https://www.theinformation.com/articles/amazon-web-services-…
Rob
8 Likes
This is one reason I took my not insubstantial profits and the taxes that will follow from them (fortunately a good chunk of my ANET was in my SEP, so that will mitigate things).
It is not that they are not a great company, with great management. They are. So was/is Juniper and Cisco. It is that the disruption that ANET made, was made into a brand new heretofore market that did not exist before. ANET experienced minimal competition because they basically invented the new architecture and legacy players had nothing that could really adapt quickly to what ANET had one, and ANET kept pushing and improving it.
Now though, after ANET’s “Tornado” with the 100gb inflection point slowing so rapidly (I was very disappointed and surprised by this. I know Tornadoes, and when you reach a paradigm changing point of inflection and you are the disruptive, first to market force behind it, that Tornado does not peter out this rapidly, not to this great of an extent…it is a meaningful happenstance in regard to competitive advantage and market dynamics) one had to re-assess.
What is happening is that as the cloud titan market matures more, competition to sell into it has grown, as the cloud titans begin to supply their own technologies and look for generic alternatives that they are qualified to run, and as Arista has had to look to the enterprise and now campus market to seek growth.
Both the enterprise and campus markets are mature and it will be a slog to break into and grow sales against an entrenched Cisco and HP, etc. There was no entrenched technology with cloud titans as the business started.
What really hit me, however, was when I learned about AT&T open sourcing their own OS to run switches within their data center. AT&T gave up finishing the product because they admitted not having the talent and resources, but that is why they open sourced it to be finished.
Sure, Arista and Juniper can sell their software on these white boxes. But the software will have to compete with multiple other vendors and will not have the same economic value as selling the switches with the software had.
I therefore ate the taxes and moved on. Has been a very wise decision. Extremely wise.
Been a lot of conversation over this. I have already stated this, but just thought I would put it out a bit more succinctly as to why I did what I did. The company is maturing and is on the other side of rapid growth, which is great, unless there are a lot of opportunities in other great companies that are still on the climbing side of their rapid growth period.
Tinker
24 Likes
“What is happening is that as the cloud titan market matures more, competition to sell into it has grown, as the cloud titans begin to supply their own technologies and look for generic alternatives that they are qualified to run, and as Arista has had to look to the enterprise and now campus market to seek growth.”
It occurs to me that AMZN is the ultimate frenemy. Want to sell on our site; sure we welcome you and give you access to our amazing POS and logistics (until we find out what you sell has great margins and is popular;then we will outsource and undercut you). Last time I heard, AMZN own brands made up over 20% of their sales. Want to supply us with your technology; sure we are glad to have you help us get AWS up and running (until we find we can run it cheaper ourselves or your technology gets commoditized). AAPL has similar tendencies. As a sidelight, it shows you what an amazing company SHOP must be for them to leave the field to SHOP.
Rob
20 Likes
…it shows you what an amazing company SHOP must be for them to leave the field to SHOP.
Bingo, agreed!
I view AMZN’s ‘partnership’ with SHOP as the ultimate validation of SHOP’s economic value
and business model.
(Not to mention the trust shown by the Canadian government, Microsoft, and a few other ‘lesser
institutions’.) 
Dan
1 Like
For what it’s worth, here’s a recent article - “Amazon denies it will challenge Cisco with switch sales”
https://www.marketwatch.com/story/exclusive-amazon-denies-it…
Excerpt:
“Cisco and AWS have a longstanding customer and partner relationship, and during a recent call between Cisco CEO Chuck Robbins and AWS CEO Andy Jassy, Andy confirmed that AWS is not actively building a commercial network switch,” a Cisco Systems Inc. spokesman told MarketWatch on Wednesday.
An AWS spokeswoman confirmed the statement Wednesday, but declined to go into more detail.
3 Likes