Light Reading

Cisco Tweaks Enterprise Marketing Model

Dan O'Shea
3/6/2014
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Cisco is about to change the way it does business in the enterprise market, and while its take on SDN (which is not everyone's take, by the way) is part of the pitch, the bigger part of the story might be less about technology and more about pricing, packaging and branding.

Cisco Systems Inc. (Nasdaq: CSCO) convened a media roundtable this week to discuss how recent announcements regarding its Application-Centric Infrastructure, Application Policy Infrastructure Controller and Intercloud, among others, are being aligned under its Cisco One Platform, targeted at the three infrastructure domains of datacenter, enterprise WAN, and access network. (See Cisco's ACI Gets Physical With SDN, Cisco Extends APIC to Enterprise, and Cisco Goes Hybrid With Intercloud.)

Cisco officials said they are moving the ACI and APIC SDN-related solutions, accompanying APIs, and all other existing hardware and software products targeted at these domains, into four different tiers of suites -- Cisco One Advanced Security Services, Cisco One Advanced Application Services, Cisco One Foundation and Cisco One Essentials -- that enterprise customers will be able to license from the company on a suite-by-suite basis if they desire, rather than trying to figure out which individual products they need.

"We had a bunch of products, and we're going to turn those products into licenses," Cisco President Rob Lloyd told the dozen or so roundtable attendees. "Product brands will become much less important than the suite itself, though if you want the product, we'll still sell you the product. The challenge for us will be simplification and packaging."

Lloyd said Cisco will discuss pricing and more details about the new suites and licensing schemes at Cisco Live! in May in San Francisco. He also said the company is working out how service providers can market suite licenses as part of managed services offerings.

So, why now for a marketing model makeover? The retreat from individual products almost makes it sound like Cisco is taking to heart a lot of the criticism about its abundant energy for protecting its own legacy products amid SDN's rise. Almost.

The packaging shift also could be read as a somewhat panicky response to a changing enterprise networking market and a rough patch of lowering sales.

It wouldn't be out of the question. Amid his company's recent financial slump, Cisco CEO John Chambers has blamed the networking giant's troubles on a variety of factors, including the NSA spying scandal, but perhaps he's looking in the mirror now. (See Chambers Caught in 90s Deja Vu and Revenue, Income Slide In Cisco's Q2 2014.)

More likely, however, Cisco is looking to control the conversation about what the enterprise really needs and what it doesn't (Hint: Cisco doesn't think enterprises need SDN).

In fact, Lloyd said the central role of SDN -- the separation of the control and data planes -- "is sort of losing interest" among enterprise customers, who have told Cisco that they want simplicity more than anything else.

"We haven't seen the use cases [for SDN] outside of very large software companies. We would never disagree that SDN at the very largest enterprises -- the Facebooks and the Amazons -- is underway. But, in most enterprises, there is a massive opportunity to simplify the deployment of applications. The value is if a controller can be used as a consolidation point for deploying infrastructure."

Cisco's critics usually don't need any help keeping their ire up, but that notion is likely to feed more criticism of Cisco's handling of SDN, and the already prevalent belief that the company is moving around its own deck chairs rather than joining the SDN movement in earnest. (See Cisco Watchers Blinded by SDN and Cisco CEO: It's Early Days for Virtualization.)

— Dan O'Shea, Managing Editor, Light Reading

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thebulk
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thebulk,
User Rank: Light Sabre
3/6/2014 | 1:25:07 PM
Re: Open their eyes
I have no doubt that SDN will play a large role in some areas going forward, I think Cisco sees that taking a chunk away from their business in a time when they are already trying to figure out how to best advance in the industry. 
danielcawrey
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danielcawrey,
User Rank: Light Sabre
3/6/2014 | 12:29:21 PM
Re: Open their eyes
Cisco saying that SDN is not important? They are at least downplaying it here. 

Look, I think that SDN will be important. The problem for Cisco is that it is a really hard sell to most companies. It's also really expensive since it is so new. But lets give it time. I don't see why networking won't become more software-specific. 
thebulk
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thebulk,
User Rank: Light Sabre
3/6/2014 | 12:27:52 PM
Re: Open their eyes
I think they are definatly trying to get the hooks in a lot more companies for support contracts, at least that is what I saw on the service provider side, it seems like every time the company would ink a deal with Cisco over the past few years they would up the service contract, something I had not seen in the first 5 or so years in the sector. 

I could get into the whole Cisco licensing structor and its implementation, but perhaps another time...

As for them being a sinking ship, I think we don't know that yet. They are definatly taking on water, but its just too early to tell if they will be able to pump it out on time. 
DOShea
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DOShea,
User Rank: Blogger
3/6/2014 | 12:05:05 PM
Re: Open their eyes
Yes, and Cisco's response from a product pricing model viewpoint now looks like it is thinking of ways to keep its very large customer base moving as much inventory as possible in suites rather than via single product sales, perhaps the better to increase customer reliance on Cisco service and support...?
DOShea
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DOShea,
User Rank: Blogger
3/6/2014 | 11:58:28 AM
The morning after...
Wrote this rather late last night, and in the cold light of morning two of my word choices are gnawing at me; Cisco's move might be more accurately described as a sales and pricing makeover than a more general marketing makeover; and the incomplete "deck chairs" metaphor is maybe not as appropriate as comparing Cisco's actions to navel-gazing.

Cisco is not a sinking ship, not yet, though some in the SDN sector would like to believe that.
thebulk
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thebulk,
User Rank: Light Sabre
3/6/2014 | 11:47:18 AM
Open their eyes
I think Cisco had their eyes close for the most part and did not see SDN come right up behind them. I can remember talking with Cisco engineers and Sales reps and one year they were saying it wasnt an issue for Cisco and the next it was all whispers and head nods about people being worried about it. 

 
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