Cisco CEO, John Chambers, has attacked most of his Silicon Valley neighbors lately, including some of his strongest technology partners. Chambers recently boasted to CRN: “when we compete, we don’t lose.” Chambers supported his comment with some numbers and trends that rate as questionable to erroneous. Consider his Avaya attack regarding telephony: “Avaya, who was going to out-execute us in collaboration, make no mistake: they are struggling. We’re beating them very bad.” If Cisco is crushing Avaya, why did Avaya gain 3 percentage points on Cisco last year as Forbes reported: “Cisco Sees Avaya Getting Bigger in Rearview Mirror.”
Additionally, Chambers bases Cisco’s market dominance on 65% of the telephony market. That is quite a claim considering Synergy Research Group reported a much more competitive telephony landscape (Cisco: 30%, Avaya: 22%).
On to Cisco’s overall competitiveness. If Cisco cannot lose, why does it keep leaving markets? Cisco exited the load balancing market a few months ago. Roughly a year earlier, Cisco decided energy management failed to suit its portfolio. Just prior to that exit, Flip Video no longer satisfied Cisco’s appetite. I could go on, but I think my point is made: Cisco’s presence in a market should not scare away competitors.
Cisco certainly should not be ignored. When it comes to networking, Cisco remains king of the castle (as far as market share goes). However, Cisco could easily be on the losing side of Chambers’ arguing points if looked at from the right angle (market share, lay-offs, share price, etc.).
Last month, I argued that the difficulty selling vanilla converged infrastructure stems from design without an application focus. To analogize, dynamite is unnecessary to tear down the shed in your backyard. On the flip side, a sledge hammer won’t help you knock down a skyscraper. Last week, Avaya announced its converged infrastructure (Collaboration Pods) and hit the nail on the head. Avaya, who specializes in applications, announced an array of converged infrastructure solutions laser-focused on applications. First, Avaya virutalized applicatioins (e.g. contact center, unified communications, virtual desktop, etc.), and then selected/built the hardware environment to adequately support the applications. Avaya’s approach to converged infrastructure is appropriate, thought through, and demands attention from end users and resellers alike.
Recently, Steve Wozniak (The “Woz”) expressed fears about everything moving to the cloud at its current rate: “I really worry about everything going to the cloud….I think it’s going to be horrendous. I think there are going to be a lot of horrible problems in the next five years.” In some ways, I completely agree. At the same time, I don’t think any problem cloud computing causes, no matter how “horrendous” or “horrible” will stop the transition to the cloud (I would challenge that no problem will even slow the movement down). Why do I dare brush off the beloved Woz’s prediction? I assert my prediction based on the same reason I hate the world’s worst sales pitch that never works: “You should buy my product because we created this product years before the competition.”
I agree, as more and more applications (especially mission critical applications) move to the cloud, problems will arise. We have already seen a fair share of cloud outages that have shaken the world’s perception of cloud as the next great technological movement. However, consider the method by which the next generation interacts with data and with each other. For instance, my three year old son recently rebuked his grandmother for suggesting that they watch his favorite Curious George on the larger screen TV as opposed to her iPad. My son preferred the iPad purely because of its cloud-essential benefits: 1) he could choose which show he wanted, and switch from show to show (on-demand, self service) 2) he eliminated the need to put a disc in a DVD player and wait for it to load (ubiquitous network access & resource pooling) 3) he had access to all the shows he wanted (rapid elasticity). Will this model fail him because of the “horrible” problems that might arise? Sure. However, he will simply change to another provider that will deliver him cloud enabled data in a more efficient/acceptable manner. Providers will learn from the cloud outages today and adjust. Those who don’t continue to meet the needs won’t push technology backwards to the pre-cloud days. More logically, new cloud providers arise that fix the problems.
Consider the state of Palm. Palm built the first internet enabled PDA in 1997. Does anyone bother arguing that a smartphone shopper should buy Palm over an Android or Apple device? No chance. Palm was first to market, but it failed to keep up to speed with the demand of users. Did that mean the internet-enable PDA went away? No, other companies simply made it better. The same phenomenon will occur with cloud, because technology always works this way.
Now that we know cloud isn’t leaving, despite its current inefficiencies, let’s address a question I hear on a daily basis: “What cloud storage provider should I use?” Well, that is a complicated question (a cop-out answer to most questions). It is truly a complicated question, but one that I will take the time to answer, in later post, based on the answers to questions that make the question complicated. Stay tuned…
Since Cisco, Intel, EMC, and VMware rolled out Vblock a few years ago; converged architecture has exploded…in theory. Converged architectures are a great idea; after all, integrating servers, storage, and switching takes IT departments a great deal of time and money. Who wouldn’t want a plug and play data center? We are now two or three years into the converged architecture movement, and the hype continues. However, before jumping on the converged architecture bandwagon, read the fine print and make sure you are investing in, or selling the correct tool for the job.
A recent Wikibon report claims the converged infrastructure market will hit $402 billion by 2017. Seeing as the market was born a little over two years ago, it seems like a winner on its face. However, the report includes “reference architecture” in its definition of converged infrastructure. By 2017, the report estimates that reference architecture will outsell single SKU solutions in this space by about 75%. In fact, the report also estimates that legacy, single application architecture will continue to outsell single SKU solutions by about 30%. What does this mean? It means the fully converged Vblock (VCE), vStart (Dell), VirtualSystem (HP), and other truly converged systems aren’t taking as their creators thought they would. In fact, EMC recently announced a reference architecture (VSPEX), which seems to question the validity of its original converged infrastructure (Vblock).
The problem with single SKU, converged infrastructure goes to a data center’s purpose. Not all data centers serve the same purpose, use the same applications, serve the same users; therefore, not all data centers require the same infrastructure from a hardware and software standpoint. Of all the infrastructure an IT department manages, the data center requires the most flexibility and customization. Accordingly, five versions of a converged infrastructure won’t serve the needs of every data center across the planet. The answer lies in application-focused infrastructure.
Application-focused infrastructure starts with the users and applications, and builds the infrastructure to serve those applications. Application -focused infrastructure goes beyond mere reference architecture, because integration actually occurs (preserving plug and play nature); however, it serves the needs of a data center’s purpose. For instance, a hosted VOIP data center requires different architecture than a hosted CRM application. Manufacturers can still offer converged solutions; however, the infrastructure must meet the needs of the VOIP or CRM application.
The theory behind converged infrastructure is great. It saves money and time to market for data center players. However, unless the infrastructure meets the needs of the application, converged infrastructure can’t serve a broad market and will never reach its expectation as a single SKU solution.
Hardware technology vendors constantly battle the “inevitable” commoditization of their products. Think about the massive price drops of PCs in the 1990s or servers soon thereafter. For years now, we have been warned about the commoditzation of networking equipment. When Cisco rose to dominate the market, the functionality of networking equipment took a back seat to price. However, a closer look at the numbers suggests that networking equipment has not commoditized like PCs and servers; and the value of innovative network technology still demands a premium.
To examine the numbers, consider three manufacturers that are the closest to “pure” networking vendors (i.e. Brocade, Extreme, and Juniper). Over the past ten years, each company’s gross margin has remained relatively stable, or has actually increased.
What’s the point? The point is simple; networking vendors are still innovating and offering new value to their partner and end user base. Networking equipment must continue to advance to support the Web 2.0 community and the rise of cloud computing. Perhaps the customer profile changes for networking resellers, but the need for feature-rich networking equipment remains vital. Cloud computing and hosted applications do not remove the need for hardware; it simply shifts its location (in some cases). The steady gross margin of networking vendors explains that partners can still demand a profit and don’t need to go to war on price to provide continued value to end users. The developing technology is impressive and resellers should take advantages of the opportunities.
In the early days of the internet, websites were pretty independent. If a website suffered latency problems or endured an outage, the problems were typically isolated to a single company. That was then, this is now…an evermore connected now. Last Friday, Facebook had a “bad day” according to a Facebook IT. However, Facebook’s “bad day” spread across the web like a pandemic. The top twenty news sites across the globe saw page loads slow from the usual 7 .5 seconds to 12.5 seconds. The top 60 retail sites, where faster load times is directly linked to more sales, page load times were more than twice as slow (5.7 seconds compared to the normal 2.2 seconds). How did Facebook affect industries around the world? The “like” button.
The like button is a small, isolated example of how connected the Web 2.0 world is. However, a like button issue is only a glimpse of the damage that can be done. Many companies, across nearly all industries, are heavily dependent on their web presence. In today’s marketplace, an ineffective web presence is simply unacceptable. In fact most companies, regardless of industry, are generating revenue in some capacity via their web presence. But, a sharp, user-friendly web presence is useless without a highly available network.
Whether its API calls, EDI feeds, or social media connecting multiple parties together, LANs & WANs are constantly communicating (internally and externally). Any glitch in your network can bring you down, but it will inevitably bring your neighbors down as well (whether the neighbor is in China, the US, or somewhere between). Whether we like it our not, a poor network will push customers, partners, investors, and leads away.
Infoblox is the clear leader in the DDI space. Accordingly, they should be the go to vendor for your DDI needs, correct? Unfortunately, very few know they have DDI needs. It would help to identify what DDI is. Gartner created the acronym to represent the DNS, DHCP, and IP Address Management (DDI) market. Now it is much clearer right? Probably not. Just identifying the three elements of DDI does not uncover any needs in the three areas. So, how do you sell into the DDI space? Try taking technology out of the picture. Try the following questions. Would you like to take the job of four employees and consolidate it into one? Would you like to take an IT process that has traditionally taken weeks to accomplish and reduce it to ten minutes? Anybody, regardless of technical savvy, can affirmatively answer those questions.
Infoblox clearly dominates the DDI marketplace (see Gartner’s report). As networks expand, IPv4 addresses run out, and manual processes to monitor/change network devices overwhelm IT departments, the DDI market will rise to a household name. No matter what niche of the IT environment you sell into (e.g. wireless, network, voice, etc.) and no matter what vertical your customers sit in (e.g. healthcare, retail, education, etc.), there is a good chance DDI already presents a cumbersome ball and chain for IT departments. Infoblox’s suite of DDI products immediately ease network processes; in turn, create immediate savings.