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              Monday, August 18, 2008

              Cisco and Juniper eyeing the long tail of consumers for their second act

              Very few companies have excelled in business beyond 25 years only with their first act, a product or a business model. Some companies recognize this early on and some don't. The networking giants Cisco and Juniper seem to get this and are looking for their second act. You don't wake up one day and drastically change your business model. It's a conscious decision based on long term strategy with very focused short term execution that is required to get to the second act.

              Cisco started their "human network" efforts by acquiring Linksys and Susan Bostrom completely rebranded Cisco a couple of years back. Consumerization of the brand was a big leap from an enterprise-centric organization to get closer to non-enterprise consumers. Few days back Cisco announced the Q4 results and John Chambers emphasized that Cisco would invest into adjacencies.

              "..and we will use this time as an opportunity to expand our share of customer spend and to aggressively move into market adjacencies."

              On the other side of the networking world Juniper recently hired Kevin Johnson as their CEO who was the president of platform and services division at Microsoft. Competing with Cisco has been challenging and Juniper did have their own share of issues in the past but let's not forget this company started during the dot com era, had a spectacular performance, survived the burst, and kept growing. But now is probably the right time to look for the second act.

              For Cisco, what could the second act be? Other than the obvious long tail of consumer-centric human network strategy I see a couple of possibilities:

              1) Data Center Virtualization:

              The virtualization is a fast-growing market segment that has not yet saturated. The real boundaries of data center virtualization are blurry since it is a conglomeration of server, network, and storage virtualization. Customers don't necessarily differentiate between managing servers versus backing up data across data centers.

              This is an adjacency that Cisco can tap into with its current investments into data center virtualization switches such as Nexus 7000, strong ecosystem, and great service organization (The service revenue is 20% of the product revenue). In fact this was speculated when Cisco announced this switch.

              This could indeed strain its relationship with vendors such as IBM and make it precarious who OEMs Cisco's switches in their data centers. Companies with large ecosystem would inevitably introduce "co-optition" when they decide to sell into the adjacencies that are currently served by their partners. They will have to learn walking on a thin rope.

              Virtualization with scale can lead to rich business scenarios. Imagine a network virtualization switch that is not only capable of connecting data centers at high speed for real-time mirroring and backups but can also tap into the cloud for better network analysis. The routing protocols and network topology analysis require massive parallel processing that can be delivered from the cloud. This could lead to improvisation of many network and real-time voice and data management scenarios that otherwise wouldn't have been possible. Cisco's partnership with a cloud vendor could lead to some interesting offerings - think of it as network virtualization on steroids.

              2) Network SaaS:

              Network Managed Services has always been an interesting business with a variety of players such as IBM, Nortel, Lucent etc. This could be one of the adjacencies that Cisco might pursue and make it a true SaaS and not just a managed service. I won't be surprised if Cisco acquires a couple of key SaaS players in near future.

              On-demand and SaaS have traditionally been considered a software and utility play. The networking companies already support the data centers that provision SaaS services but they could go well beyond that to provide Networking SaaS that provisions, monitors, and maintains the networks as true SaaS offering and not just as a managed service. This could include everything from network management, security, and related services. Traditionally SIs and partners have played this role but networking companies could see this as an adjacency and jump into it since it is a natural extension from hardware to data center to managed services to a SaaS delivery. Instead of selling to a service provider who sells services to customers an effective SaaS can turn the model upside down by partnering with service providers instead of selling to them and sell to an ever growing long tail of consumers.

              Monday, August 4, 2008

              Social computing in enterprise software - leveraging Twitter like microblogging capabilities

              Twitter was buzzing with posts on the recent L.A earthquake nine minutes before AP officially broke the news. This Twitter phenomenon once again proved that unintended consequences are always larger than intended consequences. As we would have never imagined people find amusing ways of using Twitter ranging from keeping buddies updated and getting caught drinking when they called in sick and the boss followed their tweets to ensue wave of media coverage to get out of jail. A recent proposal to use Twitter as an emergency system met with stark criticism citing Twitter's availability issues. I don't see this as an "either or" proposition. The answer is "and" and not "yes, but". Let's use Twitter for what it is worth. It's a great microblogging and crowdsourcing tool to tap into the wisdom of crowd with a very little overhead and almost no barrier to entry.

              Enterprise software should seriously consider this social computing phenomenon and leverage its capabilities by integrating such a tool in their offerings. For instance a social CRM application can use such a tool to help sales people effectively follow, collaborate, and close opportunities. The customer support system can provide transparency into the defect resolution process by service representatives tweeting the progress instead of logging it in semi-static IT ticket systems.

              Following individual tweets has its obvious advantages but correlating multiple tweets could be extremely powerful and could yield to interesting nontraditional usage models such as using it to run predictive markets, sentiment analysis, or to track a recall on salmonella tainted tomatoes in real-time.
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