Unbundling IOS affects all areas of IT

Upon reading Cisco CEO John Chambers' comments - about decoupling IOS software and maintenance from network hardware - at the company's Networkers User Conference in Las Vegas last month, I realized again how far out of sync the network and IT industries are. Talking to numerous other network infrastructure vendors, I found they all view and support this new industry tactic as a double-edged sword. On the one hand, it is a means to increase revenue and profits for Cisco and any vendor following Cisco's lead. On the other hand, it will let the industry aggressively market and sell competitive alternatives to Cisco products. My discussions with Cisco customers and their reactions were another story.

Over the past decade, customers have assumed that switch and routing products' hardware and software were combined intimately into a single physical entity called a router or LAN switch. The two were symbiotic and inseparable. Scalability and options were the differentiators among a vendor's network products. All this changed when IOS became a security target. In the press, IOS became the Windows of the network industry. Customers realized that software, not hardware, was the focal point of switch and routing products.

Cisco correctly espouses the view that infrastructure hardware is in fact a platform synonymous with an IT server, with software value-add options differentiating the platform's purpose. In reality, network hardware is becoming standardized, with few or no communications features being added to each new generation of products. Industry concerns that Gigabit Ethernet to the desktop is an upgrade to delay, not implement, have started to affect installed-base, direct-connect equipment sales. The industry's slow death spiral because of a static installed base was delayed by the arrival of additional technology requirements for wireless LANs, VoIP and video, and an explosion of opportunity in emerging markets such as India.

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Upon reading Cisco CEO John Chambers' comments - about decoupling IOS software and maintenance from network hardware - at the company's Networkers User Conference in Las Vegas last month, I realized again how far out of sync the network and IT industries are. Talking to numerous other network infrastructure vendors, I found they all view and support this new industry tactic as a double-edged sword. On the one hand, it is a means to increase revenue and profits for Cisco and any vendor following Cisco's lead. On the other hand, it will let the industry aggressively market and sell competitive alternatives to Cisco products. My discussions with Cisco customers and their reactions were another story.

Over the past decade, customers have assumed that switch and routing products' hardware and software were combined intimately into a single physical entity called a router or LAN switch. The two were symbiotic and inseparable. Scalability and options were the differentiators among a vendor's network products. All this changed when IOS became a security target. In the press, IOS became the Windows of the network industry. Customers realized that software, not hardware, was the focal point of switch and routing products.

Cisco correctly espouses the view that infrastructure hardware is in fact a platform synonymous with an IT server, with software value-add options differentiating the platform's purpose. In reality, network hardware is becoming standardized, with few or no communications features being added to each new generation of products. Industry concerns that Gigabit Ethernet to the desktop is an upgrade to delay, not implement, have started to affect installed-base, direct-connect equipment sales. The industry's slow death spiral because of a static installed base was delayed by the arrival of additional technology requirements for wireless LANs, VoIP and video, and an explosion of opportunity in emerging markets such as India.

At first glance, decoupling hardware and software should change the economic equation for the customer. If customers can configure and pay for only the software required to operate and maintain their network environments, the cost should come down. That may be the case initially, but over time, as more options are required to implement, control and manage security, QoS, virtualization, traffic optimization and other factors, the customer's capital cost marginally increases. Experience from the IT world points to an even greater problem, however: a significant increase in the cost of operations.

Software maintenance support, including revisions and upgrades, becomes an annuity for the vendor and an escalating, ongoing expense for the customer. For example, PC hardware has become such a commodity that software is more than 60% of the capital cost of a desktop and almost 70% to 80% the cost of maintenance and management. With the realization that the ongoing support cost is for software, not hardware, the network industry, like the IT industry, has come of age. Hardware platforms, whether server or router or LAN switch, now have an inherent reliability of six to seven nines. The real maintenance support problem always will be software.