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 Channel Futures

Best Practices


Five Threats to Cisco’s Empire

  • Written by The VAR Guy 1
  • May 17, 2007

Before all you Cisco loyalists flame The VAR Guy, let’s make one thing clear: He believes Cisco’s momentum is accelerating. Heading into next week’s Interop conference in Las Vegas, Cisco appears unstoppable. But that’s usually when something completely unanticipated goes wrong. So, what — if anything — could give Cisco fits in the years ahead?

Here are five potential long-term threats to Cisco’s empire:

5. The Big Transition: Relax, folks. CEO John Chambers plans to remain with Cisco for a few more years. And CTO Charlie Giancarlo is positioned as his natural successor. The two executives hit it off publicly. But one look at Dell Inc.–where Michael had to ultimately push partner and former CEO Kevin Rollins out the door–shows how quickly a relationship can unravel when business goes bad.

4. Talent: Cisco hinted about its talent search during the company’s partner summit in April (see item 11 on this list). The company says it needs to help partners recruit and train more Cisco certified experts. That’s a tall challenge: In 2006, US undergraduate enrollment in computer science studies was half of what it was in 2000. The IT market is growing yet fewer students are mastering new technology. And many computer science graduates return to foreign countries to start their own businesses rather than join the likes of Cisco.

3. Microsoft and Google: Don’t blame The VAR Guy for hyping these rivals. Cisco CEO John Chambers has said that he thinks Cisco is on a collision course with both Microsoft and Google. Imagine if Microsoft bundled basic unified communications software–just enough to hook customers–with future versions of Windows Server. And what about Google? Hmmm. Google is getting into the desktop video conferencing market. Not exactly a match for Cisco’s TelePresence technology. But while Cisco’s video technology appeals to corporate suits, Google is going after the masses.

2. Open Source Hardware: When MIT researchers helped to build a wireless mesh network for some city residents in New England, the researchers used commodity hardware and open source software to piece together a solution. Now, open source network hardware companies like Vyatta are starting to pop up. Nobody is predicting that Global 2000 enterprises will swap out their switches and routers for an open source network architecture. But over the long haul, what if companies like Google and Yahoo–which customize open source applications for their own use–begin to experiment with open source network hardware? Hmmm.

1. Asterisk: Much in the way that Microsoft worries about Red Hat Linux and Ubuntu Linux on the server and desktop, respectively, Cisco has to worry about Asterisk in the voice-over-IP and unified communications markets. Asterisk is an open source VoIP platform that’s moving into network applications and small business servers. Noteworthy Asterisk backers, according to allaboutasterisk.com, include Digium, Fonality and Switchvox.

Tags: Agents Cloud Service Providers MSPs VARs/SIs Best Practices Networking

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2 comments

  1. Avatar LT May 24, 2007 @ 4:02 am
    Reply

    The VAR Guy and I go way back and clearly from his entries he is seasoned channels veteran. However, he has a journalism tell, which is similar to a poker tell in that it is a behavior or habit that provides insight into the stories he will write. The VAR Guy’s tell…he likes to write about how the leader “could fall.”

    The year was 2001 and the VAR Guy was working for a Ziff Davis channel pub called Smart Partner. On one of the covers that year was a cartoon drawing of John Chambers dressed in a toga, but unlike the VAR Guy’s best friend Bluto Blutarsky of the infamous Delta House Chambers was made to look like the historical ruler of Rome Julius Ceasar. All around John where other folks, also dressed in togas, representing the up-and-coming networking companies that represented a threat to Cisco, companies like Foundary, Extreme, Juniper, etc… Fast forward 7-years and here we are again. The threats are different and again well thought out, but the core of the story is the same. And not that this is bad, but because I know the VAR Guy wants to make sure his readers are well informed I thought I would provide some additional insight to his 5 Cisco threats.

    5)Yes, it is true John cannot lead Cisco forever, but this May 9, 2007 Business Week story clearly states this is an issue that is 3-5 years out for Cisco.

    4) The technology shortage is an industry issue that has been well documented, but perhaps the issue that isn’t as well documented is the impact the shortage could have on channel partners (See CRN here).

    Any company with a heavy reliance on channels/solution providers needs to be thinking about how they will adress the issue and equally important how they will help their channel partners do the same. More than 80% of Cisco’s annual revenue flows through its channel partners, that’s more than a $20B business, and Cisco is proud that it has not only outlined how it will address the issue, but how it will help its partners address the issue as well. Not all the details have been disclosed on this initiative, but Cisco is clearly out in front of the rest of the industry, especially when it comes to helping its channel partners. For more insight here’s a blog entry from Amazon Consulting stemming from the Cisco Partner Summit that provides more details on the issue and highlights a few of the intial things Cisco is doing to help channel partners address the issue.

    3)It’s no secret that Microsoft and Google have risen to the top of the Cisco competitors list. It is also no secret that Cisco is a company that is built on listening to its customers, which is why in many cases Cisco will also collaborate with Microsoft and if requested Google. However, the Microsoft/Google battle (see CNet) may divert some of the focus away from Cisco.

    1amp;2)The open source network debate is an interesting one. However, even Vyatta acknowledges it can’t all be done by software and thus this bit of information from InformationWeek, “That’s why Vyatta intends to launch a hardware appliance sometime this summer.”

    To learn more about this debate read Network World’s Faceoff…

    Safe tarvels home from Vegas VAR Guy

  2. Avatar The VAR Guy May 25, 2007 @ 1:23 pm
    Reply

    Hmmm. Interesting points. Of the threats to Cisco, The VAR Guy still thinks Asterisk is the biggest for the next five years.

    On a side note, LT (Lawrence Taylor? LaDainian Tomlinson) claims to go “way back” with The VAR Guy. Clearly, the two share a common interest in Animal House.

    You could say The VAR Guy is a bit like Daniel Simpson ‘D-Day’ Day. VAR Guy may have worked at Smart Partner. But nobody knows for sure. And nobody has seen him since the closing credits of that publication …

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