Cisco’s annual event kicked off, and while all these events aren’t necessarily a window into the strategic future of Cisco, this one might well be. Cisco came out more strongly in favor of the notion of strategy and architecture than I’d ever heard them. It’s too early to say that this change is going to be fundamental, meaning that it will drive the future of Cisco (and maybe that of networking), but there’s reason for hope.
Our view of the service provider space is that the operators are stuck in bit neutral and looking for someone to save them. That salvation will mean adopting a wide-ranging set of changes that add up to what was once called “transformation”. Those changes will have to conform to an overall vision, which of course is what an architecture represents. The question has always been where that vision would come from.
Vendors, both network and IT, have seemed to favor a future where the operator drove the strategic architecture bus. On the surface that seems contradictory to the point of crazy; when has a vendor wanted a buyer to say what they need? This time, though, the problem has been twofold. First, vendors truthfully don’t seem to have had a strategic vision. Second, any transformation to the future risks incumbencies and sales of the present. Those barriers have stood for almost five years according to our surveys. Are they falling now?
Maybe. In the cloud space, for example, Cisco has introduced a series of products that provide what’s arguably the first cloud-specific vision of the network. By allowing router instances (hosted on servers) to be effectively part of each cloud tenancy, the Cisco cloud approach completes the picture of the public cloud as a virtual extension of the enterprise.
There are other ways to do this sort of thing, but they’re not integrated and they aren’t from the market leader, likely to be providing real hardware routers to both the providers and the enterprise cloud customers. Enterprises and service providers are historically reluctant to jump into new things when they’re expected to assemble all the pieces themselves, and so Cisco’s architecture drive is important for the cloud. One example does not a market shift make (or even demonstrate), but I’m heartened by this in no small part because there’s no vendor in a better position to make architecture matter than Cisco, and it needs to matter.
For Cisco, one key benefit of all of this could be a seat closer to the head of the strategic table, where favors in the sense of higher margins are handed out. For network vendors overall, the major problem isn’t that nobody will buy gear but that the competitive value proposition for network equipment is harder to establish and so price competition results. You don’t want to be moving into lower margins; the Street doesn’t like it.
Competitor Juniper, who had their analyst day on the same day as the start of Cisco’s event, confirmed that Verizon was a customer for their PTX and also said they’d be offering a smaller version of their data center fabric. Both could have been strong-ish stories, but in neither case did Juniper draw any compelling Cisco-like architectural pictures. The PTX, like all fiber-core strategies, is inherently dilutive for routing. Small fabrics are an oxymoron because it’s not likely that small applications generate enough layers of switching to need fabric connectivity. Top-of-rack is a good market if it’s your servers in your rack. Both PTX and QFabric needed to be sung in the chorus of the cloud, and they weren’t—not at launch, not since then, not now.
Regulators in Europe are calling “consolidation” of the carrier space the hope for the future of the network operators. Most, of course, would consider being consolidated kind of like contracting a fatal disease. So would equipment vendors. And they should, because consolidation is the symptom of a market with no possible differentiation other than price. With all that’s happening in networking in general and the cloud in particular, it’s truly pathetic to be giving up at this point.