Last week, Cisco turned away from one of its most important-at-the-time market-expanding initiatives when it sold Linksys off to Belkin. It was the latest in a long string of retreats from the consumer space, the market sector that’s clearly the largest. Some think that the retreat was a bad idea, but I’m not sure that’s the case, and I think that a Cisco acquisition also made last week demonstrates how Cisco now sees its future.
Consumer broadband was clearly on a roll when Cisco bought Linksys, and at the time it was certainly a useful acquisition, but I think there was one fundamental question that Cisco needed to answer when they made the decision to buy Linksys; “What next?” The problem with home routers and DSL modems is that they’re invisible. Some carrier support people told me a couple years ago that most users with network problems couldn’t even find the devices to see if they were plugged in or turned on. Here’s a Marketing 101 question for you: “What features differentiate an invisible device?” That should have been a Cisco question. They needed to immediately make the home network the hub of VISIBLE services. They didn’t do that, and so the devices commoditized. At this point, it’s too late to get a do-over, so you may as well cut your losses, which Cisco is doing.
The thing is, the notion of “visible services” is still valid. Now, though, the focus of those visible services is inside the network—the cloud. Furthermore, this notion of visible services is combining with the explosion in the number of on-network devices and the mobility of those devices to create a network of bewildering potential complexity. Repeating a quote by Larry Page on the Google earnings call, “We are living in uncharted territory”. Darn straight, and “uncharted” is only a step away from “prohibitively expensive”.
Cisco says it wants to be an IT company, but that’s a little white lie. They want to be a network company with ownership of the increasingly large market space created by the intersection of the network and IT. They want to manage the complexity of that intersection, to operationalize it, to exploit it as a platform for creating carrier revenue and business productivity benefits.
The key element here is a different vision of network services, something that makes the network a direct partner of the application and not just a fabric that is presumed to be in place. That latter vision disconnects the network from direct application-driven benefits, which goes back to that invisibility problem. I think Cisco’s SDN strategy is aimed at creating, in onePK, a set of APIs to provide easy application control of network behavior. They’re taking the notion “software-defined” in SDN seriously.
The next element is a necessary offshoot of the first. If you are going to give applications better access to network services, you have to operationalize those services to meet application specifications, not fob off management to the applications. The network has to be a lot more autonomous, and some of that can be accomplished by having service management elements running off those same APIs, some by collecting better data on network behavior, and some by introducing new controllable aspects of networking. You can see a lot of Cisco’s recent M&A in these requirements, including its latest pick-up of self-optimizing-network player Intucell.
The remaining piece of Cisco’s plan to dominate the IT/network intersection is the implementation of SDN principles INSIDE the network and not just at the API boundary. I’ve said from the first that there are only two ways to “define” an SDN; from the bottom with new forwarding principles and a connecting protocol (OpenFlow) or from the top as a set of network services to applications and the cloud that offer better control over network behavior. Cisco was smart by being the first of the vendors to adopt the second option, but whether you start at the top or the bottom you’ve got to cover the waterfront eventually.
For Cisco, there’s another truth. Whatever their SDN is, it’s still invisible, still plumbing. While onePK is a credible link between the cloud and SDN, there’s still the question of what’s in the cloud, what experiences and productivity gains are driving the investment. What do you see when you look upward from onePK? Remember the Beatles’ song “Imagine”. “Above us, only sky.” That’s a nice image for a song but it’s not going to cut it for the cloud, and those cloud applications that consumers want are the target Cisco still needs to hit. Other competitors don’t have to look as aggressively to the cloud for TAM as Cisco, and so the real question this week is not whether Cisco fleshes in a bit of the middle of its SDN strategy, but whether it starts to stake out a position in building those VISIBLE features—in the cloud.