Amazon Web Services Inc. may soon challenge Cisco Systems Inc. and other established network equipment makers by bringing its own switches to market, The Information reported today.

The publication cited two people familiar with the matter as saying that the plan is still under consideration. Nonetheless, Wall Street is taking the prospect of AWS entering this market quite seriously. Cisco’s stock dropped over 4 percent on the report, while the shares of rivals such as Juniper Systems Inc. are down as well.

AWS could pose a major threat to networking industry incumbents. Not only does parent company Amazon.com Inc. boasts a long track record of disrupting well-established industries, but it also possesses strong expertise in building data center infrastructure.

Like other major cloud providers, AWS has designed much of the hardware that powers its platform internally. The company places a particular emphasis on cost efficientcy and regularly lowers infrastructure prices in a bid to stay ahead of the competition. According to today’s report, that focus on affordability has carried over to the company’s new networking push.

The tipsters said AWS could price its switches up to 70 to 80 percent lower than comparable hardware from Cisco. They said the devices are based on a white-box design that uses cheap commodity components and includes custom management software with built-in AWS integrations.

The latter feature could prove to be a major differentiator. Most enterprises use cloud infrastructure alongside their on-premises hardware, with AWS the top choice. A switch that can natively integrate with the platform could simplify day-to-day operations for customers.

The cloud giant is reportedly already piloting the hardware with select customers. According to the tipsters, the switches could hit the market within 18 months if AWS decides to press forward with the plan.

Patrick Moorhead, president and principal analyst at Moor Insights & Strategy, said the move makes sense for Amazon because most network switches use the same chipset from Broadcom Inc. and thus can run the same software.

In case the provider were to stage a successful push into the switching market, it might move to target other parts of the data center too. AWS certainly has the necessary infrastructure expertise. Plus, the provider already indirectly competes with established data center suppliers through its cloud platform, which is reducing enterprises’ reliance on in-house equipment.

With reporting from Robert Hof

Photo: SiliconANGLE