Cisco CEO Predicts ‘Brutal’ IT Consolidation

http://www.enterprisetech.com/2014/05/22/cisco-ceo-predicts-brutal-brutal-consolidation/

by ForHackernews • 12 years ago

92 51 12 years ago

6cxs2hd6• 12 years ago

The slide that shows them #1 share in "Cloud"... does anyone know what that actually means?

csears2• 12 years ago

It's not very clear, but it sounds like a roll up of various *-as-a-Service offerings, each of which may have been #1 in their niche markets. Also the fabled OpenStack InterCloud seems to fall into this business unit.

There's a fairly long list of the products/services here: http://www.zdnet.com/ciscos-big-cloud-play-why-it-had-little...

Guthur• 12 years ago

Cloud is a marketing term more often than not.

Reminds me of EA's (computer games) latest Sim City. They stated that the player's city would be saved on the cloud, when in reality players logged onto various regional servers ie Europe1 Europe2 etc. The player's saved city were only available on the server they were created on. This was just really naive explicit horizontal scaling and not the seamlessly scaled client/server arch their marketing implied.

So yeah 'Cloud' mostly a marketing term.

Spooky234• 12 years ago

They consider UCS a private cloud in the can, which was introduced at a good time when IBM's f-up of x86 was enough to scare away even risks adverse enterprise customers. So they've seen lots of traction.

They also consider webex and some UC stuff (Jabber, some voip, etc) "cloud".

gaius3• 12 years ago

Cloud is anything you want it to be. That is literally what the symbol means on architecture diagrams.

csears2• 12 years ago

The idea that big companies who fail to innovate will die off or get acquired is hardly an earth-shattering prediction... it's just the way things have always happened.

The more interesting long term question is how much IT infrastructure will organizations want to own and how much they will want to push off to service providers. I think Cisco will find it hard to maintain their margins and growth if enterprises make a major shift to off-prem cloud infrastructure.

spydum• 12 years ago

Cloud hosted infrastructure hurts EBITDA, most enterprises will never move, as OPEX is a dirty word.

rdl• 12 years ago

I'm sure there will be a financial innovation to address that. Like Reserved Instances, but more so.

lifeisstillgood• 12 years ago

ohhhh that's interesting ... especially as all it takes to make cloud a capital investment is a contract with the cloud provider and rental agreement ...

ahsanup• 12 years ago

Unless you're an insanely large company, in the long-run, you can probably save on OPEX by switching to cloud infrastructure. You get away from purchasing hardware for yourself, which inherently reduces OPEX.

discodave2• 12 years ago

False,I know of a large Australian bank who was looking into S3 late last year.

general_failure• 12 years ago

Stating the obvious stuff mostly.

higherpurpose• 12 years ago

If anyone deserves to fall from the 5 it's Cisco (and Oracle, but that's more like wishful thinking).

qwerta• 12 years ago

You have to give some credit to HP, they are trying really hard.

briandh• 12 years ago

What does "the 5" refer to?

JanezStupar• 12 years ago

My guess is: Cisco, Microsoft, Intel, Hewlett Packard, Oracle (IBM?)?

droopyEyelids• 12 years ago

Ah, just imagine the Cisco sales rep. He's with your CIO in a skybox at the big game. Salmon fillets sizzle in olive oil as he pulls down his sleeve... He's done talking to your CIO about their Rolex watches, and now it's time for business.

"You see," he says "Thats exactly how an Open Source solution on white label hardware will end up costing your company AT LEAST 25% more! Once you've got a few UCS chassis installed, you start to see how things work because you don't even install servers or switches anymore! There's not even a choice. It's just blades and fabric interconnects. Imagine all the time you'll save worrying about compatibility, proof of concepts, the support costs, training..."

enraged_camel• 12 years ago

I didn't understand half the terminology you used, which means I'm well on my way to become a CIO and buy lots of Cisco products!

redwood• 12 years ago

Not 25%, "about 27%" lol

us0r• 12 years ago

LOL having sat in on many of these... shows? ... adventures? this is about spot on.

nrao123• 12 years ago

This is a must read article for anybody Trying to understand what's going on in the hardware / server side for enterprise IT.

Cisco's bet seems to be that they can't do anything about hyper scale data centers (AWS, google, Azure, Facebook etc) since they will have the scale to design their own hardware.

So- they are going after large enterprises that want to still have their own servers. In this market they seem to be growing.

But - their strategy reminds of me Of trying to provide the most efficient newspaper printing machine just before the printed newspaper itself gets killed.

Two points supporting the newspaper analogy:

1) If the applications themselves (SalesForce, workday, Successfactors etc) are moving to the cloud & delivered from their own servers or AWS, Then won't the overall demand for enterprise hardware Itself reduce?

2) Even if companies want their own custom Computing resources (e.g. Analytics) - won't These sub-scale enterprises themselves go with The hyper scale data centers (AWS, azure etc) ? What on earth makes these enterprise companies believe That they can take Cisco hardware & believe that they Can be more cost efficient than AWS/Azure.

opendais5• 12 years ago

Given a significant number of companies are most cost effective than AWS/Azure/Google/Etc with relatively stable workloads, I think you are completely nuts.

AWS's calculator and the assumptions the threw into it pretty much proves they aren't cost effective except compared to other cloud providers. They basically 'made up' the self hosted numbers. At $DAY_JOB, our self-hosting costs at a colo facility are something like 33% the cost of using AWS.

valas• 12 years ago

Perhaps at current AWS prices your self-hosting is 3x cheaper.

But thinking about fundamentals, a few years out, why do you think self-hosting will still be cheaper? What is it in self-hosting that economies of scale of AWS/GCE can't crush?

AJ007• 12 years ago

I was discussing just this with my friend yesterday. AWS remains many multiples more expensive than managing their own hardware; additionally their main office's internet connection remains less than perfect (which is a whole other wildcard.)

The question is, what happens when the cloud is cheaper than doing it yourself?

count• 12 years ago

Different orgs have different cost models, and AWS is most definitely NOT more expensive for lots of them. It's also not always about bare bottom possible price for 'colo' type hosting. There's a ton of value to bringing up capacity for a few days and then making it just go away, which many F500 and govt shops struggle with.

incision2• 12 years ago

'What on earth makes these enterprise companies believe That they can take Cisco hardware & believe that they Can be more cost efficient than AWS/Azure.'

In my experience, it's a combination of fear, bad math, effective sales reps and a strong sense of self-preservation.

There are undoubtedly places that self-hosting is more efficient or a simply superior option, but the typical enterprise is unlikely to fit that bill.

Trying to enact change in enterprise IT is like playing the Game of Thrones. There are all sorts of entrenched interests and alliances at play.

Even as CTO, shifting a decent sized environment to the cloud surely costs your reseller more in margins, and possibly your account manager more in commissions than you make in a year. It also likely means cutting staff.

Regardless of their level, people get very nasty when you 'mess with their money.

It's a hell of a lot easier to just keep up the status quo and keep everyone happy. Furthermore, when the shift becomes truly unavoidable, the people powerful enough to have made the move earlier aren't going to be the ones losing their jobs.

What's really tragic is that recent history suggests that the shops which are slowest to transition will be eaten by their current allies in the end.

All of the big enterprise companies will gladly sell the executives on managed services - conveniently funded by removing entire swathes of staff.

desas• 12 years ago

What on earth makes these enterprise companies believe That they can take Cisco hardware & believe that they Can be more cost efficient than AWS/Azure.

Effective sales people and existing relationships

dmourati• 12 years ago

I just took a quick diversion from reading The Functional Art to checkout this story. The book covers information visualization and the three graphics in this story would rate very low according to the book's guidelines, in particular the series of pie charts.

I enjoyed the brutal comment though.

incision2• 12 years ago

The traditional enterprise IT ship is about to slip beneath the waves and Cisco wants everyone to know they have a sizable piece of wreckage to cling to.

Not a bad strategy.

I find it funny that Cisco loves to paint itself as prescient when they're actually pretty erratic and consistently late. They're just huge, yet nimble enough to consistently make the podium in some sense.

Cisco bought Tandberg as the world was moving on with Skype, Hangouts and Facetime. Cisco brought forth converged infrastructure as the world was shifting out of the datacenter. Cisco started making sizable investments in private/hybrid cloud in the last year when it would have meant a lot more in 2010. You've probably never heard of Cius, Quad or SDN (in relation to Cisco) but they were keynotes 4, 3 and 2 years ago respectively.

'And if you look at three years ago, Huawei, Avaya, and Juniper were the worries, and they were going to eat our lunch.'

Cisco didn't fend off Huawei so much as the government blocked them from competing on the premise that China would do exactly what it turned out the NSA was already doing.

RockyMcNuts• 12 years ago

Unlike Wintel, even mobile/cloud still needs network equipment LOL.

It's a pretty amazing business, when you think about how much you pay per Ethernet port to run your business, and how much goes to Cisco, and what it costs to make that equipment. Think about what you pay for a firewall, router, switch vs. a server.

But software-defined networking seems like a paradigm shift that will be rather disruptive. Just makes no sense to buy all those firewall, router, and switch boxes, when they could all be virtualized and integrated (like VMware did to servers, and they want to do to networks with the Nicira SDN acquisition).

Meanwhile, Cisco makes a lot of acquisitions, many of which seem pretty stupid: Scientific-Atlanta and NDS, just when cable TV is about to get its lunch eaten by over-the-top; Flip video camera (Pure Digital) just when it's about to become an iPhone feature (and I guess they couldn't turn it into GoPro)

Then they bought back $70b worth of stock since the dot-com crash, distributed a rather hefty chunk of that to management. Enterprise value down to $96b.

So...could be a great business but not sure it's a great strategy or great management.

contingencies• 12 years ago

Agreed. This is mostly marketing drivel.

True story from this weekend: I have been setting up some Cisco branded devices. 'Hidden costs' were mentioned in the presentation... I found plenty with Cisco's stuff: the fact that their reams of documentation are almost designed not to get you moving, the fact that they insist on using RS232 console cables in this era of zero RS232 port availability, the fact that they constantly software-license features that complicate getting anything done, the fact that they want you to use some kind of ridiculous Java interface (that won't run on most versions of the JRE, on most platforms), the fact that their systems take minutes to tens of minutes to reboot despite being built for purpose... I'm sure I could go on. I've wasted hundreds of hours on Cisco kit in the last 20 years, and quite frankly I'm happy to avoid it whenever possible.

Huawei is kicking ass, Cisco is bullshitting everyone in this presentation as far as legally possible.

mathattack• 12 years ago

There is a lot to be said for being the standard (or 800 pound gorilla) in a key market. Look at Oracle. They've made a ton of mistakes, but they are the king of relational databases, and the amount of data will only increase.

We are in an age of increasing connectivity. The king can make it's share of mistakes.

Cisco CEO Predicts ‘Brutal’ IT Consolidation

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