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While Cisco was founded to build the routers and switches powering corporate networks, and it recently moved to embrace the server hardware business, the future for Cisco is as an applications company, according to CEO John Chambers.
In his keynote presentation Oct. 2 at this year’s Interop New York, Chambers said the next step for Cisco is to enable the “application-centric infrastructure.” The company will detail its embrace of the application environment in November, Chambers said. But he made it clear in his keynote that application centricity will become the company’s main theme.
“We compete against market transitions, not competitors,” Chambers said. “There will be a brutal consolidation in this industry,” he said, adding that the concept of the application economy will provide a road map for the whole technology industry.
The ability to create an infrastructure that is agile, simplified, automatically programmable and able to scale on demand is critical to enabling the application model, said Chambers. These products have to be designed for simplified integration rather than lengthy systems integration.
“You are not systems integrators,” Chambers told the audience. Cisco currently offers a range of application services, including an application network manager and its videoconference products. But the company has not positioned itself as primarily an applications vendor.
As an example of this application orientation, Cisco demonstrated a connected series of health applications that accompany a patient from checking in via Facebook, through reserving a room at the medical facility, allocating patient records and providing follow-up information. In a diagram of the ability to allocate resources and program the patient and medical facility interaction, the diagram showed an all-Cisco hardware environment as underpinning the application.
In his keynote, Chambers displayed his signature presentation mode of leaving the stage and walking amid the audience while talking about higher-level business and technology topics rather than getting into specific product details.
His focus on the rise of the Internet of Things and his expectations for growth from thousands to millions and then billions of connected devices buttressed his remarks highlighting the increasingly complex networks and increased network connectivity that will be associated with the vast sensor and mobile-based network access.
Notably absent from Chambers’ keynote was discussion of some ongoing network trends at this event that is traditionally focused on the nuts and bolts of network technology.
A previous speaker, Stephen Alexander, the CTO of Ciena, described the advent of the software-defined network as “actually under-hyped,” considering the potential for companies to potentially add connectivity on demand in a manner similar to the present compute and storage on demand capabilities now available.
Chambers Touts Cisco’s Shift to Applications in Interop Keynote
Cisco’s stance to two of the bigger trends in networks technology—software-defined networks and the OpenFlow standard—has changed considerably in recent months.
As analyst Patrick Moorhead described in a Forbes column, “Earlier this year Cisco announced its Cisco Open Network Environment (Cisco ONE) and the juxtaposition of the word “open” in a Cisco announcement has caused plenty of head scratching. Cisco prides itself on its technologies and is not necessarily one to push an open source standard; their business model is about captive customers and sunk investments that create a barrier for customers who want to switch to competing technologies.”
The upcoming launch hinted by Chambers is expected to be the public announcement of the much delayed product from Insieme Networks (a spin-in, as Cisco calls it). Insieme is the key to the application-centric infrastructure and incorporates a specially-designed ASIC (Application-Specific Integrated Circuit) chip to move congested workloads while migrating the associated security and policy enforcement procedures.
If that type of virtualized movement sounds familiar, it is the goal of many software-defined network architectures, which rely on merchant chips from vendors such as Broadcom rather than custom-designed chips. During his keynote, Chambers held up a chip—presumably the Insieme ASIC—which he described as key to the application model.
The Chambers presentation came a day after it was revealed that his salary had doubled in the past year. The increased salary comes at an awkward time as the company has instituted a series of layoffs and issued a less than robust business forecast.
As Bloomberg reported, “Cisco Systems Inc. Chief Executive Officer John Chambers received $21.1 million in compensation for the company’s latest fiscal year, almost twice the amount from the previous period. Chambers, 64, saw his base salary raised to $1.1 million for the year ending in July, from $375,000, according to a filing yesterday with the U.S. Securities and Exchange Commission. His previous salary was “historically low,” and the increase brings his compensation in line with peers, the company said.”
Eric Lundquist is a technology analyst at Ziff Brothers Investments, a private investment firm. Lundquist, who was editor-in-chief at eWEEK (previously PC WEEK) from 1996-2008 authored this article for eWEEK to share his thoughts on technology, products and services. No investment advice is offered in this article. All duties are disclaimed. Lundquist works separately for a private investment firm which may at any time invest in companies whose products are discussed in this article and no disclosure of securities transactions will be made.