of the smartphone supply chain with the data center supply chain,” as Ian Drew hinted in his presentation. “In 10 to 15 years, datacenters will be running many components that run in smartphones.”

Andy Bectholsheim added a couple of ideas: “There’s definitely a race towards the lowest power, highest cost-performance metrics, and the big advantage in the cloud is that many people own their own software stack; they are not limited to what’s available from the commercial third party ISVs.”

You can watch the entire segment below.


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