The Soul of Cisco

S. Schuchart

Summary Bullets:

• Hardware and software are not an either/or operation, but a balance that requires investment, time, and planning.

• Silicon One plus a cloud-friendly IOS XR7, and heavy silicon photonics investments give Cisco a new lease on the Internet For the Future

There have been a lot of changes and announcements at Cisco recently, some of them surprising. It brings up the question of who Cisco really is today? Some would tell you that Cisco is one of the old guard, a legacy IT vendor desperate to keep its market dominance in the face of younger, smaller, and more agile competitors. However, close examination of the evidence reveals something else, not a hidebound legacy vendor, but a survivor changing to match the market.

On December 11th, Cisco had its “Internet for the Future” launch event in San Francisco. This event was unusual, because for the first time in a long time, it featured at its core, a new from-the-ground-up chip family called Cisco Silicon One. It also featured Cisco, for the first time, touting the possibility of becoming a silicon supplier. Cisco outlined the option to sell silicon from the Cisco Silicon One family to anyone, including competitors. Add in all the silicon photonics (pluggable optics for Cisco and third-parties), an open cloud-friendly network operating system (IOS-XR7) capable of running on white box or Cisco hardware and you have some built-in contradictions to what would be considered traditional Cisco.

So, what does this all mean about Cisco? Are they turning their backs on all of the proclamations of being a software-focused company? Critics would say that this announcement proves that Cisco is a hardware company, period. This is a simplistic and reductive argument that fails to consider any nuance or the reality of producing infrastructure. Instead of viewing software and hardware as rivals for the spotlight, they should be viewed as climbers helping each other reach the summit with each trading the lead. Cisco’s investment into silicon shouldn’t be viewed as a return to hardware centricity, but as an investment in an area where it can provide extra value for partners and customers. Software is supreme right now, but things are cyclic, and it is very possible to be software focused and still produce advantages in hardware, especially when you consider physical realities like power consumption, heat, bandwidth, and the chip architecture. None of this diminishes Cisco’s commitment to software nor does it signal a Cisco or market move to hardware-first. In fact, there are whole business units outside of networking, namely security and collaboration, that have moved rapidly and wholesale to software-as-a-service as a business model.

The leading criticism of long time IT vendors is that they are doomed by the innovator’s dilemma, too large to be agile, too ossified to change, and too addicted to revenue to take any real chances. At one time, the thought of Cisco allowing third-party OS on its hardware, selling its silicon to any taker, or even selling its networking operating system (IOS-XR7 in this case) to others would have been blasphemy of the highest order. It does represent a change in how Cisco conducts itself and is a clear break from the Cisco of the past.

Cisco is proving that it is cognizant of changes in the market and it is evolving how it does business. From disaggregated software, to subscription, to developer focus with DevNet, to selling optics and chips, these all represent deliberate changes that Cisco has undergone to respond to the market. It has undergone considerable work to shift the selling motion from boxes to solutions, and from the network administrator to the CIO and LoB management. Cisco’s recent reorganizations and internal changes also show that Cisco is changing to match the new realities of the networking infrastructure market.

Cisco is still facing challenges, both from customers who are looking for better pricing on their networking gear and from competitors who still consider Cisco their number one target. The movement of many workloads to the cloud also limits it in the traditional enterprise data center. Lastly, it is still dogged by the general perception of being old and slow. But leading webscale and service providers such as AT&T, Microsoft, and Facebook endorsed this announcement, which lends tremendous weight. A comprehensive look at the company shows that change has been happening at Cisco and the idea that a business practice, product, or direction is sacred has fallen away. Like everyone else, Cisco’s future is not assured, but if trouble comes to Cisco’s doorstep it won’t be due to stagnation and unwillingness to change.

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