Cisco Looks to Transform

Business initiative will shift the company toward software

Five years from now, Cisco Systems may be thought of as a software company rather than a networking box supplier, if its network-is-the-platform strategy is successful.

Cisco wants to create what could be described as a network version of a hypervisor, aimed at allowing customers to more easily plug in the services they want to add into the network without disrupting existing operations, said Cliff Meltzer, Ciscos senior vice president of network management.

The transformation will change significantly how Cisco sells its advanced network services to customers, moving from requiring users to add another appliance or blade as they add more advanced services, such as security or VOIP (voice over IP), to licensing new features implemented in software that can be downloaded over the network, said Meltzer, speaking Dec. 13 at Ciscos C-Scape conference here.

The software transformation initiative also will open up information available in the network to third-party developers or other partners to allow them to exploit that information for their own applications. "The network has a broad view of whats going on with traffic, congestion, service-level agreements or what performance users are getting. If youre making quality-of-service or policy decisions, this is the right place to do it," Meltzer said.

Cisco wants to isolate services using the type of dynamic service provisioning techniques used in data centers. Today, those services are intertwined with Ciscos IOS (Internetwork Operating System) software, so that a problem with one service can affect others running on the same processor. By using multiple partitions running on a given piece of hardware, Cisco will expose its advanced services with wrappers "that allow others to customize for their own business," Meltzer said.

The transformation, which will not require a change to IOS, is built on Ciscos SONA (Service-Oriented Network Architecture), which officials described as complementary to SOA (service-oriented architecture)-based applications. "SONA puts networking in the SOA context. It provides a set of information and services that are networking-specific," said Charles Giancarlo, chief development officer at Cisco. "Presence, location, user management, information about data flows—that can be valuable to other application environments."

Ciscos move will not require a major change to its hardware for switches and routers, but it will give the company greater flexibility in the form factors that advanced services such as security and application acceleration run on, said Peter Christy, an analyst with Internet Research Group.

By more loosely coupling hardware and software, the software transformation aims to better manage complexity to simplify how customers and partners use Cisco advanced services. In addition, it will give Cisco customers a broader array of purchasing options, company officials said.

Meltzer did not detail any new pricing options Cisco will offer, although they will be based on usage rather than by the box. The five-year time frame for the rollout of a new Cisco

software-oriented business model depends in part on Cisco implementing the necessary back-office functions to support a change to its pricing, Meltzer said.

Pricing could be Ciscos biggest challenge, said Christy. "How do you continue to sell the same thing to people and not have prices distort what salespeople sell and what the channel people want to sell?" he asked.

Giancarlo said the motivation for the transformation is "not to charge more money to our customers for the same functionality, but to create a more flexible environment and one that has entitlement associated with it." In fact, he said the move could "allow us to charge less."

The first step in the initiative will come in January, when Cisco launches a new software activation capability for IOS and the new Cisco License Manager, said Marie Hattar, senior director of network systems at Cisco. Today, the company has eight levels of IOS that offer different services. Cisco wants to consolidate that into three main "buckets" that will be shipped in its routers and switches starting early next year, Hattar said.