Cisco's Strategy And Future Have Never Been Less Clear

John Chambers isn't the first CEO to get caught flat-footed in the rapidly changing world of IT technology and he won't be the last.

Bill Gates famously missed the impact the Internet would have on Microsoft's business model and came back from one of his "think weeks," where he would hole up by himself for days, and wrote a letter to the entire company that ultimately quickly turned the battleship.

The Chambers/Cisco miss, of course, is the snowballing move toward a software-defined network, something that strikes as much at the heart of the Cisco business model as the Internet did to Microsoft's model of loading software locally.

[Related: Cisco's Big Challenge: Will Chambers Stay To See It Through?]

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Gates and Microsoft had an advantage in correcting the miss in that the company is a software company that was facing a problem that needed to be solved by writing more software in a different manner.

But Cisco is a hardware company that is facing a software challenge, which ultimately adds a level of complexity to meeting the challenge.

Technology companies sometimes get caught like this because they hold on to their technology for too long. As Microsoft, many others and even Cisco in the past have proven it doesn't mean the challenge can't be met.

But so far Cisco's answer to this software problem is rooted in hardware, and I find that hard to extrapolate into a sufficient long-term response.

The whole premise of a software-defined network is that the software does many of the things that the routers, switches and other hardware in the platform do but more efficiently and cost-effectively. It's a compelling reason to buy less networking hardware, just like server virtualization software caused server consolidation.

But Cisco's answer to this trend is hardware-based. In November Cisco unveiled its Application Centric Infrastructure (ACI), which consists of its Nexus 9000 switches and Cisco's Application Policy Infrastructure Controller. So in a nutshell you can't move to SDN with Cisco unless you use Cisco hardware. That's a good strategy for Cisco. I'm just not sure it's sellable to the market long-term. Cisco hardware is very good, but it's also expensive and, over time, SDN is a way to drive expensive hardware costs down by loading much of its functionality onto software.

Of course, it's not that Cisco has no software capability. It's just that it's largely embedded into the hardware and as such there is no choice to de-couple it and build SDN on someone else's gear.

To me, an SDN product strategy that does not play well on non-Cisco gear is challenging in the long term.
That's why many of us in this industry—be they solution provider, end user or pundit—are talking about how Cisco is most likely to buy someone to get this right.

This brings us to the bigger Cisco strategy around Intercloud, which partners and end users alike say has not been well defined and is confusing. To me it still feels like a work in progress and it was unveiled before it was ready in an attempt to freeze the market and prevent customers and partners alike from going in a different direction for lack of a Cisco answer. That, coupled with the reality that Cisco is an engineering-driven company and not a leader in marketing and communications, has solution providers and end users viewing the Intercloud concept as FUD at this point, reserving judgment for a time it's actually available.

These are all business challenges, of course, and perhaps Cisco will figure it all out. I wouldn't bet against it because it has fantastic human capital in the organization. But it's also not a slam-dunk and, with Chambers possibly retiring in the midst of this, who knows what Cisco's future will bring.