Google, Amazon, Microsoft Go East For Network Gear

theodp writes "Wired's Cade Metz has the scoop on the move away from U.S. network equipment stalwarts, calling it of the best-kept secrets in Silicon Valley. 'Cloud computing is an arms race,' writes Metz. 'The biggest web companies on earth are competing to see who can deliver their services to the most people in the shortest amount of time at the lowest cost. And the cheapest arms come straight from Asia.' Or, as Joyent's Howard Wu puts it, 'It's kind of like buying couches. If you buy one, you go to a retail store. If you buy 10,000 couches, you go straight to the factory.'"

Comments

wow.. really?

[rgbrenner]

Wow.. really? Huge multinational companies are buying equipment from developing countries because it's cheaper?! What is the world coming to?

Re:wow.. really?

[lightknight]

As opposed to the networking gear that comes from the US, that has a NSA-approved sticker attached to it.

Pot, this is the kettle. You're black.

Re:wow.. really?

[_merlin]

Whoosh
He even made a point of writing "chinar" and "gubbmint" to make it obvious he was taking the piss.

What cant THIS be an April Fools joke...

[dan_linder]

I quickly read the Wired article hoping to find a joke but didn't find the punchline...

Dan

Re:I expect to see some typical comment about the

[Anonymous Coward]

Not Eastern, just China. They've been known to do it, and they'll do it again. You think Australia refused to let Huawei bid because they found the company's logo unpleasant?

Re:I expect to see some typical comment about the

[mbkennel]

No, it is not possible to inspect hardware at that level sufficiently thoroughly and it is certain that the entities will be coerced into doing exactly what you wrote.

This threat is not theoretical. The details are classified but what's been leaked is pretty indicative, if you know government bureaucracy, that things have happened for real. Actual chip-gate-level "flaws" and backdoors of very high sophistication have been inserted into the physical manufacturing chain.

Re:I'll Never Buy 10,000 Switches

[rgbrenner]

Buy Huawei? How does that work exactly?

1) Foreign companies cannot own more than 49% of a Chinese company. All of those American companies in China? They own 49% of those facilities.. a Chinese 'partner' is required to operate in China.

2) Huawei is a government controlled corporation.

3) Huawei had 28 billion USD in revenue in 2010. Which means (by revenue) it is larger than Facebook, Google, and Amazon. It is 2/3rd the size of Cisco (and has 2x the number of employees). It is 40% the size of Microsoft.

No foreign company is buying Huawei anytime soon.

Re:I expect to see some typical comment about the

[Rakishi]

Anyways why does everyone paint eastern governments as entirely evil.

Because like all large governments they are self-serving and to outsiders that makes them effectively evil. Go look at what the US did during the Cold War. Same thing, except this time the US is on the receiving end. Actually, look at ACTA for a current example of how much the US fucks with other countries for it's own perceived gain.

The difference is that China has no desire to hide such actions too much and as such is able to take them to whole new levels. They want their economy and their companies to succeed and they will do anything to achieve that goal.

Does that makes them evil? If you say yes, consider this. They have over 1 billion people and an economy that is not self sustaining yet. Hundreds of millions of those people live in atrociousness conditions right now. Worst case, China fails to build itself into a proper first world economy. Then hundreds of millions will die and hundreds of millions more would probably have been better off if they had died.

If you think every American not being able to buy three Starbucks Latte's a day more of a sin than having hundreds of kids starve to death, maybe you should look long and hard in the mirror before deciding what is evil and what is not.

10,000 couches

[Dcnjoe60]

Or, as Joyent's Howard Wu puts it, 'It's kind of like buying couches. If you buy one, you go to a retail store. If you buy 10,000 couches, you go straight to the factory

Of course what Mr. Wu leaves out is that they are going straight to a factory in Asia instead of the American manufacturers (stalwarts, I beleive the summary called them).

Googe, Amazon, Microsoft are all mega-companies and strive to maximize their profits. However, at record unemployment levels in the tech industry, they claim they can't find US workers and have to bring in foreign workers. Now, it appears that US equipment manufactures can't produce enough equipment and they have to again go offshore.

Again, they can do business wherever they want, but the time has come to for them and their shareholders to either decide they want to be an American company with a world wide presence or a foreign company with a US operation.

Re:10,000 couches

[mspohr]

I believe that Adam Smith's "invisible hand" originally referred to the tendency of companies based in a particular country to favor doing business in that country thus strengthening their home country. Of course, now companies have no loyalty to any country so they will roam anywhere to get the cheapest prices to maximize their profits. There is no more "invisible hand". It's all an open race to the bottom.

Re:10,000 couches

[mspohr]

I think you missed my point.
Try reading this Wikipedia section slowly:
http://en.wikipedia.org/wiki/Invisible_hand#Abusing_Smith.E2.80.99s_statement_of_an_invisible_hand

Smiths invisible hand has been appropriated by others (abused) and expanded (to your meaning above). My point was that his original description and meaning has been lost.

Re:10,000 couches

[grcumb]

Or, as Joyent's Howard Wu puts it, 'It's kind of like buying couches. If you buy one, you go to a retail store. If you buy 10,000 couches, you go straight to the factory

Of course what Mr. Wu leaves out is that they are going straight to a factory in Asia instead of the American manufacturers (stalwarts, I beleive the summary called them).

What did get mentioned, but seems to be overlooked by everyone here, is that one of Google's primary motivations was because they needed a more open and flexible platform than the 'stalwarts' were willing to give them.

The only thing that distinguishes Cisco from the others is their 'secret sauce' - the proprietary elements that make high volume network management easier (and in some cases possible). But that's no longer sufficient to keep some of their biggest customers happy; they want lower-level access to the equipment. Manufacturers, however, don't want to give away the only thing that still distinguishes them from commodity brokers.

I think the biggest news to me is that the commodification of high performance gear has advanced enough to allow someone to rock up to the factory door with a spec and get something decent enough to rely on. This is the same phenomenon we've seen in server operating systems and systems software. There's still room for 'Enterprise' operators to make a buck, but increasingly, companies are realising that, a lot of the time, ordering à la carte makes more sense.

Re:10,000 couches

[crutchy]

its funny how people talk about the bottom line, thinking its about price, only to be burned by cheap crap before realizing the bottom line is really that you get what you pay for

if something seems too good to be true, it usually is

Re:I'll Never Buy 10,000 Switches

[rgbrenner]

There is no evidence of that.

"No" is a strong word. Huawei was founded in 1988 by Ren Zhengfei (he's still the CEO of the company). Right out of University, he joined the People's Liberation Army (PLA) working on military technology. He joined the Communist Part of China in 1978, and retired from the PLA in 1982. He was an elected member of the 12th National Congress of the Communist Party of China (1980's).

Sun Yafang, the chairman of the board, worked at the Ministry of State Security (MSS) Communications Department before joining Huawei.

In China, companies are not directly owned by the government, but they are controlled by Communist Party members... When people say X is a Chinese government subsidiary, this is what they are referring to (the close ties of the company to the Communist Party).

Re:Go East?

[grumling]

And east of the prime meridian.

Thanks, article

[Luke has no name]

Thanks, for telling me exactly how Cisco and Juniper aren't scaling to meet the needs of Google. By "scaling", and without further details, I assume they mean "selling cheaply enough".

Cisco is not a hardware company...

[fostware]

Just take a look at their patents - very few of them are for hardware. Also consider the move to the v15 IOS Universal images.

Cisco have known for a long time that hardware suffer from Moore's Law (loses it's margin quickly) and is easily replicated via ODMs. Lifted software features are a lot easier to litigate against.

Re:I'll Never Buy 10,000 Switches

[Formalin]

If that is the standard you measure to, then certainly many American companies are 'state controlled companies' too?

ex-politicians being in high positions is... pretty bloody common.