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AI World Conference & Expo · Boston, MA · December 11-13, 2017

Posts Tagged ‘Corporate Issues’

Cisco held its annual user conference, Cisco Live, last week under the cool but sunny skies of San Francisco. This Live was the 25th Cisco user event (formerly know as Networks) and the largest to date with an estimated 25,000 in attendance and hundreds of thousands attending over the web. Before I was an analyst, I attended Networkers as a way of sharing experiences with other network professionals, as well as learning about what’s new in the world of Cisco and how it might benefit my company as well as my own career. As an analyst, I look at the company through a different lens, but the interaction with the audience was just as or more valuable when I was an IT professional.

Cisco CEO John Chambers gestures to the audience during his keynote speech at the annual Consumer Electronics Show (CES) in Las Vegas

As is the case with all large tech vendors, there’s no single point to take away from an event like this, but rather a number highlights based on what you’re looking for. To me, here were my key takeaways.

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This week, Cisco Live! kicks off in San Francisco. Live! is Cisco’s annual global user conference and it’s the place to be for anyone who wants to learn more about Cisco, or just networking trends in general. Formerly known as Networkers, the show has steadily increased in size as Cisco has grown from a small network pure-play to a massive vendor that now deals in many adjacent markets, such as servers, collaboration, cloud, security and mobility.

Recently though, Cisco’s business model and CEO have come under attack as the threat of SDNs loom large on the horizon. It seems not a week goes by that I don’t hear the chatter of how SDNs will commoditize the traditional network since the perception is that the world is embracing pure software solutions on commodity infrastructure.

My opinion is that this fear is highly over-rated. In fact, the commoditization of the network is something that’s been rumored and discussed for the past 20 years, but it’s never happened. My thesis is that most of the struggles that Cisco has faced over the past few years have been more product transition and global macro-oriented than anything, and this past quarter seems to have supported that.

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In the movie “Back to the Future,” Dr. Emmet Brown changed the world when he fell off his toilet and hit his head on the sink and the vision of the “flux capacitor” came to him. The flux capacitor was the technology that allowed Emmet Brown to build his DeLorean-based time machine that skewed the existing space-time continuum.

For Juniper’s new CEO, Shaygan Kheradpir, a similar skewing of the space-time continuum was required when he was hired. In the past few years, the company’s stock price had jumped around and the momentum of many of Juniper’s products had been inconsistent. A change was certainly needed.

Luckily for Shaygan, no fall off the toilet was required for his inspiration. Instead, he took a look back at what made the company successful in the past and is trying to resurrect that culture. This week, Juniper held its annual industry analyst conference, and it was the first time Mr. Kheradpir addressed the analyst community and articulated his vision of where the company is going. During the Q&A portion of the event, Shaygan discussed bringing back a culture of co-creation with Juniper’s customers to do some unique things with the network.

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Why do customers pay a premium for Cisco? My research shows that Cisco owns about 75% of switching share but only about 55% of port share, showing Cisco’s obvious revenue per port advantage over everyone else. Why does this discrepancy exist? I know some of you will disagree with this, but in general, customers pay up for Cisco infrastructure because it does more stuff faster than competitive products.

One good example of this is the evolution of power over Ethernet (PoE). Years before the PoE standards were ratified, Cisco rolled out its own version of PoE that gave customers PoE capabilities, while the rest of the industry was arguing in the standards bodies. Cisco got a huge, early-mover advantage by having a solution two years ahead of the field. Then, when the standard was ratified, Cisco supported it.

Cisco has maintained this advantage as remains the only vendor with 60W POE today. There are many, many examples of this. EIGRP is a faster, better protocol than RIP; for years Skinny had more features than SIP; EtherChannel was great for port aggregation, and the list goes on. Some vendors scream “vendor lock in” and “proprietary,” but the fact is that Cisco supports all the standards. But customers prefer the Cisco version since it does more.

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The networking industry has certainly gone ga-ga over the topic of software defined networks (SDN). Before SDNs were all the rage, network transformation had already begun with the use of fabrics. The rise of SDNs certainly took the media focus away from fabrics and that caused many vendors to shift their marketing messages as well.

However, one of the vendors that has been fairly consistent with the value of a fabric is data center specialist Brocade, and its strategy seems to be working.

When Lloyd Carney took over as CEO of the company last year, Brocade stopped trying to be all things to all people and focused on the areas where Brocade’s value proposition would resonate most. In fact, in the fall of 2013, I had the chance to meet up with Mr. Carney at the company’s channel event in New Orleans. He told me with no uncertainty that if the company didn’t have a shot of being one of the top three vendors in a market, then it shouldn’t be in that space. During his keynote, he talked at length about fabrics and the value the technology could provide to large data centers and service providers.

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This week, Cisco held its annual Cisco Live Europe Event in Milan. At the show, the company introduced a number of new products, including the Cisco APIC (Application Policy Infrastructure Controller) Enterprise Module that brings the benefits of software defined networks to the WAN and access edge. This announcement follows on the heels of its November launch, where Cisco announced the long-awaited acquisition of Insieme and unveiled the APIC controller for the data center.

The focus on the access edge and WAN is an interesting move for Cisco, as almost the entire SDN market has pointed their guns at the data center. Why? Well the data center has been through a tremendous amount of change. Private cloud, virtualization, NFV, more applications and other trends have made the data center a veritable cornucopia of changes that puts a heavy emphasis on the network. Now the network needs to be more agile, flexible and dynamic. Hence the intense focus from the vendor community.

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