Today begins with more negative comments on Cisco, and it’s hard not to wonder at the way a company that was once a model of tech success (“I want to be the next Cisco”) is now seen as a model of a transition failure. The idea of breaking Cisco up into pieces so that valuable parts can grow faster than “legacy” parts has been raised again on the Street (and in the media). There’s a lot of questions on whether Cisco can recover its past glory. That’s the wrong question, and if competitors for example keep asking about the past they’re going to be looking back on it from their own virtual retirements.
The challenge Cisco faces is embodied in (but, I hasten to point out, not caused by) the notion of “OpenFlow”. This is a concept of switch and router control that definitively separates the forwarding and control planes of network devices, centralizing the latter. The separation concept is far from new, and truth be told the notion of central network control arguably goes back to IBM’s SNA. Thus, there’s nothing conceptually revolutionary about OpenFlow. There may well be something commercially new, though, and even revolutionary.
Focus on the “Open” part here for a moment. We’ve long had open-source software in networking, and the Berkeley Software Distribution (BSD) component of UNIX was the source of much of the networking software during the 80s and even early 90s. That includes software running in “routers” or network nodes. What OpenFlow is doing is making open-source fashionable again in networking, at a time when pushing bits as a differentiator is highly unfashionable. I’ve cataloged the issues that have created the bit-pushing problem before, but those issues have created a largely unfocused angst up to now. Two factors have changed that, and Cisco’s fall is the first. Make no mistake, when the market incumbent is in trouble, the market is in trouble.
The second factor is the Open Networking Foundation. This is a non-profit formed in March and sponsored by Deutsche Telekom, Facebook, Google, Microsoft, Verizon, and Yahoo. Others have joined (including Cisco) since. The goal of ONF is to promote what it calls “Software-Defined Networks”, and OpenFlow is the explicit example of such a network. There’s going to be a fair blizzard of OpenFlow stuff at Interop, and that shows that there are commercial legs behind the idea. That’s critical because to convert unfocused angst into commercial drive, you have to be able to buy something.
This is especially relevant now because Alcatel-Lucent, in contrast to Cisco, presented good numbers for the quarter. They’re also gaining in strategic influence in my surveys; it looks like they’ll turn in their best performance of the last five years in the Spring 2011 sweep now underway. The question is whether Alcatel-Lucent will try to (somewhat belatedly) value its own service-layer strategy and thus preempt some or all of the business value and technical momentum of ONF and OpenFlow. They are not members of ONF either. With the combination of a strong lightRadio-created RAN position and one of the two only semi-articulated service-layer strategies in the market (Application Enablement), they could be a player still.
So is this also the path for Cisco? I doubt it, simply because Cisco has never been a strong supporter of standards because of their erosive impact on margins. But it’s a dilemma for Cisco because it suggests (not yet proves) that there will be uncontrollable commoditization at the router/switching level. Not supporting the instrument of change doesn’t undermine change, it undermines you. On the other hand, you don’t want to push a market trend against your own interests. Cisco is a member of ONF, but whether to try to adopt the idea or to try to manipulate it isn’t clear at this juncture. Might OpenFlow be the path to Cisco’s future? No. But it might be something that shows Cisco that there is a different path to its resurgence than it might think.