Actually, outsourcing whole engines is commonplace among major automobile manufacturers. For years I drove a mid-sized Chevy pickup with an Izuzu engine in it. Yes, Chevy was (and is) quite good at building larger, less fuel efficient engines for their larger trucks, but they found it cheaper and more profitable to just buy Japanese engines for their more fuel efficient truck models.

So I guess Mr. Gourlay wants us all to drive the Ferrari he is selling and scoff like he does at anything else on the road that is more efficient and less expensive to purchase and maintain. I can certainly see why - his entire business model is built on his customers not recognizing the viability of alternatives to his solutions.

So maybe Mr. Edholm is right and it is time for Cisco's customers to control their own destiny and drive the networking solutions that they want and need by deploying multi-vendor solutions, rather than letting Cisco dictate whet they get based on what meets Cisco's wants and needs. Right now Cisco in control of our destiny - which is how Mr. Gourlay prefers things to be...

Phil Edholm states "Cisco is well known for a profound inability to innovate internally and a penchant for acquisition as well as a penchant for trying to present attempts at catch-up as innovation."

From what I've seen in my 20+ years in IT is that Cisco is a leader in innovation in which ever space they want to play in. Cisco buys startups that it preceded to be an asset to Cisco and performs internal development when required (just look at the CRS-1 and Nexus 7000 if you have questions). If Nortel could blend the two together better, then their stock price and market share would not suck. We all know that larger companies take longer to roll product out due to integration complications.

Cisco may not always get it right the first time, but they do get it right when it counts.

While Brad seems to think that his reply was a “stinging rebuke”, it seems more of a lame attempt to “gild the lily”. If it were only so simple to make decisions in life, but the Ferrari comes with Ferrari pricing and maintenance costs. And it sure does a lousy job of cutting the grass!!!

I guess I hit a nerve with my comments in my blog. While I agree with Brad that Cisco pricing is Ferrari like, the performance numbers of their products generally do not bear out a value proposition that justifies the product pricing. Witness the Tolly tests that indicate that most times the Nortel products are faster and Gartner identifying Nortel as a "Visionary" in networking in the 2007 Magic Quadrant Analysis. In fact, Cisco products typically cost 2 times other “merchant” offers in the Ethernet space, a fact borne out by recent Del ‘Oro data that shows while Cisco delivers only 37% of Ethernet ports, it receives 73% of the Ethernet market revenue. Over time you can only demand Ferrari pricing if you are delivering profound performance advantage...something not delivered in Cisco networking products.

Like Brad, I like analogies to illustrate a point, but I believe they should be at least vaguely believable. The analogy Brad has chosen is flawed and almost laughably absurd. Who would ever consider a buying decision that was a choice between a Ferrari and a lawnmower? However, if Brad wants to use an automotive analogy, let’s use one that is closer to reality; the choice between a Ferrari F430 and a Chevrolet Corvette (we will use the standard model Corvette in keeping with Brad’s analogy of “merchant” engines, not the higher performance Z06). Both are very similar, (kind of like Ethernet switches), each being a 2 seat car with a V8 engine and designed for performance over people or luggage hauling. And they follow Brad’s analogy, in that the Corvette is based on a broad range of “merchant” parts from the General Motors inventory, while the Ferrari is highly optimized with virtually every part factory built in Modena. In fact, Road and Track just compared these two in their January 2008 issue, so we can use some real facts in this analogy for a change. While the review decides for general use it is a toss-up between the two (in the review, two editors out of four choose each of these cars as their favorite), the F430 does have a 12% advantage in acceleration, a 2.8% better slalom time and a 1% better skid pad grip level. So, if we grant the F430 a 5% overall performance improvement at the limits of use (none of which can be achieved on public roads or in normal networks), the F430 must be a better buying decision, right? However, the F430 costs about 4x the Corvette (slightly higher pricing differentials to those in networking). And the Ferrari gets 25% less fuel economy (again similar to the networking world), in a world where fuel economy is critical. And the costs to maintain Ferraris are legendary ($3,000 tune-ups and $8,000 clutches every 10K miles). So then, the choice is simple; 95% percent of the performance for 25% of the price and operating costs that are 25-50% less. Does the Ferrari look good now? By the way, the Corvette Z06 gets 98% plus of the Ferrari performance for one third the price and the new Z01 will be faster for less than half the price. I guess Brad would call these cars derivative due to their “merchant” roots in GM and the base Corvette.

In the end, people who buy a Ferrari do it for two reasons; they have so much money that the cost/performance trade-offs do not matter to them or they buy their cars so others will judge them by what they drive. I guess buying Cisco is similar, either you like to waste money or you buy on brand only. Comparison shopping yields different answers, as reflected by Gartner in their recent advisory to evaluate alternatives in the networking world.

Finally, thanks for putting up the family skiing picture (not sure why you choose that one versus ones of just me). In the end it is yet another analogy that further illustrates my point (I do love these analogies). While we probably could have flown to Colorado or Europe for slightly better skiing (maybe), we were skiing at good old Squaw Valley USA; equivalent skiing for a fraction of the price (when driving up from the Bay Area)!!!!!!

As you can imagine, I do not own a Ferrari, do you?