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Summary:

Light Reading has very exclusive skinny on the Cisco’s secret strategy to shift focus from pure hardware to value added services, a move which is going to put it in direct conflict with occasional partners, IBM, Microsoft and Hewlett Packard. This is not a surprise since […]

Light Reading has very exclusive skinny on the Cisco’s secret strategy to shift focus from pure hardware to value added services, a move which is going to put it in direct conflict with occasional partners, IBM, Microsoft and Hewlett Packard. This is not a surprise since even John Chambers acknowledged at a recent analyst meeting that the company is going to move in the direction of offering solutions. Cisco, despite making the usual noises about the Chinese threat, is facing the same problems of commoditization as rest of Silicon Valley darlings.

“They’re going to need something like [a software group] to bulk up those consulting services. It’s part of their move to quietly become more like IBM,” says Deb Mielke, managing director of Treillage Network Strategies Inc. “Cisco has an enormous dependency on their relationship with IBM,” says Tom Nolle, president of consultancy CIMI Corp. “The only thing I had heard was that they were expanding their professional services stuff, but I don’t think they’re doing applications development.”

Nevertheless, this is a strategy which could work if Cisco can pull it off. It will have competition. AT&T and Siemens are but two players who are focusing on offering solution than just products or single services. I spoke with George Nolen, President and CEO of Siemens USA and he pointed out that, “The communications and computing sectors are coming together, and the key for us as a company is to leverage the expertise we have in those two sectors and develop vertical solutions.” Yesterday Nortel CTO Brian McFadden expressed the same sentiments as well. Still it will be an interesting turn of events, and a new direction for Cisco.

By Om Malik

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  1. Cisco Services Push

    Om Malik writes today about Cisco’s secret plan to go from from pure hardware to value added services. This is the only option Cisco has in my opinion. It is obvious that Cisco has products that are either 100% commoditized…

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  2. Cisco Services Push

    Om Malik writes today about Cisco’s secret plan to go from from pure hardware to value added services. This is the only option Cisco has in my opinion. It is obvious that Cisco has products that are either 100% commoditized…

    COMMENT:
    AUTHOR: Rich Tehrani

    This is the only option Cisco has in my opinion. It is obvious that Cisco has products that are either 100% commoditized today or will be soon. Witness the rise and acquisition on no-name Linksys in a matter of a few years. Routers and switches will likely all be made by and sold by Chinese companies soon.

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  3. COMMENT:
    AUTHOR: Nick Gray

    Think this has anything to do with Cisco’s recent investment in CXO Systems?

    COMMENT:
    AUTHOR: Om Malik

    Nick that information about Cisco investing in CXO is about eight months old. Unless there has been a recent round of founding, I am not sure what to say about your comment.

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  4. It’s the software stupid…

    Stealing a good line from my good Friend Jeff.. Great post from Light Reading and Om Malik on Cisco software centrir strategy. I’m wondering what this means for Alcatel, Siemens, Eriscson and Co…Cisco has already set up a special software

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  5. I also have a short article and link to a extremely nice writeup on Cisco SONA that may be worth reading for those interested.

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