The project is called the Extensible Open Router Platform, or XORP. Its goal is to provide a free open-source software product that will route data through computer networks using cheap hardware and microprocessors from the likes of Intel (INTC
BIG BACKERS. If it's a success, XORP could become a low-cost alternative to expensive machines from Cisco Systems (CSCO
) and other companies that dominate the market for computer-networking gear. "There are lots of areas where networking is very important right now," Ghosh says. "We want to build a community around this project."
XORP's first version was released in July, and heavier-duty versions are due in coming years. While it's hardly the first effort to make routing software in an open-source format, it may be the most promising, due to $3 million in funding from high-powered backers such as Intel, Microsoft (MSFT
), and the National Science Foundation.
That could be an ominous sign for outfits whose bread and butter is selling computer-networking gear. Sales of those products should top $13 billion this year, according to San Jose (Calif.) telecom and networking market researcher Dell'Oro Group.
CISCO'S DOMAIN. If Ghosh can convert his project from the wonky, early-stage computer code made public in July to sturdy software that can competently run corporate networks, will Cisco get Linuxed? Probably not any time soon, analysts say. The networking giant, which continued to gain market share in the third quarter of 2004, is certainly aware of the open-source threat. In fact, it's already selling a line of cheap networking gear for the consumer market based on another type of open-source software, Linux.
But just like the Linux operating system in servers and PCs, open-source software in networking equipment could become a viable competitor over time.
No question, computer networking is a bigger challenge for open-source enthusiasts because networking gear is a bit more complicated than a plain old PC. Networking products can be split into two main categories, switches and routers. Routers determine the most efficient path for everything from streaming videos to e-mails to instant messages. Cisco dominates that segment with a market share north of 70%.
PUSH TO COMMODITIZE. Routers are more expensive and have a higher capacity. Big telecommunications companies, Internet-service providers, and large companies use routers to control flows of data on their networks. In that segment, Cisco is less dominant. Increasingly, businesses are also using these devices to provide phone services over the Internet and to protect corporate networks from hackers.
A router or switch usually has a specialized operating system designed to route traffic running inside a customized piece of hardware that's filled with integrated circuits. Some, such as those from Juniper Networks (JNPR
), run on Unix operating-system software. Cisco uses an operating system called IOS that it built from scratch decades ago.
As more and more routers and switches go into corporate offices, the push for cheap alternatives based on open-source software is likely to pick up steam. "The driver behind Linux is the same as the driver behind open-source routing. As soon as something becomes ubiquitous, it gets much easier to commoditize it. And that's what most [customers] want," says Tom Nolle, CEO of network-infrastructure consultancy CIMI Corp. in Voorhees, N.J.CHEAPER ALTERNATIVE. As always, cost is a driving force. In the U.S., 1.5 million business sites route data that work with common Internet protocols, Nolle says. The average data rate these business sites support is less than 200 kilobytes per second, and they control that with gear that commonly costs thousands of dollars. The average consumer-broadband connection, by comparison, is over 800 kilobits. "You can look at those numbers and say a consumer router costs $79," says Nolle. "How long is it before routers for these 1.5 million sites cost $79?"
XORP is aimed straight at that possibility. It's an open-source version of software like Cisco's IOS that can run on plain-vanilla PCs for less strenuous tasks in a network. In time, Ghosh hopes XORP will work with networking chips and integrated circuits designed specifically for more powerful data routing and built by big semiconductor companies.
While XORP's no-cost price tag is certainly attractive, Ghosh believes what will really win adherents is the added flexibility it affords network engineers. "If you decide you want to add a new piece of software for something like security or e-commerce on a router, you can't. You have to go with what's on the router. If you're running a XORP router you can do whatever you like," Ghosh says.
PATIENCE REQUIRED. Cisco appears vulnerable to an open-source threat over the long haul. Chip giant Intel, which already makes silicon packages meant for networking, would love to supply makers of switches and routers with generic chips and circuit boards, thus displacing the customized integrated-circuit designs used by Cisco.
Since many companies already use switching and routing technology, XORP could draw skills from a large body of programmers interested in seeing it succeed. "You'll see people using the open-source software because they might want to build their own [technology] for their particular needs," says Stephen Mock, vice-president for marketing at IP Infusion, which builds routing software and also maintains an open-source software routing effort called Project Zebra. "To run something like that on a Cisco router, even if you're a major carrier like France Telecom, you may have to wait two years until Cisco puts it in the code base,"
If all that sounds familiar, it should -- a similar dynamic has driven the rise of Linux.
PRICE WARS? None of this is to say Cisco is about to be mown down by an open-source onslaught. Unlike operating-system makers such as Sun Microsystems (SUNW
) and Microsoft, Cisco has been careful to make its products adhere to strict industry standards that ensure networking products from different companies can easily work together. And thanks to low-cost competition from the likes of the Chinese company Huawei, Cisco has already cut its prices by double-digit percentages over the past three years.
What's more, Cisco is already selling open-source products. Its Linksys subsidiary is the leading maker of networking gear for residential and home-office broadband users. Linksys uses a stripped-down version of Linux as its operating system.
Still, Dell (DELL
), the king of commodity hardware and a huge beneficiary of the open-source movement in servers, is pushing hard to grab low-end market share from Cisco. Since launching its local area network (LAN) switch line in 2002, Dell has taken 3% of the total market.
FUTURE THREAT. Sales of those products grew by 38% year-over-year in 2003, according to Synergy Research. Competition from Linux lovers such as Dell could be a huge impetus for the development of cheap hardware to go with the open-source networking software.
None of this will happen overnight. But a one-two punch from low-cost open-source routing hardware and software could eventually become a major drag on Cisco's thriving business. Salkever is technology editor at Businessweek Online