Container and software-related purchases have dominated Cisco’s recent mergers and acquisitions, but it’s natural to wonder what they intend to achieve. Does Cisco believe it can become a rival to cloud software and server firms, or are they placing their bets on hosted network elements? The acquisition by Cisco may indicate the company’s future path. If you wan pass Cisco exam in the first try, please contact SPOTO to gain the most useful study materials.

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Since 2009, Cisco has been in the server industry with its Unified Computing System (UCS) product line. Since then, and particularly in the last several years, Cisco has acquired platform software to complement its hardware position. Given that Cisco usually presents whichever narrative is most likely to generate PR momentum, it has never been quite apparent where they intended to go with the content.

Cisco’s initial entry into servers stemmed from their data center switching business. Cisco has always been a very sales-driven organization. The IT organization, rather than the networking organization, often purchases data center switching. Therefore Cisco’s salesmen were calling on a new group of prospects for their rack switching. Given that data center switches in general and top-of-rack systems, in particular, connect server farms, the demand for them results from increased server space. Salespeople advised Chambers (Cisco’s CEO then) that Cisco should enter the server industry.

UCS has earned good but unspectacular income for Cisco, although its growth peaked around 2015, with most of its clients residing in the software and technology industries. In recent years, UCS has lost market share, according to most analyst assessments. This corresponds with the rapid expansion of cloud computing and containers, which raises doubts about Cisco’s motivations.

Cisco may be doing nothing more than aligning UCS with the platform’s present path. Users are increasingly interested in purchasing hosting platforms, which contain servers, operating systems, and middleware applications. Even more important is the user’s emphasis on platform software for the hosting value proposition; servers are merely cost centers to be bargained into “margin marginalization.” Since Cisco does not wish to be in the commodity industry, it makes logical to create a value-added product.

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The only issue is that IBM/Red Hat and VMware are entering the cloud-native area as established data center vendors. Their strategy is to replace the software platform while remaining server agnostic, which means that to compete with them, Cisco would have to either sell software without UCS servers or remove current servers to install UCS servers. The former requires competing with established providers, while the latter would be difficult to market to enterprise CFOs.

What are they doing, then? Cisco may be moving its attention to a future convergence of network and cloud, according to a second option. Remember that most of Cisco’s income comes from network equipment and that their strongest profit margins have been in the router market. The price of routers is under pressure, and both network operators and companies are interested in open-model networks, putting pressure on Cisco’s core business. Could Cisco be attempting to sell servers to customers with new network missions requiring servers and network equipment? Consider “carrier cloud.”

Carrier cloud is comparable to the Seven Cities of Gold; everyone “knew” they existed, but no one has ever discovered them. The potential of carrier cloud is huge, with over one hundred thousand data centers holding millions of computers by 2030. If implemented, it would be the single greatest source of new server acquisitions worldwide. Best of all, carrier cloud is marketed to carriers to whom Cisco has been selling for decades.

This is problematic since operators have not yet made a substantial financial commitment to the carrier cloud. Due to a lack of knowledge of how the apps would function, most perceive “carrier cloud” applications, but few are confident in their ability to establish a business case or assign a cost to them. NFV was the only cloud driver for carrier clouds that operators truly understood, but it failed to establish confidence. As sales-driven as Cisco is, it is not in their nature to invest many sales resources in teaching a market they know will be competitive if customers learn the ropes.

5G and Open RAN might be the next chance for Cisco and carrier cloud. Here, the opportunity and its execution expand rapidly, funding/budget is in place, and market momentum is evident. Cisco may perceive a chance to seize control of the carrier cloud by seizing hold of this next driver. In addition, they may utilize 5G and Open RAN to solidify their position in the “separate control plane” concept. To make their stance a reality, Cisco must split the control plane and extend it partially into the cloud.

The issue with this is that for a corporation that has never been a software pioneer, it is still an ambitious goal. I believe it is more possible that a Cisco rival would seize this opportunity, in which case Cisco would likely view it similarly and not spend significant resources at this time. Their desired job is the swift follower.

What does this result in? “If you eliminate the impossible, whatever is left, no matter how unlikely, must be the solution.” While none of the suggested Cisco container motivations are implausible, I believe the first one that Cisco wants greater data center traction is the most plausible. A recent Network World article indicates that Cisco’s major motivation is the enterprise data center.

One valid argument is that Cisco already has a relationship with the buyer in that market. Cisco believes that the enterprise, or the leading-edge businesses in that sector, will likely move quicker than the service providers. Service provider profit per bit issues are significant, and it may take years to develop and fund a plan.

A last, perhaps decisive argument is that the carrier cloud is more cloud than the carrier. If there is a viable market for carrier cloud in the future, service features will be based on regular public cloud technology rather than network technologies. Consequently, a Cisco project addressing the near-term cloud-native potential for the corporation today might provide future benefits for carrier cloud ambitions.

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Last modified: 2022-09-30



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