Software and cloud capabilities are to be the main strategic focus for Cisco Systems in the years ahead, the networking giant will announce later this month when it unveils details of its new corporate strategy.
In an invite to the media and analyst communities, which Cisco Systems Inc. (Nasdaq: CSCO) will brief ahead of a public announcement planned for late January, the vendor noted that software and the cloud will be "the main focus for the company as we move to a software-based model and place big bets on our transformation in 2015."
The strategy will be presented by Rob Soderbery, senior VP of enterprise products and solutions, and "software czar" John Brigden, senior VP of software strategy and operations.
Naturally, the company isn't providing any details of its strategy in advance, so ahead of the public announcement, Light Reading decided to look into the background of this important shift for Cisco and some of the potential implications.
As has been obvious in recent years, with the advent of SDN and the virtualization of routing capabilities, Cisco's traditional hardware business is under threat and the company has already begun a transformation driven by the growing demand for software-based networking functionality, including the development of software-based routing functionality. (See Cisco's Software Router Targets the Cloud.)
So it was only a matter of time before a radical, company-wide shake-up was needed at Cisco and, indeed, at all IP hardware vendors.
What's notable, though, is that Cisco appears to be ready to make software and cloud the main focus and not just a strategic focus.
While such a shift may seem, on the face of it, dramatic from a technology portfolio perspective, it seems Cisco's biggest challenges may well come in its operations, business processes, channel and marketing departments.
Software and cloud
Although Cisco's brand is inextricably linked to IP networking hardware, the company is already a significant force in the software and cloud worlds.
In 2014, Cisco announced the Intercloud program, built around a hybrid cloud platform designed to offer enterprises freedom of choice in cloud providers. As part of the program, it brokered partnerships with communications service providers to enable enterprises to connect to multiple cloud providers and move workloads between those cloud providers, as well as local data centers. Partners include Deutsche Telekom AG (NYSE: DT), BT Group plc (NYSE: BT; London: BTA) and Equinix Inc. (Nasdaq: EQIX), extending to 250 data centers in 50 countries. (See Cisco Beefs Up Its Intercloud, Adds Telco Partners .)
In terms of networking software, Cisco acquired cloud-based network management vendor Meraki for $1.2 billion in 2012. Meraki has been a growth driver for Cisco, particularly in WiFi networking. (See Cisco Shells Out $1.2B for Meraki.)
And in the summer of 2014, it acquired network management and orchestration software vendor Tail-f. (See Cisco to Buy Hot Startup Tail-f for $175M.)
At around the same time, Cisco shipped its Application Centric Infrastructure (ACI), a software framework to program networks that runs on Cisco's Nexus switches and other devices, as well as appliances such as firewalls and load balancers. (See Cisco Ships Its SDN Architecture -- Almost.)
Cisco's ACI vision differs from the SDN approach touted by other vendors and network operators. Companies such as Brocade Communications Systems Inc. (Nasdaq: BRCD) espouse a hardware-independent approach, using software-based functionality and open interfaces such as OpenFlow to enable network operators break their traditional dependence on proprietary platform vendors and embrace the greater hardware equipment sourcing freedom that enterprise IT departments enjoy.
Even though Cisco's moves haven't gone as far as those of others, the changes it has made, in addition to the upcoming strategic shift, represent a significant departure from its traditional business, and are particularly notable for a networking equipment vendor that has grown fat selling hardware.
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