I hate to blog about vendors two days in a row, but it’s clear that significant stuff is happening at Cisco, who as a market leader in networking is also a major indicator (and driver) of industry trends. Yesterday I talked about their cloud transformation and how it seemed to be hedging against network commoditization. Today we have a chip vendor buy and their Digital Network Architecture announcement. It all seems to me to tell the same story.
The chip deal was Cisco’s second M&A announcement this week. This one involves Leaba Networks, a company with a lot of skill in building big complex communications chips. There are a lot of engineers who tell me that this sort of technology would be essential in building a cheap “tunnel switch” and also in creating high-performance electrical-layer stuff to groom optical paths.
If you believe that operators don’t want to buy expensive switches and routers any more, then there are only three possible reactions. First, hunker down on your product line, push your salespeople to the point of hemorrhage, and hope. Second, you could get out of the big expensive box business, perhaps into software instances of either. Third, you could try to make the price/performance on your stuff a lot better. My vote is that Cisco has picked Door Number Three here.
Actually the Leaba deal could position Cisco for the second option too. I think the logical evolution of carrier networking is to virtual-wire underlayment as a means of simplifying L2/L3 almost to the point of invisibility. While Cisco might not like that, the alternative of having somebody come along and do it to Cisco instead doesn’t seem attractive.
All of this stuff seems aimed at the network operator, and none of it really addresses another logical conclusion that you could draw about the network of the future. If everything inside is commoditizing to virtual wires, then how do you sustain differentiation and margins even if you have great technology? I’ve said all along that operations/management was the key and I think that’s true. So why isn’t Cisco pushing that?
Perhaps they are, with DNA, which in this context is that Digital Network Architecture I’ve already mentioned. Cisco has a history of three-letter technology architectures of course, but DNA looks interesting for what it seems to be doing, which is to create a kind of higher-layer element that not only could easily be shifted to the operator side, it even includes some operator-oriented technology already.
DNA’s principles could have been drafted for the carrier market. There are five (remember when Cisco always had five phases—apparently that’s the magic marketing number) and they are (quoting the Cisco release) “Virtualize everything to give organizations freedom of choice to run any service anywhere, independent of the underlying platform – physical or virtual, on premise or in the cloud. Designed for automation to make networks and services on those networks easy to deploy, manage and maintain – fundamentally changing the approach to network management. Pervasive analytics to provide insights on the operation of the network, IT infrastructure and the business – information that only the network can provide. Service management delivered from the cloud to unify policy and orchestration across the network – enabling the agility of cloud with the security and control of on premises solutions. Open, extensible and programmable at every layer – Integrating Cisco and 3rd party technology, open API’s and a developer platform, to support a rich ecosystem of network-enabled applications.”
Why then push it out for the enterprise? Well, to start with, Cisco can’t afford to be shilling one flavor of the future to the sellers of services in that future and another to the buyer. If you’re going to try to do something transformational you need to reap every buck you can from the revolutionary upside because as an incumbent you’re going to for sure reap the downside. But it’s also true that the carrier space is not where Cisco wants to lead the transformation to next-gen anything because they have too much at stake. Enterprises offer Cisco a more controllable Petrie dish.
It’s also true that the enterprise cares less about technology and more about results, which plays to Cisco’s evolutionary approach overall. Enterprise NFV, for example, is about being able to host features/functions anywhere, meaning generally on Cisco devices. It’s a kind of super-vCPE approach, and it wouldn’t work well in a carrier environment where you’d quickly run out of real estate. For the enterprise it’s a good idea.
But the big value in an enterprise DNA push is that you can control the market by controlling the buyer. Whatever Cisco can do to frame demand will force operators to consider Cisco when framing supply. And by sticking a virtualization layer into the mix, Cisco can frame demand in such a way that it doesn’t force big changes (read big moves to trash existing Cisco gear) on the enterprise side. Would we be surprised to find that same element in the supply-side version of DNA?
“Let’s go to bed, said Sleepyhead—Let’s stay awhile said Slow. Put on the pot said Greedy Gut, we’ll eat before we go!” Networking has been in conflict among these goals for a decade now. We have those who want to move aggressively—to doing nothing different. We have those who just want to be comfortable, and those who want to drain the current market before looking for new waterholes. Cisco doesn’t want to be any more aggressive than its competitors—perhaps less aggressive in fact. Cisco also knows how vulnerable it is now, as everyone is trying to spend less on networking. Some sort of transformation is essential or we collapse into a hype black hole and commoditization.
Cisco’s remedy is cynical but useful nevertheless. They have uncovered a basic truth, one that everybody probably knows and nobody talks about. Virtualization has to start from the top because you can only abstract from top to bottom, not the other way around. Further, once you abstract the top, what the bottom looks like becomes invisible. Build an intent model of NaaS and equip it with the service features you want, then realize the model on your current equipment and adjust the realization at the pace of your own development.
DNA lets the sense of SDN and NFV work its way into networks at the enterprise level, and thus both change the nature of demand and through it the nature of supply—or so they hope. That’s its strength, and its weakness is that other vendors who really want to do something in either area can simply follow the Cisco path and accelerate the transformation of how NaaS is recognized. Cisco is hoping that this won’t happen and they might be right; it’s not like Cisco’s competitors have been accomplishing astonishing feats of positioning up to now.
Cisco is changing, under new leadership, from a company that denied the future to perhaps a company that’s determined to exploit the future as safely as possible. That may not sound like much of a change, and it may not be, but if Cisco follows a top-down pathway to virtualization as earnestly as DNA suggests it might, and if it adds in some insightful cloud capabilities, it could be a real contender in both IT and networking, even if the future is as tumultuous as it might turn out to be.