Zeus Kerravala
Zeus Kerravala is the founder and principal analyst with ZK Research. Kerravala provides a mix of tactical advice to help his...
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Zeus Kerravala | December 11, 2012 |


For Cisco, the Future Starts Tomorrow--Which Starts Here

For Cisco, the Future Starts Tomorrow--Which Starts Here CEO John Chambers is betting that the Internet of Everything is the market transition that will enable the network to become a platform.

CEO John Chambers is betting that the Internet of Everything is the market transition that will enable the network to become a platform.

I attended Cisco's Financial Analyst Summit last Friday, and the company had its normal few hours of talking about numbers, competitive landscape and strategy. In between a couple of sessions though, Cisco showed a preview of a new ad campaign that started this Monday.

The ad campaign revolves around the concept of the "Internet of Everything," and is based on the premise that when you live in a world where everything is connected, it significantly changes the way we work, live, learn and play. While much of the tech industry is focused on wireless and mobility, the vision of the Internet of Everything is focused on pervasive connectivity both wireless and wired.

If you watch the ad on YouTube (or you've seen it on TV), Cisco puts together vignettes that discuss how things change when trees can talk to networks, which will talk to scientists about climate change; or how ambulances will talk to patient records which will talk to doctors about saving lives. While this might seem very forward looking, there are many simple examples of where this already exists today. Cisco's EnergyWise architecture, which allows buildings to turn lights on and off and move elevators when a user activates networks, is a good example of how this might work.

The Internet of Everything just takes this to a much, much larger scale. In a way, it's a network-centric version of IBM's "Building a Better Planet" ad campaign. However you choose to look at it, between wireless technology, machine to machine and cloud computing services, we're on the verge of living in a world where everything is connected, prompting Cisco to end the ad with "#Tomorrow Starts Here".

During the keynote at the financial analyst conference, Cisco CEO John Chambers highlighted how the Internet of Everything is the market transition that will enable the network to become a platform. Those who have followed Cisco over the past five years know that the company has been positioning the network as a platform over that time period. The question that statement invoked, though, was: A platform for what? And while Cisco could point to a few examples of what a network platform could be used for, the Internet of Everything is the first broad market transition where every company can benefit from the network being a platform.

To capitalize on this vision, Cisco needs to change as a company. While the core of what Cisco does is and always will be networking, the company must help customers understand how to leverage the network and the Internet of Everything, and this means moving up the stack, at least from a solution perspective.

Cisco understands this and is confident in its ability to execute on it. In fact, the company is so confident that Chambers boldly proclaimed that Cisco's 3-5 year plan is to become the #1 IT vendor (measured by value to the enterprise and not total revenue).

The path to #1 will be led by Cisco significantly expanding its services business. In addition to scaling its current services business, Cisco will alter its current services strategy with the following:

* Scale current service offerings through increasing the attach rates in commercial accounts and growing the services in emerging countries.

* Expand the reach of current services by increasing the number of "transformational accounts", expanding remote infrastructure management, adding a competitive migration program and extending its "as a service" offerings.

* Platform and Analytics. While Cisco isn't going to be a Hadoop-like Big Data Analytics vendor, the company can provide analytics on the network information it has. Cisco will use this as part of its Connected Industries initiatives.

* Consulting that includes thought leadership services that can help customers realize the value of the network platform and Internet of Everything. Comparing them to IBM again, IBM provides solutions to business problems that revolve around computing, Cisco will provide solutions that include services, which leverage the network.

* Internet of Everything exchanges for Cisco to design, build and deliver industry solutions.

The risk to Cisco is that any expansion of its already sizeable services business could be viewed as a threat to its current channel partners that rely on the services to make money. I chatted with Cisco COO Gary Moore about this and he and I discussed the careful balancing act Cisco has had to do between its services and what its partners can and should do. I can tell you the need to not step on its partner's toes is well understood and I think any concern here isn't warranted. Cisco has managed the delicate balancing act for over a decade and there's no reason to assume that it will mess things up now.

For Cisco, the future really is now. The fact that we are moving into this era where everything is connected has put Cisco in a great position to improve its position as an IT vendor. The fact that Dell and HP seem to be imploding by themselves just adds an exclamation point to the Cisco opportunity. For Cisco the path to being an IT services company begins Tomorrow--which starts here.


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