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C-Scape 2008 Signals a Year of Transformation for Cisco and its Customers

Yesterday Cisco kicked off its annual global analyst conference, known as C-Scape. The feature event is always the keynote by CEO John Chambers as well as some humorous but practical demonstration. This year, this was followed by an effective but not spectacular presentation from CTO Padmasaree Warrior on the concept of building the next generation Internet.First, I want to say that I've been in meetings with Padmasaree before and seen her present and she seemed much more comfortable this morning than she has in the past. Charlie Giancarlo set a very high bar, one which she hasn't reached yet, but it was nice to see her in more of a comfort zone.

Now, on to the conference itself. As is typical of Chambers keynotes, this year's conference talked a lot about market transitions and how Cisco catches them before anyone else, gains market leadership, and away they go. This year's keynote was no different, with the market transitions that Cisco is trying to catch being collaboration using Web 2.0 tools, visual networking and virtualization/cloud computing.

Collaboration: Chambers talked a lot about (and has been talking about for some time) the new world of work and the use of wikis, blogs, social networking and other collaboration tools. As proof of value, he uses Cisco as an example that has moved from a traditional command and control approach to one based on councils and boards where teams are quickly assembled based on skills and then disbanded when the initiative is over. The approach has some merit but I'm still skeptical as to how much more effective it will be long term. I can see the "council"-based approach being highly political, with people being brought into councils and boards based on who they know and their willingness to agree with the leader rather than their status as a real expert in a market. Also, the integration of systems is critical, as the ability find experts is only as good as the information in the systems and the workers' willingness to keep that up to date. One of the metrics that Chambers did give that was meaningful was that under a command and control environment, Cisco could focus on a single initiative per year, while council-based allowed for 2 per year, and the goal for a totally collaborative Cisco is 26 per year. Time will tell how successful the 26 per year are, though.

Visual networking. Video is an obvious adjacent market for Cisco. Video drives network traffic like no application ever has and could be the "silver bullet" Cisco is looking for to increase network traffic and drive another network upgrade cycle. The challenge for Cisco is helping their customers understand all the various forms of video and how to best leverage them. The other challenge for Cisco for driving video adoption is being able to use video for company-to-company communications. TelePresence is great, but its use is very limited for most companies if it only allows internal employees to communicate. Video of all forms is coming, though, and Cisco's put themselves in a very strong market position.

Virtualization and cloud computing. This is a not-so-obvious adjacent market for Cisco if you think of virtualization as nothing more than making one server look like five. The long term vision of virtualization, though, is to have an environment where the entire compute infrastructure becomes virtual pools that are delivered to whatever application may need them. So what's the network's role in this? For a number of different reasons, data center managers would like to be able to mobilize these virtual workloads. When this happens, all of the network policies and settings need to be able to move along with them to ensure the virtual services perform effectively. That puts a heavy emphasis on network design. Additionally, through its unified computing vision, Cisco is positioning the network as the thing that will orchestrate and manage delivery of these virtual services. As Warrior outlined in her presentation, eventually all of these virtual services will be clouds that are connected, creating an "Internet of connected clouds," again putting the network in a strategic position, which flips the current thought process of the network being non strategic. I'm actually a big believer in the virtualization/cloud/unified computing model. I think our industry is on the precipice of another wave of change in computing that will be as impactful as the move from mainframe to client server or client server to Internet computing. There are other vendors that have a similar vision, but Cisco is the only network company that's thinking about this problem.

One of the really interesting things to think about is how the competitive landscape for Cisco changes over the next wave of Cisco. Many of its current partners such as IBM, HP and Microsoft become significant competitors. Cisco will also face a wave of new competitors including Polycom, Google, Yahoo, Skype and many other companies Cisco hasn't had to compete with before. This new wave of competitors is a lot stronger than its historical competitive base. Cisco is looking to transform into an IT vendor rather than a networking vendor and will exit 2009 looking significantly different than the current Cisco--as so will the competitive landscape. Cisco has historically executed as well as can be expected on almost every initiative they have embarked on; however, you have to wonder if they've bitten off more they can chew.