SAN JOSE, Calif. – Cisco Systems stands at a strategic juncture. I believe it may have hit its peak, and if it does not change direction it could see a slow decline from its leadership in communications.
I see Cisco pinched between two trends—software-defined networking (SDN) and the Internet of Things (IoT). I believe it currently has the wrong long-term strategy for both.
On one side are all the hungry forces of SDN. The Googles and other data center giants along with Cisco’s core enterprise and carrier customers long for a path to simpler, less costly networking.
These customers are allied with some of Cisco’s competitors who want to disrupt the networking giant. Together these vendors and users are pushing for a virtualized comms layer controlled by open C-language programs runs on mainstream x86 servers. They are like a rebel hoard with a thousand spears trying to bring down the mighty castle Cisco has built out of its ASICs and IOS software.
Cisco has defensively erected its ONE initiative. The idea is to embrace SDN at a rudimentary level but continue to deliver value-added features through ASICs and IOS, only accessible through its proprietary APIs.
It’s a reasonable strategy for an incumbent. Ericsson has adopted a similar position.
Long term, I think it’s a losing game. Ultimately free Linux overwhelms $70-a-copy Microsoft Windows. Simpler, good enough technology wins out over value-added proprietary bits.
Hewlett-Packard appears to be with the SDN crowd, and it should be. If the market moves toward managing comms through its servers, it wins. If proprietary features on switches and routers maintain a hold, it can play there too.
I think in the end the game goes to the company that is the first and best to embrace the openness of the SDN vision. Cisco is not poised to be that vendor.
Time to change direction.