February 21, 2011 § Leave a comment
A few months ago, I had written about the slow yet defined remaking of Cisco. Since then, the Silicon Valley stalwart has delivered three lukewarm quarters and has seen its stock stagnate against its nimbler competition. The Wall Street Journal wrote an interesting article questioning some of the very moves it had lauded over the years. Analysts have also questioned Cisco’s slowing its pace of innovation against its competitors in its core area of expertise, routers. I figured the time is ripe to revisit my post and see if anything has changed fundamentally.
For starters, some of the niche acquisitions have not panned out as planned. Some of this is obvious. While the Flip camera product line was extremely popular at the time of purchase, it is now challenged by smart phones that do everything the Flip does and more. In addition, the Flip is a relatively pricey single purpose device while smart phones are multi-utility and carry a similar price of entry (excluding monthly service costs, of course). Cisco has been releasing newer models at a steady clip but the question is if the product has outlived its utility.
Cisco announced a tablet product, the Cius to capitalize on the popularity of the iPad. It wanted to target the product for businesses and enterprises that were well entrenched into the Cisco family of tools and services. On the face of it, this was a smart move. It still is, if Cisco can deliver not just a business solution but a universally appreciated productivity tool. Android tablets are expected to be all over the place this year and Cisco needs more than its suite of applications to sell the Cius. One of the Cius’s biggest selling points namely video conferencing might soon become a feature of iOS with the rumored front facing cameras in iPad 2. Also, when the Cius was announced, enterprises were still evaluating the iPad. Almost 8 months since then, the iPad is a certified blockbuster in board rooms and executives are clamoring for their own iPad. This, coupled with Apple’s increased attention to business customers and the Cius has indeed a big wall to climb.
Cisco continues to sell its routers and lots of them. In recent quarters, they have complained of a stagnant government segment (which might not improve much for the next few quarters considering how much of a budget hole most states are in). In addition, HP has started encroaching on some of the lower end router business. Cisco itself entered the server business recently with their Unified Computing System (UCS) and has made slow but steady inroads there. The pricey acquisition of Scientific Atlanta for its set-top box business gave a new business area for Cisco to get into but they have been reporting lower sales in the segment, where the main competitor Motorola has been doing well the last few quarters.
Overall, Cisco is going through a rough patch the last few months. It would be easy to blame its strategy of expanding into hitherto unknown segments but there was not much more to gain in their primary router business and the expansion made sense. Eventually, Cisco might shrug off a few of these acquisitions and settle down with just a few select successful ones. Until then, the San Jose behemoth deserves the benefit of doubt.
July 6, 2010 § Leave a comment
A couple of issues ago, Fast Company had a big article on on Smart Cities and how IBM, HP and Cisco are betting huge on them. There have been more from them on the same topic that can be found here . So what does a smart city mean and how does it impact you and me?
Most of you must have noticed IBM bombarding all business and tech magazines with its smarter planet pitch while Cisco does something similar with its “Smart+Connected Community“. Billions of dollars are being poured into courting everybody from local planning officials to heads of state. In addition, ads campaigns are all over the place and more is expected in the coming months.
The business folks at IBM and Cisco have reams of material on the matter here [IBM][Cisco] describing energy and financial savings for communities that become “smarter”. They are also touting better educational opportunities and improved government functioning as major benefits of moving to a smarter community. From what I have read and assimilated on this topic, it boils down to the following real world factors.
1. Building a well designed network to serve all aspects of the community from the ground up. Simple as it may seem, it hasn’t happened in much of the west since development and infrastructure growth has been staggered. When wiring a community from scratch, smart network engineers can do an optimized and well connected system that will account for potential bottle necks and build better load balancing techniques into the system. While this is in no way revolutionary, it will perform much better than most evolutionary infrastructures we are used to.
2. Using vast amounts of collected data to feed back into the system and optimize it from all aspects. This is something that is becoming bigger and bigger as we speak. Data Mining has so many applications that are yet to be “mined” (pun intended) it is mind boggling. IBM’s expertise in data mining will come into play here. Predictor systems will be in vogue and for a good reason.
3. Provide a backbone that can handle future traffic requirements. This is big. Much of the current infrastructure is not scalable enough to handle the explosion in Internet traffic. A smart city built from the ground up will be designed taking this very important element into consideration. If there is one thing all planners and designers agree- network traffic is headed one way, up.
4. Enable rich applications that were impossible until recently. This will be an offshoot of the previous point. The better the infrastructure and available bandwidth, more innovative the applications that can use them. This ties into some of the ad-speak of the smarter city ideas namely improvements in basic education and remote teaching.
5. Empower newer kinds of economies that lie untapped. This is an unknown entity which will remain so until each and every smart city identifies its niche and uses all the new found power to exercise it to its benefit.
But for all the cool things that it promises, there is a huge cost to pay. Each of these cities are billion plus dollar investments which will take a lot more to manage and maintain. Herein lies the bounty Cisco, HP, IBM and many more are after. The promise of newer revenue streams that could take care of the bottom line for years to come.
I am just waiting to see the first smart city built from the ground up that manages to not just be a showcase of cool technologies, but one that actually executes on a vision to put all of it to use for its citizens.
May 20, 2010 § 1 Comment
Somewhere in San Jose, there are big changes happening. One that is not being shouted out from rooftops but a major one, nevertheless. As the title of the post would have revealed, I am refering to the transformation of and at Cisco. For most of us, the perception of Cisco is a staid old router company that makes gazillions selling routers and switches to the world. While that is still very true, Cisco has made a very conscious and admirable approach to expanding its portfolio in very adventurous ways.
Looking at their acquisitions over the last few years, one can get an idea of how they are trying to spread their wings without fundamentally changing themselves. The first oddball acquisition really happened in 2003 when they picked up home networking gear pioneer LinkSys. At that time, people were surprised by Cisco’s move to the SME and home office business but it definitely made sense. Things were then relatively silent from their image makeover standpoint until 2005 when they acquired Scientific Atlanta, a profitable maker of set-top boxes. Until then, Cisco had primarily been a backend communication equipment vendor with the lone exception of LinkSys. With this, they were starting to expand further into consumer electronic devices. The rest of their 2005 acquisitions, minor yet important are listed here. In 2006, they acquired a bunch of complementary tools to start putting together an ec0-system for enterprise customers at the front end. They are listed here. Their next big acquisition came in 2007 when they picked up WebEx, a pioneer in web conferencing systems and business collaboration tools. This was a major move by Cisco, one that would be bolstered further by their Tandberg acquisition in 2009.
With WebEx and later with Tandberg, Cisco was placing itself more and more in the end point devices and services space- for enterprises big and small. This was a smart move to build a complete enterprise offering for its customers- many of whom had large Cisco accounts and affiliations. The icing on the cake happened in 2009 when Cisco is an extremely surprise move, acquired Pure Digital Technologies, the maker of the very popular Flip video systems. This was a straight consumer play that was extremely unlikely for a very large networking vendor. But by 2009, Cisco was no longer that Cisco 0f 1999. They were a “network” ecosystem player- one that made anything any everything that had an IP address and the ability to communicate via a wired or a wireless interface.
The launch of the Valet line of Linksys devices targeting the novice home network user and the acquisition of the Moto Development Group, a consumer electronics design firm confirms Cisco’s full on assault on home electronic and networking devices. The company is now intriguingly poised to be a force to reckon with across the full spectrum of networking gear- ranging from GigaBit core routers to consumer video capture devices, from corporate wireless systems to enterprise video conferencing software and hardware. This is not your dot-com Cisco. This is a very different beast and one that had a lofty vision.
Welcome to the Human Network!
May 3, 2010 § Leave a comment
Technology that truly impacts how good things can be done better is worth knowing, understanding and appreciating. As a lifelong student I have been interested to know how technology can, is and will impact education. A press release from Cisco today on its suite of classroom learning tools is worth taking note of.
The full press release is here:
I wont claim to be an expert and evaluate Cisco’s word on the matter. We will take it as it is – they have lived up to their claims for a long time now to be questioned on it. The suite in its entirety is pretty exciting in what it claims it can do. It will truly change distance education and e-learning systems if implemented fully. What I am curious to know is how can it impact low income education systems and school boards on a budget crunch (as almost all of the country is today)?. Can it save money for the school district or university system while improving on things as it stands today?
The other dimension to this technological evolution in how education is delivered is more personal – is there a downside to our dependence on such systems for learning?. When I was doing my undergrad, I used to have a handwriting that was appreciated and well respected. Once I hit grad school and subsequently a career in technology, my handwriting has significantly deteriorated. Reason- I use electronic systems to do most of my reports and communication. There is no value for the written word. The same is true for our memories. The more I trust my smartphone to handle my tasks and phone numbers and such, the less I focus on trying to retain this information in my head. As we head towards the smart learning systems that truly are innovative and ground breaking, do we stand to lose something else in the process?