Managed Services

Cisco's Eos Reaches for Telcos

LAS VEGAS -- 2010 International CES -- As the Eos hosted service for media Websites continues to grow, Cisco Systems Inc. (Nasdaq: CSCO) is starting to consider possibilities for offering the platform to telcos.

"We want this to be something that ultimately, when we hit scale, we can bring to the service provider," says Dan Scheinman, senior vice president of the Cisco Media Solutions Group. "We're just beginning to approach the service providers in the U.S. In Europe, they're very positive."

Cisco plans to show off some of the possibilities during a CES media reception tonight, to be held in a suite of The Venetian.

Eos could work with a set-top box, for instance, to push Web content into a TV-viewing experience, Scheinman says. It would be like an integrated version of BD-Live, the Blu-ray feature that allows access to special online features.

First, Cisco has to show Eos can reach that massive scale, operating an army of hosted Websites and collecting user data in hopes of finding new revenue possibilities amid the noise.

In conversations with Light Reading last month and at CES this week, Scheinman expounded on his aspirations for the platform. He's enthusiastic about bringing Cisco, an equipment company, more deeply into the hosting world. "I want to build a really, really big hosted software business. That's what I want to do," he says.

Eos is a platform for quickly creating media-laden Websites off of templates; it's also the Cisco-hosted service that operates those sites. Discussing Eos in an interview in a Venetian suite, Scheinman spreads available objects around the table -- folders, water bottles, cups -- to represent media companies' current strategy of building scattered, unconnected Websites. The key to Eos lies in finding a way to unify those sites.

"We're unique in the marketplace because Cisco allowed me to build a platform and not a plug-in to one of these sites," he said.

Gathering support
Eos has certainly grown up since August, when it was supporting just two disclosed Websites. (See Cisco's Eos Takes Aim at Internet Media Management.) Cisco now says Eos is supporting 20 artist sites for Warner Music Group and this week added more media customers, including Travel Channel and All Access Today.

Cisco will now start certifying Web designers for Eos, giving media companies a stable of vendors to go to for developing these Websites. (See Cisco Spews News at CES.)

"Since August -- that was when we started putting down the gas pedal -- we've been adding about a site a week," Scheinman says. Cisco is keeping up with the growth by applying its own Universal Computing System, an all-in-one package for data-center switching. (See Cisco Dreams of Data Center Unity.) Eos's gear resides in a Savvis (Nasdaq: SVVS) data center, and Cisco is enlisting an East Coast service provider to house parts of the network as well.

"I was very nervous about whether entertainment companies would accept hosting," Schienman says. "That was a barrier two or three years ago. It is not now."

The difference, as Scheinman has been preaching, is that media companies have discovered they're getting bupkis from their Web efforts and want to try something different. "When people have just plopped content online, they've gotten a fraction of what they can get," he says. "People have wasted so much money on technology. They need a partner."

For Cisco, though, the trick is to find new revenue sources on the Web without eating into media companies' businesses -- or service providers' businesses, for that matter. Inside Cisco, executives are describing this idea with the unfortunate term "grow the pie" (insert graphic of a cartoon guy holding a watering can over a lemon meringue slice).

As an example, Scheinman cites ad revenues. "Today, there's a huge amount of value in selling the ad and in publishing the ad. Is there something also in the middle, where you do something with the ad?" he says.

But a big part of the Eos team's work revolves around creating entirely new revenue sources -- ideas beyond subscription fees, ad placement, and ordinary merchandise sales.

Here's an example: At Cisco's CES press conference Wednesday, chief strategy officer Ned Hooper described how fans of the band Paramore -- a Warner Music property with an Eos-based Website -- have snapped up a line of limited-edition, customized Flip cameras related to the band. Eos could present similar kinds of benefits to set-top boxes and even core networks, Scheinman says. "What we think is that there are going to be a lot of markets that open up," he says.

Whether Eos can make a profit isn't being considered yet; the project is still in an exploratory phase, and Scheinman's primary task is to build an audience of Eos-hosted sites. From there, Cisco can start to find ways for media companies to make money off those users. Some of the secret might lie in Web analytics -- hence, the company's investment in Quantcast Corp., announced this week. (See Cisco Leads Quantcast's C Round .)

"We're still in investing mode. Our bet is that the value of the uniques [distinct visitors per site] rises over time," he says. "Today, a unique is, frankly, not worth very much," Scheinman says.

— Craig Matsumoto, West Coast Editor, Light Reading

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