According to Cisco Systems Inc. head honcho John Chambers, Cisco is currently in transition, shifting from a switching and router vendor that provides the enterprise networking backbone to an IT supplier that offers communications and collaboration services.
“I’m proud to be a plumber,” Chambers said at the annual Cisco Networkers Forum in Las Vegas last month. The user conference attracted 10,000 customers, partners and analysts.
“However, the [network] plumbing is moving beyond transport to providing applications.” He predicted a 200 per cent jump in enterprise workloads on networks within two years due to the ramped-up use of video technology and bandwidth requirements.
More specifically, Chambers outlined Cisco’s telepresence initiative. “Up to 40 to 50 per cent of productivity gains will be via collaboration,” Chambers said. The emergence of enterprise telepresence — which combines video, voice, data and mobility on the network — will be the network infrastructure of the very near future, he predicted.
One of the company’s advanced technology goals over the next three to five years, Chambers added, is building an intelligent information network that would combine both business and technology architectures.
“The next-generation network will be the platform for all forms of communication and IT,” he said.
The initial Cisco telepresence technology won’t be available until later this year. According to Chambers, unified communications and collaboration is a prospective US$10 billion business for Cisco. It’s no longer about core routing and switching, he noted, and more about each node on the network having intelligence.
Telepresence will be a key part of Cisco’s overall Unified Communications architecture, he said, which also includes IP telephony, text messaging, application collaboration and desktop videoconferencing.
In this respect, Cisco is not unlike its network rivals in developing new systems that merge various kinds of communications on the IP network. This collaboration approach means that all enterprise applications will be readily available on all devices at all times, via storage virtualization and processing. For example, Microsoft Corp. late last month unveiled its UM roadmap, touting voice, video and messaging capabilities that it expects to ship in the first half of 2007. The Microsoft applications will work atop a company’s IP-based communications base.
Brownlee Thomas, principal analyst in Forrester’s telecom and networks research group, said that while the telepresence concept is viable, it’s still a few years away. But overall, Cisco’s strategy around the network as a platform and delivering applications anywhere on the pipeline makes sense. “It’s not mainstream...but as an enterprise, you definitely need to pay close attention to this because it’s going to make the difference in how competitive you are,” Thomas said.
Vendors like Microsoft, Cisco and Nortel are playing in the collaboration and integration space because they understand that it’s potentially a hot market, Thomas said. Enterprises should at least understand the technology, and start looking at possibly implementing it by 2007, she offered. “It’s an immature technology, but does that mean you wait until it grows up?”
How these technologies will be priced remains to be seen. At Networkers, Chambers noted that Cisco is currently reviewing the way IOS and other software images are bundled with its switches and routers. Cisco says this move — which would initially cost organizations more — actually provides more flexibility in purchasing and configuring Cisco hardware. “We need to evolve our software strategy,” Chambers said.
Wu Zhou, an analyst at IDC, offered that Chambers may be pushing Cisco to become more of a software provider than a hardware provider and taking a similar approach to Cisco competitor Avaya Inc., which recently created a new software-based pricing model. Such an approach makes sense for companies selling data and voice network convergence products because of the complexities in setting up VoIP and the reliance of such systems on software, she said.
Cisco’s services business is a “very profitable” part of its overall business, even under the current structure of allowing customers to get software upgrades packaged with maintenance services, Zhou noted. Cisco has been able to leverage what it learns from one customer’s problems to share with other customers, which has helped lower costs, she said.
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