Cisco’s physical approach to a virtual and connected world

Cisco held its annual C-Scape Europe, Middle East, Africa and Russia (EMEAR) conference in London a couple of weeks ago, where Chris Dedicoat and team outlined its strategy, vision and go to market activities. You’ll want to learn more about how its taking advantage of its strong position in networking to grow its business.

The Figure shows Cisco’s worldwide financial performance recalculated to calendar quarters for the period from the beginning of 2003. Net profit has doubled to $7.8B and revenue more than doubled to $47.2B since then until the end of September 2014. The drop in revenues around the Credit Crunch in 2008 and 2009 was less than most similar sized suppliers.

Application Centric Infrastructure (ACI) – 200 customers one year on

I had a look at ACI a year ago. Since launch Cisco claims to have sold Nexus 9000 switches to 1k customers worldwide, of which 250 or so are in EMEAR. It currently has 200 ACI clients using its Application Policy Infrastructure Controller (APIC) however, despite the new switches being a sine qua non. Reference accounts include:

• Du, the second largest mobile operator in the Middle East, which is using ACI to consolidate its IT operations from 14 to 2 data centres in Dubai and Abu Dhabi to run its 29 services
• E*Trade an online brokerage which has moved to ACI for handling auditing and regulatory controls from Infiniband connections which proved too costly and complex
• Qatar University, with a multi-tenanted IT environment supporting 16k students, is using ACI to move from ‘chalk and talk’ to more sophisticated customer services
• Qbranch (a Swedish Managed Service Provider) delivers hybrid IT solutions from its 4 multi-tenanted data centres; it’s using ACI to create a single logical data centre from 2 physical ones in order to deliver better stability and a number of new services
• Symantec is using ACI to change its IT operations across 85 countries from a heavily outsourced to an insourced model as it prepares to split itself into 2 separate companies;

As the examples show ACI can be split across data centre, branch and campus infrastructure, giving it advantages when used in large and disparate organisations.

EMC’s decision to take the leading role in VCE and the reduction of Cisco’s stake to just 10% will no doubt reduce the chances of ACI adoption by vBlock customers – VMware’s SDDC ideas are more likely to catch on there, despite all vBlocks being ‘ACI-ready’. Cisco is widening its hypervisor support beyond VMware’s ESI and ESX to embrace KVM and Hyper-V, claiming that 45% of users now have a ‘multi-hypervisor’ strategy. However, despite ACI being application centric, Cisco has little to say as yet about Docker and other container approaches that do without the need for virtual machines and hypervisors all together.

Cisco’s Unified Computing System (UCS) – the standout leader in CIandIS markets

There are 2 new UCS models in Cisco’s data centre portfolio. In particular:

• The M Series uses an innovative architecture in which CPU, memory, peripherals, adaptors and fans are modular components; it decomposed these elements by extending the PCI bus within the design, which has cartridges in the front for processor and memory and in the back for peripherals; it uses a CPU Link to extract the systems memory into separate cartridges and claims these systems can be managed far more efficiently than traditional ones; specific components include the M4308 Modular Chassis and M142 Compute Cartridge
• The UCS Mini includes the 5108 Blade Server Chassis, which can accommodate a maximum of 15 half-width B200 M3 Blade Servers; It operates on dual voltage AC (100-120V or 200-240V) and -48V DC power supplies; it also includes the top-of-rack 6324 Fabric Interconnect and UCS Manager; optional components include the 1U C220 M3 server (for Web serving and database workloads) and the 2U C240 M3 server (for storage-centric workloads), as well as UCS Central for managing multiple, globally-distributed UCS and UCS domains from a single control pane.

The M Series looks a bit like Dell’s FX2 or even HP’s Moonshot, while the UCS Mini is more like Dell’s VRTX.

Despite only having a 4.8% share of the total server market, Cisco is in second behind HP in blades; as the continuous miniaturisation of system components opens up the market for cartridge-based systems, it will be interesting to see how Cisco succeeds there also.

Worldwide there are 40k UCS customers who use its own, VCE vBlock (with EMC), FlexPod (with NetApp storage), VersaStack (with IBM storage), and UCP (with Hitachi storage) systems, making it the standout leader of the CIandIS market. I believe it can take a more expansive role – especially in hardware maintenance services, where it is currently weak in comparison with other data centre system vendors.

Deep strides into the Internet of Things (IoT)

Of course the digitisation of analogue processes in the real world is creating streams of data, which could be used for improving productivity, service levels and even in reducing costs in some cases – in some cases ‘IoT’ is a just a fancy name to help IT executives understand an issue which not new to those running the processes.

However, despite being immature and largely misunderstood, IoT is an important developing theme for Cisco, who sees the secure connection of sensors, monitors and machines to IP networks as an essential development in modern computing. It reports a tripling of its own 200k devices over the last few years and is making a strong commitment in terms of partnerships and investment to the subject. In particular:

• Its partners include Rockwell Auto, Schneider Electric, Itron, AGT, Emerson, Honeywell, Black and Veatch
• Its offerings include network connectivity, cyber and physical security, data analytics, management and automation, as well as application platforms
• It has also spent $250M to date in a investment fund for smaller IoT developers

It talks intriguingly of ‘Fog Computing’ – an extension of infrastructure beyond the data centre, branch and edge for the connection of ‘thing’ devices to the network, which in turn is built on its ACI and Nexus 9000 products. The ‘thing’ devices include ruggedised wireless AP, industrial routers and switches, industrial security, hardened mobile M2M gateways, IP cameras and video surveillance systems.

Its current go-to-market activities take an industry sector approach, focusing on over 40 separate solutions for Manufacturing, Transportation, Energy and Minerals, Public Sector and B2C organisations. Its reference customers here include The Hamburg Port Authority, the Portuguese Schools Unify Energy Management project (with Schneider Electric) and Rio Tinto’s Mine of the Future.

How the InterCloud business model makes money

The InterCloud brand was launched in March 2014. It’s a business model – not a technology – and is based, according to Cisco, on 5 principals. In particular that:

1. The current financial model for public Cloud is unsustainable – a huge shakeout is coming
2. It’s all about open, secure, compliant connectivity – not vendor-centricity
3. The network will play a critical role in enabling granular services and applications with associated SLAs
4. A robust Partner ecosystem is fundamental – it’s not a ‘vendor direct’ model
5. The money and the value is in enabling digitalisation through IoE enablement

The technology used in the InterCloud is less proscriptive than in many other areas, since – although Cisco’s own ‘aaS’ offerings are based on KVM, OpenStack, UCS and ACI components – it can accommodate non-UCS and/or non-OpenStack solutions from others. Among its 45 partners Telstra, for instance, is basing its solutions on OpenStack, while another, BT, is not. The basis of its approach is that security for InterCloud applications can be guaranteed in a way those on public clouds cannot.

How does the InterCloud model make money for Cisco? In future I expect Cisco to take a wider interest in becoming a Cloud broker, not least because many of its customers have plans to become software providers themselves. It will also be able to make money from data (IoT and traditional) that moves over its wider network facilitated by its publishing 3.5k open APIs to date. At the moment it is making money from building Clouds with network components, ACI, Cisco One software and UCS and in selling Cloud services such as WebEx Squared, Meraki, security, Analytics, HANA aaS and vDesktop aaS.

To become an InterCloud partner you’ll need to make a commitment to implementing Cisco’s InterCloud Fabric in the Enterprise data centre buying installing its Cisco One software and at the Service Provider end; you’ll also need to buy APIC, which requires Nexus 9000s and APIC control software. As I mentioned above however you won’t necessarily need to buy UCS itself or adopt OpenStack.

Cisco’s approach is interesting – unlike Dell worldwide and HP in Europe it’s offering SaaS from its own data centres; however it is not backing away from data centre equipment sales like IBM to focus on becoming major Cloud service provider in its own right. Its approach includes enhancing the security of Cloud services and placing it under centralised control.

Some Conclusions – an integrated, Cisco hardware-centric future

Cisco’s success is largely due to early involvement in – and pioneering of – IP networking. Routers and switches based on Cisco’s ASICs represent over 50% of the Enterprise Network market, but – unlike Intel’s chips – are not ‘industry standard’, as they don’t share a common instruction set with other suppliers’ products. It is taking advantage of the start of a new refreshment cycle for network products to sell the Nexus 9000 and upping the ante by making this and other new offerings compulsory components of much of its SDN, Cloud, IoT and CIandIS approaches.

It clearly understands the new investment intentions of its major customers and has significant momentum in a market that’s proving difficult for many system suppliers. It hopes to prove that its expertise in infrastructure, virtualisation, security and ease-of-management encapsulated in its ASICs still offer significant advantages over competitors who claim you can save a lot of money by building systems without them. VMware’s less hardware-proscriptive SDN approach will provide strong competition in coming years.

Cisco’s points of control include Nexus 9000 within ACI, UCS Director and Compute Blades within UCS, ACI and APIC within IoT, as well as ACI, APIC and Cisco One software for the InterCloud. Even though Cisco has a wider set of upstream partners than any other IT vendor and is relevant to most current industry trends and customer investment areas, Cisco remains mainly a hardware supplier – putting its Intellectual Property IP into the ASICs of its Internet Protocol IP network products.