Summary
You can actually hear those old 'network equipment' roots at Cisco wrapping around and strangling the neck of Cisco's potential in new markets.
Analysis
After over 30 years in high-tech and twenty-five patents I feel confident in my judgement that Cisco has excellent technology. They also have superb testing and packaging. Who can argue with their past numbers? If anyone can deliver a winning infrastructure, Cisco can.
The world of the Internet and data centers is shifting at a staggering pace. Cisco helped accelerate the shift by alienating HP and IBM when they announced their new enterprise servers and their Unified Computing System.
But, the shift is far more than who is an equipment vendor, a software vendor and a systems integrator. Companies like HP want to do it all and do it well. That is why HP bought EDS. To become the management layer of their customers' technology assets. Once you manage it, you can replace it with your own technologies.
In the SMB space, Dell is doing the same thing with its alliance with ATT and its ProManage offering. The combo, if properly executed, could provide a superb new area of dominance for Dell. Because Dell will manage the infrastructure not just sell the equipment.
Almost all software companies, either publicly or privately, are talking about creating versions of their products that are 'good enough' and that function in the cloud. Oracle is doing Fusion (time will tell if Oracle can succeed at segmenting its massive applications). The goal is to lower the cost of entry and snag new customers. Once snagged, they are largely owned. And Software as a Service and Cloud Computing are the perfect ways to control the destiny of your customer base.
If Cisco wants to compete against HP, IBM and others in their own back yards then Cisco needs to get on the same evolutionary roadmap. It is not just about selling servers, de-depulication, storage, etc. It is about actually providing and CONTROLLING the future of the infrastructure of the customers.
Components to provide the infrastructure of the cloud will commoditize over time. Maybe a short period of time. Competition is fierce, is growing meaner by the hour and is accelerating the commoditization. IBM and now HP understand that it isn't enough to sell equipment. You have to own the customer's infrastructure, manage it, deploy it, replace it. Microsoft new that in the software space 20 years ago.
Cisco probably doesn't want to compete against potential customers like Amazon in the cloud computing space. Eventually Cisco will have to compete against the Cloud as a Service providers...because Cisco's former partners and now their competitors are already doing so.
