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 | July 22, 2013 |


Cisco Or Microsoft? Who Wins the Line-of-Business War?

Cisco Or Microsoft? Who Wins the Line-of-Business War? Developer-led or services-led? Microsoft should get an early advantage, but the services strategy by Cisco should create longer, more sustainable value,

Developer-led or services-led? Microsoft should get an early advantage, but the services strategy by Cisco should create longer, more sustainable value,

Last month I wrote a blog outlining how the line-of-business manager holds the key to winning the Cisco versus Microsoft war. A number of you commented that this was obvious and both companies are already doing it. I'll agree that this is something both companies are trying to do, but neither is doing a great job. Microsoft is a company with high appeal to IT pros and Cisco to network managers, with high brand familiarity to line of business managers but low appeal beyond this.

When breaking down the tactics of both companies, there are some similarities in their approaches, but there are also some stark differences. The common point between the two companies is the cloud. The cloud has been a game changer in the go-to-market tactics for software vendors, as it has allowed the SaaS providers to sell directly to lines of business with no IT involvement at all.

When it comes to the cloud, Microsoft has a bevvy of communications and collaboration services that could drive UC sales, including Skype, Lync On Line, Office 365, Share Point on line and cloud Exchange. Cisco has only WebEx as a direct-to-business offering, so it certainly appears that Microsoft has a leg up. However, Cisco is focused on being a cloud enabler to its reseller partners and telco service providers through its Hosted Collaboration Solution (HCS).

The multitude of services gives Microsoft an early edge when it comes to cloud, but the channel-enablement model for Cisco can create much greater scale than a direct to line-of-business model. The key is ensuring its resellers are fully trained in selling to line-of-business, which isn't a simple undertaking. Bottom line: With regard to cloud, Microsoft has a faster route to market, but Cisco's should give it an advantage over time.

Putting cloud aside, Cisco and Microsoft have markedly different approaches in selling to lines of business. For Microsoft, the key lies in its developer community. Developers build applications that business people use and buy. Many of these applications use Microsoft as an underlying technology without the purchaser really even being aware of that fact. Microsoft gets pulled through with really no involvement from Microsoft, providing a low- to no-cost sales model for the company. The only down side is that the application brand often overshadows the underlying brand.

Microsoft has made a living off selling products, many of them sub-par, into business because of its developer relationships. Does anyone really think Microsoft gained monopoly-like share with desktop operating systems because of quality of product and ease of use? Hardly. Windows became the de facto standard for developers because of the quality of the developer program. Microsoft does a good job of meeting the needs of its large software vendors, but does an even better job of making sure those millions of small ISVs have access to Microsoft platforms and developer support.

I've been surprised there hasn't been a stronger developer push by Microsoft with Lync yet. Maybe the folks in Redmond feel it's too early to be aggressive with developers to use Lync? Whatever the reason, I would have thought that Microsoft would have more Lync-based applications than it does today.

Cisco has been trying to build its own "Cisco Developer Network" (CDN) for the better part of a decade. The company kicked off this initiative way back in the early 2000s when it bought a company called Metreos that had some interesting VoIP applications and a slick developer interface. Back then, the program was known as CTDP, Cisco Technology Developer Program, and was run by VoIP people, not individuals that understand software and how to build a developer environment. Since then the program has undergone a number of facelifts and Cisco appears to have some real software people running the group, so there is some potential.

Given Cisco's huge share in UC, any developer looking to build UC applications will likely look to Cisco. However, no one does developer like Microsoft does developer, and the short-term opportunity for developer influence goes to Microsoft.

As important as developer influence in Cisco's line of business success is the services organization. Cisco has always had a small services group that catered to the top handful of Cisco customers. Moving forward, as Cisco sets its target on becoming the most strategic IT vendor, the services role will have the biggest influence on whether Cisco achieves this goal.

With regards to UC, as this market transitions away from products to platforms, services will play a significant role. Cisco's services plays a role similar to IBM services. IBM's consulting group works with its top tier customers to understand how to solve business problems through compute-centric solutions. Cisco services works with its customers to create solutions through networking- and communications-related products. As more and more organizations look to leverage UC strategically, I would expect Cisco services to target its top-tier customers. The key for Cisco then is to take these solutions and push them down through its channel for scale and market share gains.

Microsoft does have a services group, but it pales in comparison to Cisco's. In many ways, the group is there to support the application and developer efforts, which makes sense since Microsoft is a developer-led company.

So developer-led or services-led? Microsoft should get an early advantage, as many in-house developers will look to Lync; but the services strategy by Cisco should create longer, more sustainable value, as it has for IBM. The key for Microsoft is being able to adapt its developer environment faster as market trends change. Obviously, compute is moving away from the traditional desktop to mobile clients and the cloud, and there are far more single-use, purpose-built applications being built in the consumer world. I think Microsoft's Developer Network is oriented towards more old-school developers.

The key for Cisco is having the patience to work with its lead customers and find those unique, game-changing applications and use cases that it can then push down into the channel. It's the right strategy for Cisco, but it might take a bit more time to bear some fruit.

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