Cisco Wants To Climb Back the Way Microsoft Did (bloomberg.com) 61
The networking giant says it has turned a corner in its attempt to adapt to the cloud era. From a report: Cisco is hardly a failure. It produces billions of dollars in annual profits and is generally regarded as stable and well-run. But investors feared that its steady operations could lead to a slow-motion descent into obsolescence in an industry that can be brutal to anyone who falls a half-step behind. The best example of a tech giant stumbling then regaining its dominance is probably Microsoft, and analysts regularly hold it up as a role model for Cisco. Microsoft's decline, which began about the same time as Cisco's, was largely the result of a progression of disappointing products. That began to change in 2014, when new Chief Executive Officer Satya Nadella started selling tons of copies of popular software such as Excel and Word as subscription services rather than one-time purchase products and built a formidable cloud computing division. Microsoft is now the only U.S. company other than Apple with a market value of more than $2 trillion.
Chuck Robbins has held his job as Cisco's CEO just one year less than Nadella. In recent months, he's begun to insist that his company has finally reached its inflection point. Cisco acknowledged years ago that it had failed to capitalize on the chance to build the initial infrastructure for cloud computing, says Robbins, and responded with a significant, if slow-developing, overhaul of its strategy. "We were going to build technology for the next transition," he says. "We did that. Now we're seeing the benefit." Cisco's initial problem was partially a lack of flexibility. When Amazon, Google, and Microsoft began building cloud computing data centers, they wanted components, software, and machines that were tailored to their needs. Cisco insisted on selling the same expensive, uncustomizable equipment that was always the core of its business. The burgeoning cloud companies were only too happy to take their business elsewhere. Robbins can point to significant changes during his six-year tenure. Cisco has made a string of acquisitions that have turned it into one of the top 10 software companies in the world by revenue. Software and services have surpassed hardware and now make up more than half of Cisco's revenue. Its expected future revenue for outstanding fees from these products totals $30 billion.
Chuck Robbins has held his job as Cisco's CEO just one year less than Nadella. In recent months, he's begun to insist that his company has finally reached its inflection point. Cisco acknowledged years ago that it had failed to capitalize on the chance to build the initial infrastructure for cloud computing, says Robbins, and responded with a significant, if slow-developing, overhaul of its strategy. "We were going to build technology for the next transition," he says. "We did that. Now we're seeing the benefit." Cisco's initial problem was partially a lack of flexibility. When Amazon, Google, and Microsoft began building cloud computing data centers, they wanted components, software, and machines that were tailored to their needs. Cisco insisted on selling the same expensive, uncustomizable equipment that was always the core of its business. The burgeoning cloud companies were only too happy to take their business elsewhere. Robbins can point to significant changes during his six-year tenure. Cisco has made a string of acquisitions that have turned it into one of the top 10 software companies in the world by revenue. Software and services have surpassed hardware and now make up more than half of Cisco's revenue. Its expected future revenue for outstanding fees from these products totals $30 billion.
I wouldn’t hold my breath (Score:3)
I doubt very much Cisco can operate in a lower-margin/higher-unit environment. There are too many cheap solutions that are good enough and don’t have the baggage that Cisco provides.
Microsoft in contrast had corporate America in lock-step with their offerings and too high of an inertia to change to cheaper options when they started pushing subscriptions. A similar example would be Adobe. Cisco has none of that.
Re:I wouldn't hold my breath (Score:2)
Sounds like they aren't trying to do so. Sounds like they see that Microsoft pivoted from selling to pushing everyone towards renting, and he thinks Cisco is on track to do the same thing. So this means Cisco is pretty much admitting they are giving up on hardware and instead prioritizing software, and not only software, but software the customer doesn't get to install.
If they pull it off, good for investors, but screw the customers. What isn't listed is any particular focus on driving customers to actually
Re: I wouldn't hold my breath (Score:2)
Re: I wouldn't hold my breath (Score:3)
Re:I wouldn't hold my breath (Score:4, Insightful)
So this means Cisco is pretty much admitting they are giving up on hardware and instead prioritizing software
Cisco Meraki gear is all cloud managed routers and switches and wifi access points and whatnot. I am assuming that support is based on a subscription, so they're not really "giving up" on hardware, they're just turning it into a regular payment model.
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No surprise. Quite a few mid-tier network hardware providers do at least partial subscription. Usually on a feature or support basis.
Re:I wouldn't hold my breath (Score:4, Insightful)
Which has long been a dumb model. I guess ok so long as you don't worry about competition, but it's easy to get out-competed in that mode. These practices are the worst of off-premise and on-premise headaches all put together. Most companies I know that doubled down on subscription-based on-premise lock-in have such offerings dwindling in the market. They love to inflict large capex and opex as well as tedious entitlement management on customers, and ride high for a few quarters before starting to get eroded by more appealing options (either more straightforward on-premise or off-premise offerings, depending on the market segment and customer preference).
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The subscription Meraki stuff is a major pain in the ass. The idea is you lose track of some equipment and keep having to pay for it. We spend so much time trying to track things down, see if it is still being used, figure out which department pays for it... I hate them with a passion. Their cell-tower internet devices work well enough for traveling "offices", but as soon as someone can compete without a stupid subscription we are jumping ship. Cradlepoint is close. I'd easily pay double the cost of a Merak
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I will never use, nor recommend, Meraki equipment.
I could handle having to pay a subscription cost for continued access to their cloud console, or for continued firmware updates, but with Meraki if you stop paying your subscriptions, your firewalls stop routing data and your switches stop forwarding packets. No thanks.
Don't get me wrong, their hardware is good quality, and their cloud console is one of the best in the industry - I'm just not putting in equipment that will hold my internal network to ransom
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They're ok I suppose.
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I actually think they have a really good hardware and software platform. They're a bit overpriced, but then so is anything with the Cisco brand on it, so that's par for the course.
I don't even mind paying for continued access to a management console, nor do I mind paying for support. I just don't agree with a provider being able to brick my network if I don't pay up each year. Many corporations however have decided differently, and Meraki are pretty popular.
Re: I wouldn’t hold my breath (Score:2)
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This is also the company that loves to continue competing with new gear from competitors with older, lower performing hardware.
It's been a while since my company even bothered considering cisco offerings, but basically every competitor was able to deliver much better performance owing to being a couple of generations newer hardware than the then-current Cisco stuff. Paradoxically, they were also the most expensive, and, as you say, further held firmware updates ransom under subscriptions.
Leaving Cisco behin
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Microsoft in contrast had corporate America in lock-step with their offerings...
I think Cisco might have that also, given that the massive American corporate I work for uses exclusively Cisco products. I do accept that my sample is limited to one though.
We also have lots and lots of Cisco Meraki gear which is all cloud managed stuff. I have no idea why switches need to be cloud managed but I'm just a cog in a huge machine and no-one cares what I think.
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Depends upon who owns the cloud. If it's the "massive American corporate" you work for then it's all good.
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I'm still unsure why anyone needs a cloud managed switch though.
Re:I wouldn’t hold my breath (Score:5, Insightful)
Microsoft reinvented themselves by realizing that locking everything to Windows and Office wasn't the way to move forward. They realized that things like Office365, while not necessarily tying people to Windows anymore, would mean being able to satisfy business requirements in other ways.
The big corporate Microsoft clients don't really care about buying Office outright - the software support and such that they pay means the corporate plans for Office365 are a really good deal in the end which si why the big companies rapidly adopted it. Sure they have the option of buying full versions of Office standalone, but the costs end up being around the same - $500 outright versus $100 a year for 5 years, but the latter includes support and other online tools AND often includes other benefits, like being per-seat so if someone has a desktop and a laptop, they can use the same Office365 account and license instead of two separate standalone licenses, plus often that account includes a home use so that employee can install Office on their home PC, back when working from home was a rarity.
Microsoft basically quit being idiots, realized that Linux and online and clouds were things and basically fully embraced the concept.
Not sure what Cisco can do - they squandered WebEx such that a new startup literally now owns the conferencing space. And there's not much else they can do - Meraki is a nice piece of kit that is easy to manage, but their service plans and such need beefing up if you want to offer a subscription based variant to owning the stuff outright. (Nothing wrong with subscriptions, if you're paying for support on your standalone equipment, it's the same thing).
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Subscription for things that need recurring support. e.g. usually security related. The white-hat virus and malware industry already operates this way.
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Microsoft reinvented themselves by realizing that locking everything to Windows and Office wasn't the way to move forward.
You're giving them too much credit while missing the obvious. They are still very much the same Microsoft of old, they just realised that instead of locking people into Windows they could lock people into Azure and capture an even larger market than before. Don't have the misguided notion that they are embracing open anything after seeing the error of their ways. Linux is just another service they can now offer to Azure clients that gives them yet another way of collecting dollars from people. They are prov
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Wasn't that the reason they bought Linksys?
Problem being that they made Linksys even worse than it already was, and lost even more ground to the competition. TP Link, Asus for gaming oriented stuff, Xiaomi...
LOL What do you want for Christmas, Leonard? (Score:2)
The thing is, Microsoft underwent a period of change where they (thanks to government intervention) stopped being bleepity-bleeps and focused on making shitty software. So they regained a modicum of trust from the community.
Cisco would have to want to be better, and try to be better, before they would get to be recognized as having gotten better. Instead, they think they just need to invest some money in cloud-stuff, and they'll make more money. But there is actually a lot of competition in that niche, too.
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Microsoft basically managed to transform their transactional product roadmap lock-in to recurring revenue products. They didn't really become that much better on most fronts, apart from getting over being anti-linux in time to be a credible cloud service provider for linux workloads.
Basically, MS managed a credible MS-centric cloud story in time to keep customers that had everyone screaming 'move to the cloud' in their ears.
However, Cisco's lockin is mostly with stuff that is explicitly on-premise and has
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Maybe more of a push towards enterprise level virtual networking [wikipedia.org] along with a host of other technologies. [wikipedia.org]
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Isn't that what they were doing 20 years ago?
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At least for off-premise, the challenge is that they would effectively have to use Microsoft's/Amazon's network management to compete with Microsoft's/Amazon's network management. Even if they were hypothetically capable of building something better when they have full stack, anything they do is layered and redundant with the cloud provider's stuff and that's a really tough value proposition. I don't see that happening short of Cisco somehow magically being a provider themselves, and I see no road to that
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I think dropping a few $1000 on long dated PUTs on Cisco might be a good investment. I'll have to go check out the premiums.
You are right that is the direction the industry is moving but my question would be what value proposition can Cisco offer anyone there? The time to embrace that for Cisco was 10 years ago while the industry was flooded with professionals used to Cisco paradigms that had a vested interest in seeing those mapped on SAAS/Cloud offerings. The got their foot in the door with Nexus-V and vi
Cisco is hardly a failure. (Score:4)
WebEx is a deep failure. Cisco was there long before Zoom and now Zoom is almost a generic word. WebEx sucks badly.
The pandemic should have been the best opportunity for WebEx, but Cisco has squandered it.
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Very good example of Cisco problem, 'Webex' was basically the verb for teleconferencing, and once established, they just kind of sat on it. Cisco doesn't innovate to maintain a lead once they think they have it (in WebEx case, they bought it and then just went immediately to coasting mode).
Now they are well behind Zoom and even Microsoft Teams. I probably get asked to join a Webex meeting about as often as I'm asked to join a BlueJeans meeting, i.e. almost never.
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in WebEx case, they bought it and then just went immediately to coasting mode
That's all Cisco knows how to do.
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I think the only time I had to use BlueJeans was dealing with Facebook. Seems like it's owned by Facebook or something as it seems integrated into their systems and processes and half the fun was getting it to work right.
Incidentally, none of the FB people I dealt with seemed to figure out how to deal with someone without a camera. Bl
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In what way is Zoom better than WebEx? I really don't like Cisco, but in my experience, WebEx is far better.
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In what way is Zoom better than WebEx? I really don't like Cisco, but in my experience, WebEx is far better.
I used Webex extensively with Webex client since until about 2 years ago after which I switched mainly to Zoom but still used Webex a few times since.
In my experience, compared with Zoom, Webex's problem was
- had to dial-in separately (2 years ago), it often took ~3-5 mins for everyone to be ready. Zoom calls often have everyone ready in the first minute.
- later, Webex using computer audio has worse audio quality, stutter and distortion was much worse than Zoom
- worse video quality, again, stutter, and als
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I'm not sure what to say, because I have the opposite experience you do. Maybe it's where I live, but in general, WebEx calls are higher quality (for both my wife and me) and I can't remember the last time I had to dial in separately.
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One thing I have noticed about zoom is that on Android the battery drain is maybe half of google meet, and noticably better than whatsapp. No idea how it compares to webex, but so far it's been the best one I've used.
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What? I use WebEx on Linux almost every day. It works fine.
Microsoft? (Score:5, Insightful)
I would think the best example would have been Apple after Steve Jobs returned and the iPhone was invented.
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Apple is a more significant story, whereas Microsoft went from dominant to middling to dominant again. However, Apple's products are almost all consumer focused - and then enterprises have adopted them.
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"The best example of a tech giant stumbling then regaining its dominance is probably Microsoft"
I would think the best example would have been Apple after Steve Jobs returned and the iPhone was invented.
Not sure why you think it's a better example. Apple with the help of Steve Jobs basically invented a new consumer market. I don't think that is in any way appropriate for Cisco compared to using cloud and industry trends to further capture business markets in which they already operate.
Just because someone invented a consumer gadget doesn't make it appropriate for another company to do so. Expect Apple's car to amount to nothing for the same reason.
costs too much plus buggy (Score:2)
Cisco charges top dollar. Their products are buggy and are a huge attack target. No better way to paint a target on yourself than to run Cisco gear. And good luck getting the bugs fixed, even when you pay top dollar.
Cisco priced itself out of the market and then bought up a bunch of buggy junk to flip. No thanks, keep your crap Cisco - the world does not need you.
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Agreed. I won't even consider a pure (non-switching) Cisco router, anymore, and the only reason we still use Cisco switches is because the last time we refreshed our networking equipment, we were in a hurry and couldn't come up with anything better in a short time.
(If anyone has any suggestions for 9300 replacements when we do our next refresh, I'm all ears.)
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You Need Products (Score:1)
I can't think of a compelling product that Cisco offers these days.
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There is a dedicated RJ-45 connector for LOM access. The ma
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Problem is it isn't any more compelling than HPE, Dell, or Lenovo. The generic AMI firmware systems from companies like Supermicro are categorically worse, but still workable in a pinch. The major difference is its much easier to purchase from competitors and their competitors all have more models and options supported.
Cisco Press Release (Score:1)
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Cisco? They need to go "all in" on Meraki, really. (Score:3)
I remember when I worked at a job in the Metro DC area, our company used Cisco Meraki gear at all of our locations across the country. Therefore, I attended one of their annual seminars in DC. What I observed was Cisco really trying to push the Meraki solution to everyone in attendance (along with their security camera solutions). But practically everyone in the room except for me was some type of government contractor or employee, and none of them had any interest in it. The only reason why? Government guidelines for equipment purchases of that type were written many years ago, and had a number of specifics in them that ruled out the option of anything like Meraki that had a "cloud" component. For security reasons, at the time, the ability for the product to run completely "stand alone" was considered a must.
I'm sure this is slowly changing, but truthfully? Cisco probably makes a ton of $'s supporting all of these "legacy" firewall and router products of theirs that use only a command line. And that stuff is the "boat anchor" for them that will drag down any true innovation. Similar problem Oracle has, really. They specialized in a massively capable centralized database server solution that was *the* product to use for many years when you needed to store and look up a LOT of data really quickly. But the cloud obsoleted it with infinitely scalable solutions that only charge you for what you actually use. (During slow periods, you pay less since you're not hammering the server with queries.) Oracle has many lucrative contracts with all the customers who can't afford to migrate to something else right now. But it's not a real future-forward business model and all the money supporting the legacy stuff holds them back.
The Meraki platform and overall licensing model is a pretty good way to rake in a lot of cash while providing a flexible, easy to administer solution that MOST businesses today prefer. But even where I work now? We use Meraki and find it lacking in a few ways. A BIG gripe for YEARS has been their lack of real IPv6 support across the product line. Even now, in 2021, some of it is only a "beta":
https://community.meraki.com/t... [meraki.com]
Other issues include the relatively low processor power of the small units that you'd deploy to home office users to bridge their home network to your office LAN via VPN. Most aren't even capable of keeping up with a gigabit connection people commonly get from cable providers or fiber to the home scenarios.
I feel like Cisco just hasn't committed fully to Meraki because they still sell and support the traditional products, and they're afraid to "step on toes" by making Meraki too powerful vs some of that gear?
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It's a tough sell for on-premise equipment to corral the people into cloud management. There is value for off-premise offerings in the cloud ecosystem, but tacking 'cloud' to on-premise equipment doesn't really bring anything to the table that couldn't alternatively be done on-premise. From a non-technical standpoint, you can offer OpEx friendly purchasing model, but from a core technical function, it's nothing but a liability to keep the management plane for on-premise 'in the cloud'. Doesn't mean you a
RaaS (Score:3)
Router-as-a-Service?
i don't know if there is any money to be made from this space though...
Cisco And Microsoft (Score:1)
not a real comparison (Score:2)
no chance to survive make your time (Score:2)
Microsoft was able to claw its way back because so many people were still stuck with their formats and therefore their products (since the format specs literally say stuff like "do this the way word 97 does it") and so they still had organizational inertia. But Cisco's products are broadly standards-based (not the management in all cases, but the interfaces of the products themselves) so they can be relatively painlessly replaced with products from other vendors. There's lots of reasons why you can't ditch