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Cisco 2005 outlook: Fostering convergence is top priority

Cisco's 2005 agenda includes pushing deeper into VoIP and making networks easier to manage, but the networking giant's top task is to sell customers on its complex vision for the future.

Cisco Systems Inc. may still be the undisputed champion of enterprise networking, but in 2005 the vendor could face more challenges than ever before.

During the next year, Cisco will continue its effort to tie more intelligence into enterprise networks and to innovate voice and security products. However, industry observers believe the company is an underdog in the voice market and still needs to convince customers that the "all Cisco, all the time" approach is best.

Cisco has been on a multi-year move toward creating intelligent networks, which integrate more end-point devices and functions, said Rob Redford, vice president of Cisco's product and technology marketing.

Cisco has its work cut out for it. They have to convince people to dump other vendors and go with Cisco for voice.
David Passmore
Burton Group
Cisco's vision is to bring disparate technologies -- security, wireless, VoIP, video and presence -- together as a single system, Redford said.

The company is integrating support for many of these technologies into its routers, he added, aiming to make it easier to deploy network applications like VoIP.

"We're trying to be smarter in how we deal with all those component islands and filling in the white spaces in between," Redford said. "The network will play a foundational role in bringing together all those technologies."

A key example of the benefits that can be derived from such intelligent networks is Cisco's self- defending network strategy. The company has been adding more intelligence into network devices to help the network play an integral part in its fight against various attacks. It has also expanded its network admission control strategy, which augments the screening process used by the network when allowing devices to log on.

But such device screening requires that Cisco's strategy reach not only through the network, but also out onto end-point devices, said Dave Passmore, a research director with the Midvale-Utah-based Burton Group. To that end, Cisco is treading in new waters, since it has mostly been associated with technology residing in the wiring closet.

Passmore said that for some businesses, its continued expansion into the device realm may be cause for concern.

"While customers have been willing to embrace Cisco as a primary enterprise network supplier, they may be concerned if Cisco limits their choice of devices," Passmore said.

At the same time, Cisco's core business is under more pressure than ever before. It may still dominate the market for core networking equipment, such as routers and switches, but published reports claim that competitor Juniper Networks Inc. has nabbed more than 30% of the core router market, mostly by under-pricing Cisco.

Raise your voice

Voice technology is likely to be another key focus area for Cisco in the next year, said Zeus Kerravala, a vice president with Boston-based research firm Yankee Group.

Because Cisco is such a strong market leader in routing and switching, Kerravala said it is hard for the company to expand its market share in those areas. He said Cisco will likely use applications, such as voice, video and presence, to help expand the market for its networking gear in the future.

During the vendor's recent worldwide analysts conference, Cisco CEO John Chambers said it's critical for enterprises to consider how VoIP will combine with other elements of an IT environment in order to take full advantage of the technology.

Chambers asked, "If you're going to buy IP telephony just to replace your existing phone system, why do it?"

Redford said Cisco has been and will continue to build VoIP support into its new routers, which will make it easier for businesses to deploy VoIP service.

But Cisco is not the dominant player in the voice market the way it is in the networking world, Passmore said. IT faces competition from vendors with larger voice businesses, such as Nortel Networks Ltd., Siemens AG, Avaya Inc. and others. Even Microsoft is entering the voice space with a desktop soft phone supported by its Live Communications Server.

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"Cisco has its work cut out for it," Passmore said. "They have to convince people to dump other vendors and go with Cisco for voice."

A simple plan

Cisco is also likely to begin building Session Initiation Protocol (SIP) into more of its products, Passmore said. SIP, an IETF standard, has quickly gained popularity among vendors looking to ensure interoperability for multimedia and collaboration software.

In September, Cisco acquired Dynamicsoft Inc., a company that was instrumental in the early development of SIP, but Passmore said the networking giant has been slow to integrate the standard into its CallManager VoIP software. In the future, experts believe the company will further its SIP integration efforts in CallManager to appease interoperability advocates, while ensuring high performance levels through its largely proprietary VoIP approach.

Meanwhile, Cisco and other vendors in the enterprise networking business are facing the growing complexity of networks as they take on more critical applications.

According to Redford, this presents a tremendous opportunity for Cisco. He said Cisco's "systems approach" offers the increased flexibility and responsiveness that enterprises need from their networks in order to run more interdependent applications.

In any industry, such a progression from individual technologies to a system is inevitable, Redford added, and Cisco's 2005 products will enable businesses to run their networks more efficiently while increasing their capabilities.

Said Redford, "Our challenge is to take the most advanced technology and make it simple."

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