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Amazon’s Potential Move Into Data Center Switches Has Negative Consequences for Nokia

JPMorgan said that Amazon’s (AMZN) AWS unit may move into data center switches which has negative consequences for Nokia’s foray into the enterprise market. According to The Information, AWS is considering selling its own networking switches to enterprise customers within the next 18 months. AWS is working with white-box manufacturers such as Celestica, Edgecore Networks and Delta Networks. AWS’ white’box switches could undercut incumbents in the datacenter switching market such as Cisco (CSCO) and Juniper (JNPR) by as much as 70-80%.

In JPMorgan’s view, hyperscale datacenter players and ISPs with a large server installed base have increasingly moved toward using off-the-shelf hardware and open-source software solutions in order to scale quickly and in a cost-efficient manner. While it comes as no surprise to us that AWS uses white-box switches in its datacenters, its move toward launching commercial products is, the bank said.