Cisco vs VMware: Chambers On VCE, EMC, Competition, Cooperation
Cisco Systems (NASDAQ: CSCO) wants to lead the market for software defined data centers and software defined networks. But Cisco must balance relationships with EMC (NYSE: EMC) and VMware (NYSE: VMW) — which recently acquired Nicira in the network virtualization market. How will Cisco move forward? CEO John Chambers (pictured, right) and Executive VP Rob Lloyd (left) provided clues during a Q4 2012 earnings call this evening, conceding that Cisco may need to both compete and cooperate with VMware. Here’s a recap.
Brian Modoff, an analyst from Deutsche Bank Securities, asked Chambers if Cisco needs to beef up its software defined networking products, and whether potential competition with VMware will impact VCE — the virtual compute environment company funded by VMware, Cisco and EMC.
Johnny On the Spot
Chambers’ reply was classic — initially focusing on Cisco’s innovations before indirectly addressing potential competition with VMware. He said.
“Well, when you really think about SDN [software-defined networks], I want to be very candid. We think the future is going to be hardware and software combined. We think when you have knowledge of the network, and are able to know what’s going on in the network, you can program to it. You can get dramatically better flexibility, etc. Its nice way of saying, we think it’s going to be … hardware and software combined.”
Chambers also claimed Cisco was ahead of rivals in the network virtualization market. “If you watch why we’ve done in this area, we saw virtualization coming early. So it wasn’t like it snuck up on us. We went into virtualization with the Nexus 1000V in 2009, which is exactly when we entered the data center market with the UCS [unified compute system]. So we saw both of these trends coming.”
Plus, Chambers mentioned Cisco’s close watch of OpenFlow, a communications protocol that enables software defined networking.
Cisco vs. VMware?
Finally, Chambers addressed potential competition with VMware without mentioning the virtualization company by name. “And our ability to handle transitions with our partners — when at times we compete and at times we partner — has been unprecedented in the industry. So as we look forward, we’re completely staying committed with VCE and our ability to work together. We are looking at the innovation that we can do in our market, and we will have partnerships like what occurs with Microsoft and IBM and Citrix in this area as well.”
Then, Chambers asked Cisco Executive VP Robert Lloyd to weigh in. Lloyd stated:
“We obviously expect to leverage the strength of our install base, which is pervasive across the data center, multiple ecosystem players, we’re going to support multiple hypervisors, multiple applications and operating systems. So we’ve got that working underway in every area. And we can’t forget some of the innovation we got going both inside and outside the company.”
Chambers closed by reinforcing Cisco’s VCE partnership with VMware and EMC.
“Just want to add, with VMware and EMC, it’s been a very strong partnership. We’ve both benefited greatly from it. They candidly need us and we like very much being a partner with them. So, I think you’ll see us worked this out in terms of our direction. But we are going to be an open player, and we’ve shown in the marketplace when we compete, we can be really very tough.”
Long live cooperation… and competition … in software defined networking and the software defined data center.