Peter Christy

Cisco Rolls On

We had a number of interesting briefings from Cisco recently. Maybe we're just getting older (undeniable fact) but it's really exhausting to try and keep up with Cisco innovation, and from time to time you wish they would get smug and self-contented and just back down for a while. One briefing was about the empowered branch (every possible gizmo for your ISR router you could hope for). The second was about the Campus network fabric. We're told that CMO Sue Bostrom is working hard to make Cisco focus more on the value proposition and less on the feeds and speeds when marketing is done. Can't come a minute too soon if you ask us. The Campus fabric announcement is a great example: Cisco improved the switch software so pairs of switches could share state and be managed as a single switch. That seems to have been quite an engineering accomplishment. But the impact to the customer is simple and dramatic because all of a sudden standby switches can share load and you get a 2X cost-performance improvement. You would think that would be on slide #1; not the case. And to add insult to injury Cisco calls this switch "virtualization" because that's the term used in the network community, as if "virtualization" wasn't overloaded enough already. Since we doubt that Cisco will slow down innovation and engineering anytime soon we're rooting for Sue's team to simplify the explanations so our aging heads won't hurt so much (or in this case should it be "routing"?)

Virtualization (and financial jitters)

The frothiness in VMW and GOOG stock has to make you wonder if we learned anything during the dot com bubble or not (seems not). RVBD recently got an unpleasant Wall Street haircut for no apparently good reason other than a partial return to investment fundamentals. VMW and GOOG float above all that. Since VMW is now valued at roughly $40B and parent EMC at $47B if you do the math since EMC owns 90% of VMW, the market doesn't value the rest of EMC very much (to be fair the market knows that EMC can't just go and liquidate the position). The froth in virtualization places an intense and not very pleasant light on Microsoft and exactly where Viridian is (or isn't). There is no shortage of grim stories if they are to be believed. Microsoft should (in my opinion at least) get the Nobel Prize in Software for having collapsed all their operating systems down to a single code base, but now if you reflect on the consequences, there is high pressure to get Windows Server 2008 (the operating system previous known as "Longhorn") out, and pressure to release Vista SP1 (the likely trigger for real enterprise uptake) and in the middle of that you have the Viridian team trying to ram intimate hypervisor code right into the middle of the code base. Thank goodness I don't manage software development anymore! Anyway, if you talk to customers they all will look at Viridian when it finally shows up (a) because (remember) virtualization is all about Windows primarily and (b) it will be free and free is a lot cheaper than what VMW charges today. Or maybe VMW will conspire with private equity and do a hostile leveraged buyout of EMC, or even Microsoft J.

Web 2.0 Comes into Focus

(Or maybe it was just a little stroke). We've been skeptical about the real business behind Web 2.0 but over time it appears a little more real. Cisco probably is an ideal test to look at. Chambers believes in eating the dog food and then helping customers from that "been there, done that" perspective. Furthermore John thinks that network-enabled collaboration will be the next big economic boost. Most importantly Cisco is deeply into the concept (collaboration dog food), having created twenty strategic thrusts which wouldn't be possible without a lot of collaboration to bring together world-wide teams (that's a hideous over simplification but probably captures the basic idea). It's in this context that the potential for "Web 2.0" should be considered. The good news is that it seems real and potentially revolutionary (don't have room for the details but that's the conclusion). The bad news is that the value of Web 2.0 seems to depend to a large degree on understanding the need for organizational transformation, something that ain't easy and that Cisco has been tinkering with for a decade now. And if that weren't bad enough ask a compliance officer what they think of Web 2.0 and user constructed mashups for building business applications. It's hard enough to transform corporate ERP and wire in all the employees but that seems to be easy compared to really embracing Web 2.0. So: neat stuff but organizationally challenging. Hopefully Cisco will really succeed and in doing so light the fire under the followers.