Cisco: Consumer behaviour trumps enterprise as network driver

Consumer behaviour, rather than the enterprise, is now driving Internet application adoption, Cisco says, causing the company to change its strategy.

Acceptance of new technology used to start with the enterprise and trickle down to the consumer. In recent years, that long-term pattern has done a 180-degree turn -- consumer technology is driving future IT endeavours. That shift is one of the biggest networking changes of the last 10 years, Cisco Chief Development Officer Charles Giancarlo told attendees at Cisco's C-Scape 2007 analyst meeting in San Jose this week. And if understanding the marketplace is key to developing any company's vision, then Cisco must embrace that shift.

Cisco is clearly embracing a consumer strategy, according to Robert Whiteley, senior analyst of enterprise networking at Forrester Research, but he noted that this isn't the only strategy at Cisco. "As Cisco approaches a US$40 billion run-rate, then it will have to address multiple segments across consumer, enterprise, small business and service providers," Whiteley said. "However, one of the unifying themes is this 'consumerisation' of IT."

Whiteley said he did not think Cisco was abandoning its traditional network professional buyers by focusing on consumers. Instead, he said, "They are developing a consumer strategy, which is subtle but different. If anything, I would have previously critiqued Cisco for trying to tackle each segment by repurposing infrastructure aimed for a network buyer."

Whiteley pointed out, however, that last year Cisco developed unique architectures for each customer segment, with its Enterprise, SONA; SMB, Smart Business Communications; Consumer, Connected Home; and Server Provider, IP NGN offerings. "Now they are pursuing strategies for each segment," he said. "I think this is a sign that Cisco is maturing and building the blueprint to continue growing beyond US$40 billion."

Cisco acknowledges demand for freedom from network boundaries

A major influence on Cisco's direction, Giancarlo said, is that users want to access the applications they use at home -- such as Facebook or YouTube -- in business as well. With this blurring of user boundaries, Cisco is no longer dividing users strictly into consumer or worker categories.

After moving to a unified communications focus for the enterprise by adding video and voice to their data network offerings, Cisco is now looking to adopt an advanced user focus that will extend boundary-free unified communications to all users "“ not just the enterprise.

"Today's market is about the merging of private and public networks, not about the use of data, voice and video in different market segments. It's about information and information sharing, collaboration and communications across environments, and entertainment," Giancarlo said. "Finally, it's about having the freedom to communicate at any time, anywhere, on any device."

Cisco's point of view on these changes in behaviour is that the network needs to make communications fluid and transparent. "We're looking at the network as a platform," he said. Over the next three to five years, Cisco will be moving forward as a platform provider that also provides software, as opposed to a vendor that just sells network hardware.

"I would mostly pay attention to the emphasis they are [placing] on the software side of the house," Whiteley said. "I truly believe they will transform their business -- albeit slowly -- to emphasise software as the key intellectual property and solutions they sell."

Video growth drives the vision

At its conference, Cisco repeatedly drove home the message that video is the networking driver of the foreseeable future. Tony Bates, senior vice president of Cisco's Service Provider Group, offered a variation on the message. "I think the killer app is broadband, actually, and one of the greatest enablers is video. Enough bandwidth has been built out that the time for video is now."

To prove the point that 2008 will begin the age of IP-enabled video in many forms, Giancarlo said nine billion video streams were served over the Internet in 2005. In 2006, the number grew to 301 billion. In 2007, the number of video streams will easily beat all projections, he said.

Even though consumers may be pushing video adoption, the increase in video streams, according to Giancarlo, is creating new opportunities he groups under the name "video convergence." This convergence includes business telepresence and videoconferencing, desktop video, digital signage and video surveillance. "All of this data needs to be transported and managed," he said.

Despite Cisco's shift in focus, Whiteley believes that Cisco will maintain its network hardware dominance for the foreseeable future.

Amy Kucharik contributed reporting to this article.

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