EUR 850.00 For Business Accounts Only

Morningstar | Arista's install base growth provides a springboard for its next round of disruptive innovations.

Arista Networks developed an expanding installation base through its focus and execution on software-based networking innovation, and we believe customers will remain loyal to the firm's Extensible Operating System software and peripheral products. Arista's initial growth came from high-frequency trading firms that found value in its low-latency switches and EOS. As an early vendor of 100-gigabit,or Gb, Ethernet switches, continued growth relied on cloud-based data center suppliers yearning for Arista's hardware architecture and EOS software innovation.We think EOS' novelty lies in its single software image that provides a consolidated view of device activity from end to end and its ability to centrally upgrade the entire network. EOS contains leading software-defined networking features while remaining intuitive and fully programmable. Additional software offerings, like CloudVision, expand functionality and interoperability across networks. Bucking industry norms of requiring specific hardware per network function, some Arista switches double as routers after the functionality is unlocked through software licensing. Through software and hardware innovations, our view is that the company is staying true to its goals of driving network productivity and lowering network ownership costs.In our view, cooperative development projects and product customization openness has yielded positive results with customers like large cloud-based companies and enterprises. To expand its customer base beyond cloud-based data center providers, enterprises, service providers, and financial institutions, Arista announced its intention to expand into the campus market. The adjacent move is due to requests from existing customers desiring one software platform across networking locations, and this part of the business will be ramping into fiscal 2020. Even with current customer concentration risk, we respect that Arista is growing alongside key customers and that new ventures have expanded from core competencies. Our opinion is Arista is well-positioned as a pioneer in the new age of software-defined networking and will continue to be a leader in next-generation switches and routers.