Cisco’s Secret Software Plan

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.