Open Source to Compete With Traditional Networking Firms

It’s a small partnership that could make a big impact in the world of networking. Two tiny networking companies — Digium and Vyatta — have caught my attention. And they deserve your attention, too.

If these two companies succeed, they might change the rules of a game currently dominated by Cisco Systems Inc. (CSCO), Netgear Inc. (NTGR) and other small business network hardware suppliers.

First, let’s set some expectations. Big, traditional networking firms like Cisco won't fade away anytime soon. But many customers are now familiar with open source software like Ubuntu Linux and Red Hat (RHT) Linux. It’s only natural, looking ahead, that some of those customers will increasingly express interest in open source networking gear.

Enter Digium and Vyatta.

Digium specializes in Asterisk, the open source IP telephony platform. The company is growing fast, building a partner program and opening a new headquarters later this year. In contrast, Vyatta specializes in open source routing, firewall and VPN (virtual private network) solutions. Combine the two product portfolios into a network solution, and you’ve got a heck of a business strategy — at least on paper. That's why Digium and Vyatta have agreed to work together on product interoperability.

It’s too early to predict whether the new Digium-Vyatta partnership will succeed. Plenty of logical business relationships fail because companies can’t agree on various priorities (R&D, marketing, customer support, pricing, etc.). But in this case, Digium and Vyatta both adhere to open source business practices, where collaboration and compromise are the norm.

Interestingly, Digium and Vyatta mentioned Unified Communications as one of the key reasons they are partnering. That could be pure posturing. But it could also mean that the companies are serious about competing with 3Com (COM), Cisco, Nortel (NT) and several niche networking firms that serve small and midsize businesses.

The bottom line: Cisco is concerned about long-term competition with Google (GOOG) and Microsoft (MSFT). But the company better keep an eye on the open source movement.

Microsoft underestimated Linux several years ago. Big mistake. Cisco better not make the same error with Asterisk and its growing flock of open source promoters.