Cisco

What’s the hoopla over at Juniper? It better be a data center strategy!

Juniper Networks is planning a huge technology announcement next week. So big that the company has invited press to a gala Wednesday night and then a day packed with a press conference in the morning and executive break-out interviews all afternoon Thursday.

The company has pre-briefed every analyst in sight and clearly plied them with drinks, money or … something … because none of them will drop the dime on the announcement either.

What is clear is this: This announcement had better be data center related. After all, last February, Juniper announced it was working on the Stratus Project – a data center initiative meant to combine storage, compute, switching and networking all on Converged Enhanced Ethernet (CEE). But the announcement included no specific product details or actual release dates.

It appeared that Stratus was a slap back at Cisco, which “leaked” news of its upcoming blade server and Cisco Unified Computing data center architecture just a month earlier.

The thing is, Cisco followed swiftly (in March) with actual product announcements and release dates.

Juniper’s non-announcement frustrated those in the networking community so much that one reader on NetworkWorld’s Cisco Subnet Blog, wrote in:

“Juniper doesn’t have anything or they would be releasing it! They got caught holding their imaginations and have no where to turn. ‘I have a super special architecture that will crush all others, will blow your mind, run all OS’s, run terabit Ethernet, and make coffee in the morning. Due out 2013.’ Give me a break, its like little children on the playground.”

That may have been a bit harsh, but it’s time for Juniper to come forth with a solid data center plan if it really wants to be competitive. Since Juniper said that Stratus was meant to be an architecture that would be built on a number of vendor partnerships in combination with its existing technology, this very cryptic Juniper press invitation does lead one to believe the hoopla is, in fact, about the data center after all.

“This will be the company’s most significant event in their 12-year history and will be hosted by Juniper’s CEO, Kevin Johnson. The company will be unveiling new hardware and software products, new partnerships and new go-to-market programs as part of the event.”

 Juniper set the stage, now it’s time to put on the show. We’ll be there to let you know if that actually happens this time around.

Cisco launches blade switch just weeks after HP ProCurve

Two weeks ago HP ProCurve launched a new line of blade switches, the 6120XG and the 6120G/XG, which plug into the same blade enclosures as HP’s BladeSystem servers. These switches were meant to replace the switches which HP OEMs from a third party, most likely Blade Network Technologies’ BNT switches.

Now Cisco has launched the Nexus 4000, a blade switch which also fits inside a blade server enclosure. Like other switches in the Nexus family, the Nexus 4000 runs the NX-OS operating system, which Cisco designed for converging LANs and storage-area networks (SANs). The switch is also designed to support converged, data center Ethernet, the pre-standard technology that will allow data centers to run server and storage traffic across the same wire.

Although the Nexus 4000 is part of Cisco’s Nexus switch family, Cisco is only selling it through OEM channels, specifically blade server vendors. These are the same server vendors that Cisco now competes against with its Unified Computing System, a line of data center technologies which includes blade servers.  It remains to be seen how enthusiastic vendors like IBM and Dell will be about selling a switch from a server competitor with their blade server systems.  I doubt HP will be interested, given that it just launched a similar product.

Hey network engineers, you’re not doing enough! Try facilities management too

It is ironic that right as Gartner released research showing engineers are managing 20% to 30% more network components than they were last year, networking pros are about to receive even more on their plates by way of facilities management … of all things.

This week the IP for Smart Objects (IPSO) Alliance announced a certification and compliance program to ensure vendors release IP-based smart objects that interoperate. You may be thinking, what the h&%ll do I care about smart objects? What is a smart object?

Believe me, you should care. Smart objects are sensors and actuators that run in a range of applications from smart grid management to building automation. The IPSO alliance is hoping to accelerate the use of IP in these devices. That means that enterprise lighting systems, for example, can be networked into the LAN. Among the many use scenarios, facilities management systems will communicate to network managers when a system is wasting power without actual use. It is feasible that these systems could save enterprises as much money as greening data centers.

On a larger scale, IP-based energy and building management means that utilities will implement smart meters in enterprises and homes that will warn home base of outages and waste. These smart meters will be part of larger IP networks laid over utility grids. In addition to enterprise and consumer savings, regional governments will spend less, enabling them to direct money to other crucial projects.

Cisco has already moved in on the action with its EnergyWise software initiative. EnergyWise is embedded into Catalyst switches and used to control not only power within the network, but also on PCs and building control systems. So it’s no surprise that Cisco is a member of the IPSO Alliance, along with Ericsson, SAP, Sun Microsystems and Google.

All of this innovation may be exciting, but for network engineers it means the need to gain more skills (possibly even certifications), more responsibility and assuming an even greater role in every enterprise. As this happens, they will have to demand the manpower and support necessary to expand in this new direction.

Brocade continues to exploit friction between Cisco and systems vendors

It’s debatable just how much Cisco’s move into the server market with its launch of the Unified Computing System (UCS) has truly soured the networking giant’s strategic alliances with IBM and Dell, but Brocade has wasted no time in exploiting whatever separation may arise as a result.

Cisco’s UCS strategy banks on the need for tight integration between servers, storage and networks in next-generation data centers, particularly those that use a unified fabric, such as converged Ethernet, to transport all forms of data center traffic on a single medium. Cisco see an opportunity here, believing that many enterprises will want to get all their data center equipment from a single vendor in order to build such a highly-integrated infrastructure.

Of course, as part of its plan to exploit this potential market, Cisco has introduced its own line of servers, putting it into direct competition with long time allies in the data center, such as Dell, HP and IBM.

Whatever rift that forms between Cisco and these server vendors is an opportunity for Cisco’s networking competitors.

In the year since the storage networking company Brocade bought Foundry Networks, it has been leveraging its existing partnerships with leading IT equipment vendors to expand the market for its newly acquired Ethernet switching business. Apparently vendors like IBM and Dell are only too eager to find an alternative networking partner.

Earlier this year IBM announced a major expansion to its OEM relationship with Brocade. Big Blue had been selling IBM-branded storage networking gear from Brocade for several years, but in the new deal it expanded that OEM relationship to include a broad range of former Foundry switches and routers.

And now yesterday Dell announced that it is expanding its own OEM relationship with Brocade, from a storage networking channel to a broad line of Brocade’s Ethernet products.

Dell also announced it would start reselling products from IT automation vendor Scalent Systems. This is all part of an “Efficient Enterprise” offering Dell plans to unload on the market toward the end of 2009. As a result of these new OEM deals, Dell can now offer enterprises servers, storage, networks and IT automation software in one deal, enabling enterprises to buy an integrated data center solution from one vendor. IBM is making a similar move with its OEM agreements and its consulting arm. HP is moving swiftly in this direction, too, but it has the advantage of possessing its own, rapidly growing network equipment division in ProCurve.

Arista continues to drain Cisco’s brain

Arista Networks, a networking start-up that sells high-end Ethernet switches for cloud computing environments, continues to hire former Cisco Systems executives.  At the top is CEO Jayshree Ullal, who joined the company last year after leaving her role as a senior vice president in charge of Cisco’s $10 billion data center, switching and services business.

On her blog today, Ullal revealed two new hires, both former Cisco executives.

Doug Gourlay has joined the company as vice president of market, just a couple months after leaving his role as Cisco’s vice president of data center marketing.

Anshul Sadana has joined Arista as the company’s vice president of customer and systems engineering. Sadana has been with Arista since 2007, but Ullal is just announcing his appointment as an engineering VP. Before he came to Arista, Sadana headed up Cisco’s development team for the Catalyst 4500 and 4900 product lines and also managed strategic customer relations.

Is Cisco killing your network? End-of-life blues

No, Cisco isn’t killing your network, but quite a few of its products reached end-of-sale/end-of-life status this month, as Amy Kucharik noted on our sister blog, Changing the Channel.  Some customers (and channel partners) are peeved that so many Cisco products are being retired this summer, especially in a tough economy where forklift rip-and-replace efforts carry too hefty a price tag for IT departments that have seen their budgets slashed.

As one anonymous Cisco partner told Barbara Darrow, senior news director for SearchITChannel.com, many Cisco customers will be dumping their old Cisco gear on eBay to recoup some of the cost of upgrading to new switches and routers:

Given the cost of a Cisco Catalyst switch, if I’m a gutted and hamstrung midsized business right now, thanks to the economy, and my choice is to spend $800 for an EOL’d switch in a manufacturer’s sealed box on eBay versus paying $2,200 for one from a reseller, guess what I’d do?

And there may end up being a lot of end-of-life Catalyst 6500 switches on the gray market soon. Just take a look at the Catalyst models that will be discontinued over the next few years.

How will Cisco’s core businesses fare as it expands?

In the early days of Barack Obama’s presidency, a new meme emerged among the pundits who make their living assembling straw men and tearing them down again on the various cable news networks. Is Obama trying to do too much? Shouldn’t he be focusing on the economy and leave things like health-care reform, etc., to another president?

I found this collective hand-wringing about a president working too hard kind of laughable. So, perhaps I will be guilty of doing the same thing when I ponder here whether Cisco is biting off more than it can chew.

Earlier this year CEO John Chambers made it clear that Cisco plans to move into 30 to 50 new markets over the next year or so. Chambers has preached that smart companies set themselves up in economic downturns to take over market share in new and existing markets when the economy rebounds. There is plenty of truth to that notion, I have no doubt. But I also wonder how much Cisco’s ambitions are driven by stock price.

The heady days of the dotcom boom, when Cisco’s stock price reached past $77, are gone and might as well be forgotten. The tech bubble overvalued even the best companies back then. But in more recent years, Cisco’s stock price has been rather stagnant. It passed $33 a share back in late 2007, but it has been hovering around $18-$23 since then. The best way to put some momentum back in a stock price is to grow revenue and increase profitability. Cisco is well into its campaign to reduce expenses by $1 billion this year. But, as Chambers noted, it is also moving rapidly into new markets, both adjacent and not so adjacent.

Unified Computing, Cisco’s foray into servers, has the potential to make Cisco a lot of money in an adjacent market, but it also puts it in direct competition with old friends like IBM and HP. Some experts have speculated that Cisco’s move to compete with IBM and HP in the server market could hurt it’s bread & butter switching and routing business, since HP and IBM’s consulting divisions have often resold quite a bit of Cisco’s networking gear.

Acquisitions like Pure Digital, maker of the Flip video camera, have pushed Cisco into new, not-so-adjacent markets. The Flip camera is a consumer device, and most analysts will tell you that Cisco has not quite found the recipe for success in the consumer market. Perhaps that’s why Cisco is trying to position the Flip as an enterprise device, talking up the notion that video is the future of enterprise communications and that consumer and enterprise technologies are converging. Cisco went so far as to hand out a free Flip to every channel partner who attended the recent Cisco Partner Summit in Boston.

And this brings me to my central question about Cisco’s future. How will Cisco’s ambitious plans to expand affect its ability to maintain its strong, often dominant, positions in the core markets it sells into? For instance, I am struck by this passage from colleague Michael Morisy’s analysis of Cisco and Juniper’s recent struggles in the WAN optimization market.  When asked why Cisco  and its WAAS product have slipped against competition from Blue Coat, Riverbed and Expand, a Cisco representative had this to say:

“It’s partly due to the fact that the UCS [Unified Computing System] platform was announced [that quarter], and a lot of our sales teams have been focused on that,” said Michael Leonard, a marketing manager with Cisco. “WAAS is sold by the same data center sales teams that sell Nexus and UCS, so that’s part of what we figure it is.”

Leonard said he was optimistic that, with the sales teams seeing the drop in an otherwise fast growing segment, Cisco would continue to remain a strong player in the WAN optimization market.

“That’s something we’re addressing. How that will turn out, I guess we’ll see,” he said. “I expect WAAS to come back. We have a lot of customer demand, and I’m seeing a lot of deals.”

This is an extraordinary statement. Cisco has stumbled in WAN optimization, in part, because sales resources have been focused on selling Nexus (a new line of data center switches that Cisco has positioned as a cousin to, not a replacement of, its venerable Catalyst switches) and the Unified Computing System, a new product line that Cisco announced just a few months ago.  Now Cisco will no doubt tell you that this is just a hiccup, that Cisco has plenty of resources available to tackle all of the markets it competes in today or will compete in tomorrow. But the company is also trimming $1 billion from its operations and laying off a hundreds of employees. Is Cisco stretching itself too thin? Its competitors argue that is the case. But it’s really up to customers and channel partners to make that determination for themselves. They will speak with their wallets.

UPDATE:

I have been informed that in the quotes by Cisco’s Leonard above, he is referring to an overlay sales force that is responsible for kickstarting new Cisco products, not the company’s general enterprise sales organization.

Nortel out, Cisco in, as 2012 London Olympics sponsor

As E.T. would say, “Ouch.”

Nortel received another black eye this week when the organizers of the 2012 London Summer Olympics announced that it has replaced the bankrupt Canadian company with Cisco as technology sponsor and official supplier of network infrastructure for the games.  The move will cost Olympic organizers $20 million in revenue because Cisco is signing on as a lower-tier sponsor. Nortel was replaced because of the uncertainty surrounding the company.

Nortel has a similar deal in place with the 2010 winter games in Vancouver, but that deal appears to be safe because buildout of the network is 85% completed.

Cisco matching ProCurve prices

The rivalry between HP ProCurve and Cisco continues to heat up. According to a leaked email from ProCurve, Cisco has been telling its channel partners to match any price that ProCurve offers.

ProCurve appears to be welcoming this. According to the email, ProCurve will publicize Cisco’s pricing scheme. The rationale? ProCurve figures that as more Cisco customers hear about this tactic, more of them will come to ProCurve for a price quote. At the very least, this will give ProCurve a chance to show Cisco customers what it has to offer. It will also cost Cisco a lot of money, since ProCurve generally offers much lower prices.

So the key takeaway here is - if you’re a Cisco customer and you’re looking to refresh part of your network, go talk to ProCurve and see what kind of price it can offer. Even if you decide to stick with Cisco, you’ll at least have a chance at getting a better price from your incumbent vendor.

Wireless LAN spending is down, 802.11n spending is up

Market analyst firm Dell’Oro published a 1st quarter assessment of the wireless LAN market which showed that a severe 11% drop in enterprise spending from the 1st quarter of last year and a 15% drop from the 4th quarter of 2008.

Dell’Oro says Cisco’s huge share shrank a little, from 63.1% to 60% from a year earlier. HP ProCurve doubled its share from 1.7% to 3.1%, no doubt thanks to its acquisition of WLAN vendor Colubris. Aruba’s share is 8.1% and Motorola’s is 5.9%.

Despite the overall poor showing for WLAN, 802.11n technology sales grew 4% from the 4th quarter of last year, according to a report from PCWorld.  and 802.11n technology now makes up the majority of the WLAN sales for the first time ever.

Cisco’s domination in the wireless LAN market remains intact, but it’s interesting to see their share shrink just a little bit. In fact, looking at the numbers, the amount of market share Cisco lost equals ProCurve’s ENTIRE market share.

The WLAN market remains extremely crowded and some of the largest network infrastructure vendors not named Cisco (Brocade, Juniper) lack a true WLAN product line. I expect to see some more consolidation before the recession ends.