Cisco conference may resolve CTO/CDO questions

SAN JOSE, Calif — Cisco Systems opens its annual C-Scape conference for industry analysts and reporters here Tuesday at a time of internal and external upheaval.

Externally, uncertainty about the U.S. economy has some economists worrying it will tip into recession, which could result in lower sales of Cisco products.

In its most recent report IDC foresees a dampening of IT spending worldwide next year, although to a merely moderate 5.5 to 6 per cent over 2007. In November, CEO John Chambers said the company was hit by “dramatic decreases” in orders from U.S. banks. Internally, the company – as usual – will have to absorb its usual number of annual acquisitions, including three of the most recent: Securent, a developer of network access software, Cognio, which makes wireless spectrum analysis products and Navini Networks, a maker of mobile WiMax equipment Executives will be called upon to explain their expectations for the economy and these new units.

But arguably the topic most will want to hear more about will be last week’s announcement of a shake-up in what the company calls the Cisco Development Organization.

It has added four more units within this organization: an access network and services group responsible for routers, switches, wireless and security products; a data centre, switching and services group responsible for enterprise-class products; a software group responsible for network, management and unified communications and collaboration technologies; and a consumer and small business group.

In making the announcement, the company said the new units will help it deliver integrated products and solutions.

They will join groups dedicated to service provider technology, emerging technologies, global government solutions and research. The senior vice-presidents of these eight units will report to executive vice-president and chief development officer Charlie Giancarlo.

This follows on the hiring, also last week, of Padmarsee Warrior from Motorola to be Cisco’s new chief technology officer.

In a pre-conference interview, Forrester Research analyst Robert Whiteley said he wants to hear an explanation of the difference is between a CTO and a CDO. Beyond that, he said he wants to learn how the management changes will position Cisco for the next generation wave of innovation and growth.

“I follow Cisco at the product level and they’re doing fine,” he said. There’s hardly any markets where they’re not the top three provider, and if they’re not it’s a matter of time.” Still, it does have challenges.

“Cisco’s approaching a (US)$40 billion run-rate,” he said, “and they’ve doing that mostly selling hardware. Meanwhile IT companies of comparative size, such as Microsoft, have done it by diversifying in hardware, software and services.

“Cisco has never really had a software business, and they’ve never had an aggressive services business,” said Whitely. “So for them to continue their aggressive growth I think they have to become a more relevant IT provider.” By that he means regularly appearing on the top five lists of vendors CIOs buy from, alongside Microsoft and IBM.

One of Cisco’s strategies is to convince IT buyers that the networks they build around its products are not merely conduits for data but a platform for building business processes.

“But there’s still some debate as to how ready Cisco and other network providers are for fulfilling that role,” said Whiteley.

One problem Cisco has is a lack of software developer support compared to giants like Oracle and Microsoft. Whiteley feels that without a “breakthough software acquisition” – say, for example, buying BEA – it won’t attract that support.

One area to watch is Cisco’s push into unified communications and collaboration, and its associated partnership with Microsoft.

Interestingly, Microsoft chose Nortel as its networking partner to launch Office Communications Server 2007. However, Whiteley sees the Cisco-Microsoft alliance as going well. “But,” he added, “you have to realize Microsoft is a multi-headed beast with many fiefdoms. And Cisco is a multi-headed beast with many fiefdoms. So the companies can be working quite nicely together and have different divisions that are in direct competition with each other.”

In short, there will be no shortage of questions to ask executives at this year’s conference. And there’s only two days.

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Howard Solomon
Howard Solomon
Currently a freelance writer, I'm the former editor of and Computing Canada. An IT journalist since 1997, I've written for several of ITWC's sister publications including and Computer Dealer News. Before that I was a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times. I can be reached at hsolomon [@]

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