Is this a trend or simply someone thinking too hard? Cisco moving out of the core to the edge, where consumers reside? Be nice if CSCO is getting out of SONS's space, but don't bet on it. In any event, things look good for CSCO.
A good article:
whatpc.co.uk
What does the future hold for Cisco?
Cisco has been gradually making some important changes to its business, and as it builds and develops its new direction, it will also be looking to its channel to step up to the new challenges that the new era will bring. Simon Meredith reports
Simon Meredith, CRN 27 Nov 2006
Cisco is undoubtedly one of the most important companies for the channel and it is the undisputed leader in the networking market. Those watching the company will have noticed a succession of product launches starting with the release of the Digital Media System at the end of September, followed by the release of the Unified Communications (UC) for SMEs and the Telepresence ‘Meeting Solution’ in October. As recently as 1 November, Cisco also launched its CRM Connector, which plugs into Microsoft Dynamics software.
What people might not have noticed though is that Cisco has changed its logo, even though it is noticeably different. They may also have missed last month’s report that the company has announced its intent to acquire Orative, a small Californian-based mobile telephony software specialist. However, Wall Street certainly noticed because the company’s stock, which for some time has been going nowhere in particular, started to rise sharply again.
This is not just because the markets like the way that Cisco’s new logo looks. It is also because of the evolution in Cisco’s strategic direction, which this re-positioning and its spate of video and collaboration-related announcements signals. Another acquisition that may have escaped people’s notice earlier this year was Cisco’s purchase of Scientific-Atlanta, a company that specialises in set-top boxes, end-to-end video distribution networks and video systems integration. We are already starting to see the results of that acquisition in the product line, so internally and at a strategic level the re-positioning started some months ago.
The external process to change its market branding will also take place over a lengthy period. Cisco seems to be planning to change perceptions gradually. As the role of the network changes, so will the company’s position. Cisco said that the network is becoming ‘a platform for people to build businesses upon and transform life’s experiences’. In the future, according to the networking giant, there will be much more of a desire and a need for everyone to communicate and collaborate, and this will extend beyond the boundaries of business and into every aspect of the domestic environment. And this is where Cisco wants to dominate next; the consumer sector.
It may happen slowly, but at some point the re-positioning will unquestionably have an impact on all Cisco partners. There will be a series of new products in the pipeline.
Neil Moulton, head of voice sales at Westcon, had no doubt that Cisco can enter these new areas smoothly and successfully.
“Look at the success it has had in the past few years with advanced technologies such as security, VoIP [voice over IP] and video,” he said. “A lot of these technologies are now being brought together into the triple-play piece, and Cisco is wrapping all that up neatly with this ‘human networks’ tagline. That should make it easier for consumers to understand.”
One of the key lines that Cisco has used alongside the launch of Telepresence is ‘enabling the human network by changing the way we live, work, learn and play’. We can expect more of this sort of language from the company in the future.
Mark Wheeler, general manager for networking at distributor Azlan, said that Cisco is getting it right.
“The way we work, live, play and learn will change,” he said. “What Cisco is trying to do now is take the game up to the next level. There will be a lot of opportunities going forward into next year.
“Cisco is established as the global leader in networking, but over the next few months it will become much more than that and start to deliver world-leading technology that improves everyday experiences.”
Cisco is preparing to venture further into the small business and small office/home office (SoHo) markets, and into the consumer world for the first time.
To a significant extent, it is already a player in SME and SoHo markets with its own offerings and those of Linksys, although what happens to this brand now is unclear. Linksys is already a significant brand in the consumer market and it recently claimed to have shipped its 25 millionth router.
But more SME-focused products are emerging from Cisco and there may be a further push into the consumer area. At the time of the Scientific-Atlanta purchase, the company stated that “this acquisition will allow Cisco to offer a world-class, end-to-end data, voice, video, and mobility solution for carrier networks and the digital home”.
So while the move into the small business and SoHo sectors is no surprise, the question many Cisco partners will ask is just how swiftly the company is planning to make the transition into being as relevant in the home as it is in the office, and how this will affect its long-standing partnerships with the channel.
Wheeler said that, if anything, the new direction that Cisco is taking will increase the company’s commitment to its partners.
But while all of this sounds very conceptual at the moment, Cisco is a pragmatic company. It has already set about providing the kind of support and programmes that resellers will need to take these ideas forward.
Wheeler pointed to the company’s recently launched Smart Business Roadmap scheme. This is a methodology designed to help and encourage smaller VARs to understand customer issues before proposing specific technology solutions. It also aims to get customers thinking more strategically about networking and IT before they go ahead and implement systems.
The key element of this is a Discovery Guide. This allows partners to go through the needs and issues with the customer and then score the business on its strengths and weaknesses, thus identifying areas that need to be addressed. The idea is to help SME resellers focus on the
customers’ pain-points and present simple, effective solutions that will address those issues in a way that will protect investment and seed further potential for technology deployment.
“The Smart Business Roadmap promotes the idea of even a small business havin g an IT strategy, something that gives them a foundation that they can build on in the future,” Wheeler said.
However, the Cisco of the future could be very different to the one we know today. The new logo is referred to as ‘the gateway of possibilities’ by the company. It is meant to reflect the extended potential that the company is presenting to the entire market. In the future, Cisco claimed there will be much more of a desire and a need for everyone to communicate and collaborate. This will extend beyond the boundaries of business and into every aspect of the domestic environment, hence its need to penetrate that mindset. How it will do this though is another matter.
The company refused to talk about its specific plans except to say that there will be further developments around the UC product line, and to point out that 13 per cent of its 2006 revenues were invested in R&D. More acquisitions also seem certain, and they are likely to come in the key areas of video, voice and collaboration. But Cisco’s entry into any technology market cannot be ruled out. The only stipulation seems to be that whatever it is, it has to run on the network.
Phil Smith, head of technology and corporate marketing at Cisco Europe, told CRN: “This illustrates perfectly how we are aiming to integrate technologies into the network and video. Just as all forms of data and now voice converged into the network, the same is starting to happen with video. All forms of video will be available on the network and will be transformed to operate in any environment on any device.”
This suggests that Cisco is likely to extend its portfolio beyond those that are directly attached to the network, to truly mobile devices. It has already launched an IP phone, and other types of UC products must surely be on the agenda. The acquisition of Orative gives us a strong indication. Cisco is paying about $31m for this privately-held San Jose-based firm that has only 33 emp loyees and develops software to help mobile phones connect with PC-based telephony systems.
Further confirmation was provided by Keith Humphreys, managing consultant at analyst EuroLAN. He noted that the new Cisco logo has been designed to retain a link with Cisco’s previous image, but also to look good on consumer devices, such as mobile phones and PDAs.
But, according to Smith, the network will remain at the centre of everything Cisco does.
“Cisco is at the heart of a market that is changing the face of networking and is positioned to provide the network as a platform for people to build businesses upon and transform life experiences,” Smith said.
“Our vision is that all information of all types will be available to anyone, anywhere. Data, voice and video will be available at work, at home and on the move.
“However, it should be pointed out that all of these capabilities would not be possible without core networking technology. As such, even though we appear to be branching out into more communicative technologies, the core network will still be at the heart of our business.”
Partners believe that Cisco can maintain its focus on the network while moving into previously uncharted areas.
John Pepper, managing director of Cisco Gold Partner Minx, said: “Using the network as a platform to deliver these advanced technologies is a natural step forward. Cisco has always been comfortable in delivering and achieving the ‘next step forward’ goal.”
Gary Duke, director at Cisco reseller LAN2LAN, said the way Cisco is gradually rolling out new technologies and responding to the market makes sense.
“The move into video is an obvious progression from its very successful voice and IP telephony business,” he said. “Most organisations we talk to are looking to reduce travelling costs and increase efficiency by using innovative technology.”
Pepper added that Cisco is being truly visionary and that its strategy is “a perfect fit for the changes that we are all going to have to make in our lives”.
With the critical state of the global environment being highlighted, Cisco has also got its timing right.
Pepper said: “We are all going to have to be smarter communicators and change our lives to become less carbon hungry. The ability to travel around the globe to attend business conferences and meetings will become more difficult and unfashionable.”
Moulton said that these green issues are becoming genuine considerations in the market.
“These are issues that business people – people who sign off IT projects – face every day,” he said. “The world situation is making it more desirable to use video. In the past it was held back by cost and the difficulty of using it, but there weren’t the same constraints then as there are today.”
The rise of the environmental agenda may indeed play into Cisco’s hands very neatly. Duke said that customers in both the consumer and enterprise markets will respond positively to the company’s approach.
“Clients like to deal with forward-thinking companies that provide a range of product and service offerings to address their current and future needs,” he said. “I do not think Cisco will lose focus on its core markets because it is this business that pays the bills.”
But the company will need to strike a careful balance between achieving the mindshare it will need in the consumer market, while still showing that it is still very relevant in the enterprise, according to Humphreys.
“Cisco will have to work hard to shore up consumer recognition and reposition itself from just being a networking infrastructure provider to being a brand that gives the consumer security and empowerment to bridge the gap between being known by consumers and being liked by consumers,” he said.
And Cisco must be careful not to move too quickly because this would risk devaluing its position in the enterprise and confusing the consumer and its own customer. Humphreys insisted that the Tesco comparison is a serious one.
“Tesco is increasingly moving into global markets,” he said. “Cisco will have to be careful not to dilute its brand.”
This is perhaps why Cisco is moving relatively slowly and carefully and putting itself forward as an innovator and a company that thinks about the bigger picture.
Humphreys said that Cisco has already followed this line of thinking in a previous advertising campaign that talked about the power of the internet to provide information and education for everyone.
“Cisco is using philanthropy to rebuild its brand so that its business, brand and efforts to change all strengthen and enhance each other,” he said. “It is openly promoting its own products, while at the same time promoting the possibility of a better world.”
It is a big idea, but this is what the Cisco re-brand is really all about, according to Wheeler. It is paving the way for a new phase, not only in Cisco’s evolution, but also that of whole technology market.
“It is about the next wave of change and developing an end-to-end story that brings technologies together and makes them work for the customer,” he said.
As Cisco builds and develops its new direction, it will also be looking to its channel to step up to the new challenges that the new era will bring.
As Humphreys pointed out, Cisco will need to look closely at its routes to market and strengthen its position in the retail channel. According to EuroLAN, Cisco has set out requirements that all certified partners will need to meet by the end of 2008. These are intended to equip the channel to sell solutions that provide everything the customer needs from the network, including communication, collaboration and security.
Cisco will be asking resellers to step up to the mark and embrace its new thinking. Those that do may find many opportunities opening up as a consequence, providing that Cisco can get the balance right and preserve the strength of its legacy while moving towards its new vision. |
