Is Cisco losing thought leadership in the networking industry?

If you work in networking, you’ve gotta have love for Cisco. Like most of us, I first learned about networking through Cisco, and attaining the CCIE certification would prove to be the basis for launching my career.  Cisco’s brand in networking is analogous to what the brands Xerox and Polaroid were to their respective industries; like what IBM was to the mainframe and minicomputer industry. But today when we make a ‘Xerox’, or snap a “Polaroid”, there is a good chance you are not performing these actions on equipment from these manufacturers; and if you are deploying infrastructure to power the modern compute cloud, the old saying “You don’t get fired for buying IBM” no longer holds true.

What happened to Xerox, Polaroid and IBM is what many call, the “innovator’s dilemma“, which is based on the observation that throughout modern economic history, many of the world’s largest businesses have risen to prominence as new technologies and industries grew around new technological capabilities. Over time as these technologies become mature, incremental improvements in products become increasingly less impactful, less differentiated and eventually, fundamentally new “disruptive” shifts in technology occur. Some relevant examples of this include the computer industries’ shift from the mainframe to the client server era, and today the industry is undergoing a similar disruptive shift towards Cloud based technologies. If you ascribe to the idea of grid and utility computing, as Nicolas Carr so eloquently presented the case for in his book, The Big Switch: Rewiring the World, from Edison to Google, the technology industry has only seen the tip of the disruptive iceberg that cloud computing will bring.

Many tech industry leaders and analysts have observed that as the networking industry is being disrupted by cloud computing, Cisco is facing the classic innovator’s dilemma. So the obvious question is … how will the disruptive changes that are occurring in IT today affect current market leaders? And beyond this and I think more importantly, how will these disruptive shifts affect you, your job and your business? As I prepare for next week’s Open Networking Summit, the veritable who’s who of tech titans that will converge on Stanford to discuss open networking serves as a reminder of just how much disruption the network industry may experience in the coming years. With the rising dominance of cloud architectures, cloud and solutions providers are challenging Cisco’s thought leadership in networking, most significantly in the data center. Leading Cloud and IAAS providers have by and large rejected the idea that any proprietary offering will define how the network should operate in the cloud. Some examples of this:

• The Open Networking Foundation was founded and is lead by web/application developers and service providers. Cisco is merely a participant along with most other networking vendors.
• Cisco’s recent submission to OpenStack floundered, causing them to have to compromise and merge with competing submissions.
• Numerous analysts have speculated that Cisco’s anticipated Jawbreaker platform is a response to pressure from the increasing influence of their competitors.
• Cisco recently announced that certain new platforms will be based on merchant silicon, which many analysts speculate may be due to rapid innovation in the network silicon industry. As noted here, Cisco has been very reluctant to make this transition as it will likely lead to significant commoditization.
• Cisco’s recent stock-market challenges resulting in several public apologies from their CEO, as well as restructuring and significant layoffs

As a result of these and other factors, many analysts are speculating that Cisco’s market share in the data center will decline. Analyst firm Oppenheimer recently observed that “long-term trends are incrementally negative for Cisco’s switching business … we’re in for a bumpy ride with no clear direction yet.” Several analysts have criticized Cisco’s management structure.  I was shocked with the press coverage leading up to Cisco’s most recent financial report, with virtually every wall street analyst speculating that Chambers may step down and reporting that Cisco execs are gunning for the title. 

These trends lead to a dilemma for enterprise IT departments, as there is an urgent need to adopt private cloud architectures, but the amount of competing proprietary architectures can make it difficult to decide on a direction. However despite all of the competition, there is one direction that is becoming increasingly clear: open standards.

Many analysts note that proprietary architectures have more to do with vendor lock-in than with technological advancement. When evaluating proprietary solutions, enterprises need to examine whether or not these architectures offer immediate, strategic business differentiation, and if not, they should stick to standards. Proprietary visions try to promise that their architecture will offer significant business advantage, but keep in mind that Amazon, Google and most leading web and IAAS providers are already offering the services that enterprises are trying to build, and they have done it without proprietary technologies. While generally offering no improvement in application performance, proprietary architectures have significant disadvantages when compared to standards-based architectures:

• Proprietary solutions create lock-in, any potential TCO advantages they may claim are overshadowed by the fact that they force customers into sole-sourcing strategies. Recent research by Gartner identified that “Sole-sourcing with any vendor will cost a minimum 20% premium, with potential savings generally reaching 30% to 50% or more of capital budgets when dealing with premium-priced vendors.”
• When faced with increasing cost pressures and increasing acceptance of IAAS providers, enterprises that have been locked in to more expensive non-standard infrastructure will be faced with a significant dilemma.
• Networking hardware architecture is increasingly being defined by merchant silicon providers who focus almost entirely on open standards. Most notably Intel recently purchased Fulcrum Microsystems with the goal of creating a similar effect in the networking industry that the x86 platform has had in compute.
• Most enterprises long-term roadmaps lead towards increased adoption of hybrid clouds. Adding proprietary add-ins to your virtualization infrastructure could lead to problems in VM mobility to IAAS providers, as most are building compatibility with open standards and VMware, but far less are incorporating proprietary solutions like VN-Link and Cisco’s adapter fex technology, which requires equivalent hardware when migrating virtual machines.

When adopting new network technologies, Infrastructure 2.0 expert Stuart Miniman offers the following advice:

“Cisco, HP and Juniper have dramatically different approaches to architecting nextgen networks. In short, Cisco wants to maintain its substantial lock-in advantage, HP wants to bomb pricing and Juniper wants to disrupt everything so it can steal share. Customers should understand that no matter which path they choose for virtualizing networks, they must plan for disruption and look toward developer-friendly, multi-vendor, best-of-breed solutions to minimize lock-in.”

A recent survey by InformationWeek revealed that IT Pro’s attitudes towards standards-based networking are very bullish:

“We asked which features matter most for data center switches. The answer: virtualization support, adherence to standards, and configuration automation. IT pros care least about proprietary technology in advance of standards and a migration path from 40-Gbps to 100-Gbps Ethernet. You can start to see the challenge for Cisco …”

The world of IT infrastructure is being turned on its head as we move towards cloud-based architectures. Nobody can provide certainty as to which, if any, proprietary architectures could become dominant in the future. But especially given the strong commitment to open standards, and the increasing influence that web, application, and solutions developers have in the networking industry, it is apparent that standards-based networking will increase to a new level of significance. If you look at past industry disruptions, in some cases top brands remain prominent, in others market leaders change, but in all cases the end result is positive for the technological growth of the industry and positive for consumers. Disruption and competition has helped drive industry-changing technologies while at the same time driving significant cost reduction. Standards have always been very positive, and with the sea of significant change IT is facing today, there has never been a more important time to embrace standards.

I will leave you with a quote from a great post by EtherealMind Blogger Greg Ferro:

 “In twenty five years of IT that I have seen, proprietary networking always loses. Always. There will always be a few exceptions to this but don’t think that ‘winning the lottery is an employment strategy.’ And it stops industry growth, it retards product sales … no vendor lasts forever, no product strategy lasts for more than a couple of years. New technologies are only new for a couple of years. Never accept that proprietary is acceptable. Proprietary will always waste your time and money. Your networks will last longer than this year’s fashion for technology. You want to go home on time, after an organized and planned day. That’s what standards are for.