To: Frank A. Coluccio who wrote (11012 ) 4/18/2001 1:59:07 AM From: elmatador Respond to of 12823 Cisco looks to proprietary metro solution for salvation By Simon Marshall, Total Telecom 17 April 2001 Cisco Systems may have just announced its worst financial figures yet, but it looked on Tuesday to be planning an escape route by the year-end through systems that integrate IP routing and intelligent optical transport, with the promise of reducing costs for service providers. The firm's so-called IP+Optical strategy, which involves enabling routers to signal the metropolitan optical network to provision bandwidth on wavelengths, is not a new concept, but Cisco is now more eager than ever to develop and launch products. "Because of the economic downturn, we now have to concentrate on markets which make us profit," Cisco's optical networking group marketing programs manager Johann Strauss told Total Telecom, referring to the metropolitan area. "Rather than just addressing everything in the market with a general broadband solution, we have to aim for profit. We can bring our customers back into profit by driving down their operating and maintenance costs," he said. Cisco confirmed Tuesday it will cut 17%, or 8,500 staff, and report Q3 profits that fall below forecasts for the second consecutive quarter, a position that makes Cisco's IP+Optical bet crucial to boosting its bottom line and keeping competitors at bay. According to Strauss, while those competitors insist on "overlaying" existing optical networks with IP equipment - making them relatively complex to manage and control - Cisco has taken a different approach. "There's an overlay model and there's an integration model," said Strauss, "and we favor the integration model." This integration approach, which Strauss clearly sees as a competitive differentiator, means upgrading router software and adopting Cisco's Optical Control Plane (OCP) to manage network elements in both the IP and optical transport layers. "We can reduce the number of network management tools compared to Nortel, [because] they're favoring an overlay model," opined Strauss. But there may be a downside. Asked if service providers that already own competitive products, such as Juniper core routers, could use them within Cisco's OCP framework alongside Cisco IP routers, Strauss said "this isn't possible today." Interoperability could become a flaw in Cisco's strategy to profit from its OCP initiative if service providers are forced to install Cisco-only kit, and the Silicon Valley-based vendor has been criticized for a proprietary approach in the past. "These will be proprietary systems for the next two years," admitted Strauss, but said this was necessarily the case because Cisco was leading the way with OCP. It's understood Cisco refers to the system as the "Unified Control Plane" now, rather than use the "Optical" monicker it was originally given, which may reflect its concerns. Strauss claims the first fruits of the IP+Optical strategy will appear in the products of Cisco Powered Network suppliers by the end of this calendar year, although a trial system has already tested successfully at the Optical Fiber Communications show in Anaheim, California. COMENT: I think CSCO is at the momenty pondering how much they will shrink to its natural size. Remember Paul Kennedy explaining us of global overstretch? Empires would expand itself until they were overstreteched, Then they would shrink to its natural size. CSCO is in the process of shrinking to its natural size. First stiops buying new companies. The thrown overboard the ones not immediately needed. Then cutting products that has no future. We know that LAN gear, routers and stuff -the stuff where CSCO came from, obviously will remamin in the smaller CSCO. The battle now is to see what is kept and what would be jettisoned in this shrinking. People within CSCO would try hard to keep their parts of the empire: broadband wireless, ADSL and Optic+Transport.