New Cisco Products May Foreshadow Licensing Changes

Yesterday, Cisco took its first steps down that path with a new way of selling software for switches and a software asset management application.

"This is really looking at software best practices in the industry and seeing how they are done," Cisco senior director of network systems Marie Hattar says. "It's our first step that you see as evolving to more of a software business, and we're looking at it as an evolutionary path." For the time being, there will be no price changes, no significant changes to the licensing model, unbundling of software from hardware or even how people buy from Cisco, just a simplification of upgrades that possibly lays the ground work for the more significant changes Cisco executives including Chambers have hinted at.

Cisco's new IOS Software Activation provides users with an authentication key they use to implement purchases of software, which will come in three tiers: IOS base, IP services and advanced IP services. New routers and switches will be sold with all their features already installed, just turned off until the necessary activation key is applied. This could potentially give customers increased control over their networks and less headaches associated with buying features one-by-one for individual routers.

Some of Cisco's networking software is already sold in the tier model. By and large, though, it's a far cry from the old way of doing business -- Hattar relates a story of one company who had 44 different versions of IOS running on its network at one time, and customers used to have to download feature upgrades instead of simply turning them on.

The company is also introducing Cisco License Manager, software that polls the infrastructure users have, tells them what version is installed on each device, and automatically upgrades to the IP services or advanced IP services with the purchase of new software plans. That means easy bulk upgrades and a better view of exactly what users have on their networks.

At this point, both the activation key and asset manager will be strictly restricted to new products, particularly routers and switches companies would have in their networks in high volumes. Though Cisco is for now only using the tiered pricing plan with new devices, Hattar says the company could eventually move in the same direction for other products. Forrester analyst Rob Whiteley says he thinks Cisco is being cautious so as not to make life difficult for channel partners who will have to adjust to the new way of selling things.

Regardless, something needed to be done, because customers are often flummoxed by a multitude of plans and options when buying from Cisco. "I can't tell you enough how frustrated users are about the complexity of Cisco sales," says Forrester's Whiteley. It looks as though Cisco's starting down a path to change all that.