The US tech giant changes focus with the launch of its integrated internet protocol system, which can process all business-related data functions, writes Quinn Norton
Historically, Cisco was the switch and router company, but under the guidance of chief executive and president John Chambers, it sees itself taking over all the many functions of the modern network, in addition to the infrastructure.
For the past few years, the networking giant has been taking the simple switches and routers that made the core of its early business and smartened them up. The question is, can the master of the stupid network bring us a smart network that we'll all want?
NGN, their "next-generation network" of internet protocol (IP) is their latest and greatest attempt to move more functionality from the computers and devices they connect, into the network they control. "The network is the platform" is the company's new mantra, and a complex and expensive platform it is.
But how do you sell a network that acts as a platform? For Cisco's senior executives, this is simple.
Businesses and consumers will merge the many networks they deal with now - traditional telephony run on dedicated hardware, satellite connections run by hired providers, cable to the home, radio, or other information infrastructure - for a simpler IP network that handles all their information-driven utilities.
Chambers's strategy will take what were once Cisco's most generic and effective switches and routers in the networking world and turn them into "network appliances" with the ability to slot in new features and manage their data packets.
It's part of Cisco's quest to avoid commoditisation: the process by which even the most complex technological services become simple and interchangeable, and the bane of companies looking for high margins.
Perhaps most surprising is the number of applications viewed as PC or service provider functions that Cisco is looking to include in its vision of network intelligence. Applications such as filtering malware and spam, parental controls, content and bandwidth monitoring are being built into the routers and switches that once dumbly passed network traffic.
A smart network might eliminate bad content, without the need for human intervention. Chambers says: "If you need human intervention, it's too late. A virus can spread in 10 seconds."
Cisco sees these as value-added services that they can pass on to service providers, who can use this to distinguish themselves and generate more revenue on fee-based services.
The danger is that the more complex a computing platform becomes, the more vulnerable it is to security flaws and failures. If Cisco routers were as complicated and as multi-functional as Microsoft Windows, would they also be as vulnerable? Will a network that is also a platform be as insecure as the platform often is?
Chambers addresses this with an argument about tightly integrated architecture. But then, so did Microsoft, originally. #
Many of their clientele, including service providers and enterprise, making up a hefty 73 per cent of Cisco's total business, are worried about the security and redundancy issues of "single-sourcing" - in other words, getting all their equipment from Cisco.
All Cisco networks could be vulnerable to failures or security flaws to which more heterogeneous environments are resilient.
To address the security concerns, Cisco has been on an acquisition binge and roughly 15 of the 100 companies they've acquired have been security companies. "Security," Chambers says, "is still the main issue for consumers."
Mike Volpi, senior vice-president for service providers and router technology, admits it will be difficult for Cisco to get above 70 per cent market penetration given the single-sourcing concern - although that figure is still optimistic.
The competition for market share changes according to geographic region. Companies such as Siemens in Europe, Hitachi in Japan, Juniper and Alcatel in the US will remain alternatives to Cisco's unified network.
Cisco acquires new technology companies to enter new markets and increasingly, it takes those new technologies and looks for a way to package them into its network equipment. It has a solid record for acquisitions - many have been more successful as part of Cisco, and a 90 per cent retention rate of acquired employees shows their expertise at mergers, a rarity in this industry. The recently acquired Linksys demonstrates how Cisco is moving into a market that's different to the massive infrastructural concerns of the enterprise and major service providers.
Chambers makes it clear that Cisco is happy with its acquisition of Linksys and his long-term strategy seems to be to market its products as the "go to" brand for small business integration.
Linksys has grown into a billion dollar business under Cisco and, with the spread of broadband around the world, Linksys' IP-based phones are positioned to be the little brother to Cisco's grander voice over internet protocol (VoIP) play. Cisco's VoIP offering has already been successful, replacing 10,000 normal business phones a month.
Linksys is at the forefront of the fixed-phone and mobile convergence Cisco hopes to usher in and for its consumers - it means being able to reach employees anywhere, and on the cheap.
Cisco VoIP calls follow a preset phone path, ringing around possible locations until the intended receiver picks up. To accomplish that requires a mix of landline, VoIP, and 802.11 VoIP handsets and a smart system driving them to ring in order.
Cisco worked out the details, and added video conferencing and even unified billing systems to it all, if you want to charge. It's an example of what's possible on the more reliable all IP network.
VoIP, though, is a competitive field. As Cisco acquires the know-how to build these complex services, will the business community buy it and does it really matter? Cisco sells the routers and switches that pass IP, so even if they lose in a particular IP application, they win as the IP network gets bigger.
"For us," says Chambers, "more bits is better."
