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Posted by Andre Kindness on September 22, 2011
Brocade isn’t the loudest networking vendor on the block, but more than two weeks ago it released a subscription switching service that should have sent a shockwave through the industry. With Brocade Network Subscription,customers pay for their network infrastructure on a monthly basis. Sadly, the new service was not some new xfabric or new-fangled technology, the industry was quick to dismiss the news as anything more than another cloud announcement, and so Brocade’s subscription program registered only a murmur. What was missed was that the service helps to solidify I&O as a business unit on the same level as manufacturing, services, energy, and other businesses.
I’ve written extensively about how networking solutions need to support two business realities: 1) Enterprises are embedding themselves in their customers’ lives, and 2) businesses are forming symbiotic relationships with their vendors. In regard to the latter, businesses want to ensure that their vendor is creating products and solutions that are in the best interest of that company, and so there is an expectation that their partners will carry some of the financial risk and burden, ensuring that they will stay committed. On the vendor side and with respect to embedding themselves, the reasoning is twofold. First, Wall Street rewards recurring revenue streams, and this is more likely if the vendor can create something the customers can only get from that particular source. Second, vendors know it costs ten times as much to find new customers and would prefer to have a customer keep coming back to keep their operating costs as low as possible.
As a result, there has been a shift to a subscription service model. Take for example three distinct markets that support this strategy:
Although Brocade’s model is crude at this point, it’s really the beginning of what will come from them and the industry. With increased monitoring and reporting capabilities being required of the infrastructure, I&O could be paying a lot less if they were billed by usage. If you’re an I&O executive, I’d encourage you to pay closer to attention to this trend than you may have otherwise. Challenge your network teams to transform the economics of running their network by asking them:
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