I met recently with Cisco’s UCS group in San Jose to get a quick update on sales and maybe some hints about future development. The overall picture is one of rapid growth decoupled from whatever pressures Cisco management has cautioned about in other areas of the business.
Overall, according to recent disclosure by Cisco CEO John Chambers, Cisco’s UCS revenue is growing at a 550% Y/Y growth rate, with the most recent quarterly revenues indicating a $500M run rate (we make that out as about $125M quarterly revenue). This figure does not seem to include the over 4,000 blades used by Cisco IT, nor does it include units being consumed internally by Cisco and subsequently shipped to customers as part of appliances or other Cisco products. Also of note is the fact that it is fiscal Q1 for Cisco, traditionally its weakest quarter, although with an annual growth rate in excess of 500% we would expect that UCS sequential quarters will be marching to a totally different drummer than the overall company numbers.
There has been a lot of press about IBM’s acquisition of BNT (Blade Network Technologies) focusing on the economics and market share of BNT as a competitor to Cisco and HP’s ProCurve/3Com franchise. But at its heart the acquisition is more about defending and expanding a position in the emerging converged server, networking, and storage infrastructure segment than it is about raw switch port market share. It is also a powerful vindication of the proposition that infrastructure convergence is driving major realignment in the vendor industry.
Starting with HP’s success with its c-Class blade servers and Virtual Connect technology, and escalating with Cisco’s entrance into the server market, IBM continued its investment in its Virtual Fabric and Open Fabric Manager technology, heavily leveraging BNT’s switch platforms. At some point it became clear that BNT was a critical element of IBM’s convergence strategy, with IBM’s plans now heavily dependent on a vendor with whom they had an excellent, but non-exclusive relationship, and one whose acquisition by another player could severely compromise their product plans. Hence the acquisition. Now that it owns BNT, IBM can capitalize on its excellent edge network technology for further development of its converged infrastructure strategy without hesitation about further leveraging BNT’s technology.
I recently spent a day with IBM’s x86 team, primarily to get back up to speed on their entire x86 product line, and partially to realign my views of them after spending almost five years as a direct competitor. All in all, time well spent, with some key takeaways:
IBM has fixed some major structural problems with the entire x86 program and it perception in the company – As recently as two years ago, it appeared to the outside world that IBM was not really serious about x86 servers. Between licensing its low-end server designs to Lenovo (although IBM continued to sell its own versions) and an apparent retreat to the upper-end of the segment, it appeared that IBM was not serious about x86 severs. New management, new alignment with sales, and a higher internal profile for x86 seems to have moved the division back into IBM’s mainstream.
Increased investment – It looks like IBM significantly ramped up investments in x86 products about three years ago. The result has been a relatively steady flow of new products into the marketplace, some of which, such as the HS22 blade, significantly reversed deficits versus equivalent HP products. Others followed in high-end servers, virtualization and systems management, and increased velocity of innovation in low-end systems.
Established leadership in new niches such as dense modular server deployments – IBM’s iDataplex, while representing a small footprint in terms of their total volume, gave them immediate visibility as an innovator in the rapidly growing niche for hyper scale dense deployments. Along the way, IBM has also apparently become the leader in GPU deployments as well, another low-volume but high-visibility niche.
Today, Cisco unveiled its home telepresence solution called Umi (prounounced you-me, get it?). For those of us who aren't familiar with Cisco's use of the term telepresence, it's a term it coined to describe the very impressive (and very expensive) enterprise immersive videoconferencing experience it provides to businesses around the world. In the home, it basically means TV-based videoconferencing.
The home offering is similar to the enterprise version in two key ways -- it is also impressive and expensive. Starting November 14, affluent consumers who really want to connect with family across great distances (and who are either unaware of or uninterested in Skype) can put down $599 and sign up for a $24.99 monthly Umi service fee and become HD videoconferencers. I tried the system in a real home and I'll admit the quality is eye-opening. As is the price. Read more of the details here in this post from CNET, but some of the less obvious points include: video voicemail, video voicegreetings, and the ability to record video messages when not connected to someone else. The camera rests above your TV screen and makes for one of the most believable videoconference setups I've seen (the person you speak to actually appears to be looking at you, imagine that). The whole experience rides on top of the existing video input so that while you watch TV you can see a message indicating a call is coming in. Choose not to take it and it will go to video voicemail. There are nice touches like a privacy-minded sliding shutter over the camera (complete with "shooshing" noise when the shutter closes) that helps you know via the senses of sight and sound that your camera is not on. So go ahead and give the missus a kiss while on the couch, no one is looking.
So what does this mean for CIOs and IT, the custodians of enterprise technology architecture?
It is clear Jive wants to play with the big boys in the enterprise software space. To date, many Jive deployments have not involved IT. This ability to deploy its technology without IT’s involvement has no doubt helped Jive to this point. Of course, having market-leading functionality hasn't hurt. (Jive has featured highly in recent Forrester Wave reports).
At the recent Enterprise 2.0 conference in Boston, I sat down with Jive’s new CEO, Tony Zingale, to explore the company strategy. From our discussion, it was apparent that Jive intends to compete for a big slice of the enterprise collaboration marketplace. Fundamentally, this is the right direction for Jive, but I foresee some big challenges for the company along the way.
Last December I wrote about Building B2B Technology Markets, looking at how to penetrate a market with almost none of the traditional characteristics of a mature technology market? As technology vendors increasingly look to emerging markets as a significant opportunity and source of growth, this question becomes more pressing. The report explored some of the elements of Cisco’s Country Transformation initiatives in order to identify steps in the process of building market infrastructure:
For example, the report looked at partnering with governments to encourage market-friendly policies and investment in the necessary technology infrastructure to support market development and overall economic growth. And, from a sales perspective, trade associations provided an alternative channel to reach small and medium businesses in markets where distributors and resellers weren't available.
But, another element critical to successful market development is the ecosystem of partners developing solutions specific to the particular market, or even just contributing local innovation for new approaches to broader global issues. Building B2B Technology Markets discussed finding local organizations to act as partners in the market, and even investing in educational initiatives, but missed the next step of how to help create these new local ecosystem partners.
I just returned from Cisco Networkers 2010 in Bahrain, and wanted to put a few thoughts to paper (or the electronic equivalent). First of all, thank you Cisco. What a fantastic event for all involved!
The event was held at the Bahrain International Circuit (BIC), and boasted attendance of over 3,000 delegates from Bahrain and more than 60 other countries. Not only was the event an opportunity for technical training for the attendees but it was also an opportunity for local Cisco partners to present their products and solutions. Both are consistent with Cisco’s emerging markets strategy of country transformation – to create an environment conducive to expanding opportunity in emerging markets rather than merely exploiting existing opportunity. Cisco works with governments and other non-governmental organizations in certain emerging markets to help develop the ICT infrastructure and local technical skills in order to build the market, and further enable economic development of the country. Holding Networkers 2010 in Bahrain demonstrated Cisco’s commitment to their country transformation strategy.
This post is the third in a three part series on Smart Cities. Best to start with Part I.
Two Approaches to Making Smart Cities
As with most things in life, there are a number of ways to approach smart cities. One way is to start from the ground up. A new city is born - a clean slate - to be made smart with the necessary infrastructure for its connected systems to communicate and collaborate to create an efficiently running city. A recent article in Fast Company, highlighted a number of smart cities projects that essentially started from the ground up - or, in one case, from the mud flats up. The most widely written about start-up city is Songdo. The concept was launched as a vision of the South Korean government and eventually, through the work of a real-estate developer and Cisco as the IT infrastructure provider, has become a reality - although the city is not expected to be complete until 2015. Songdo and other start-up cities have become one answer to the nagging concern about increasing urbanization.
Reconciling the rapid urbanization in China with the observation of one World Bank official that "Cities are expensive to retrofit and modify once they are built," start-up cities just might be one answer to China's urban needs.
This is actually not a tale of two specific cities but of two types of cities, or “smart cities” as the new moniker goes. It will appear in three parts.
Defining Smart Cities
“Smart” has become the adjective of choice among tech vendors to describe solutions that capture, synthesize and analyze the vast amounts of data being produced by computing and networking systems. Forrester defines Smart Computing as:
a new generation of integrated hardware, software, and network technologies that provide IT systems with real-time awareness of the real world and advanced analytics to help people make more intelligent decisions about alternatives and actions that will optimize business processes and business balance sheet results.
What does that mean in layman’s terms? Every system can be smarter if it can learn from and act on the data it produces.
A city is a “system of systems” making the potential for efficiency exponential as all of its systems interact. Therefore, a smart city is:
A city that uses technology to transform its core systems – city administration, education, healthcare, transportation, public safety, real estate, utilities and business — enabling them to capture, analyze and act on the data they produce.
As a result, a smart city’s systems can optimize the use of and return from largely finite resources. It can, in other words, “do more with less.” Using resources in this smarter way also boosts innovation, a key factor underpinning competitiveness and economic growth.
You can use Internet protocols to make phone calls inside your own network. And you don't have to pay for the minutes. But you can't do the same thing with a business partner. Instead, you have to pay a carrier like BT or AT&T to carry the phone call over the public switched telephone network (PSTN).
(PSTN is an analog network born in 1878 when Bell opened a switching office in New Haven, CT. It's done us proud, but it's time to move to a digital network.)
It's even worse for video conferencing. If you want to have a video conference internally, you can use your IP network to do it. But if you want to do a video conference with a business partner, you have to use a complex business gateway link and pay a lot of money for it.
Cisco thinks it's time to change that. We spoke with Cisco executives Tony Bates, Barry O'Sullivan, and Joe Burton about Cisco's intercompany media engine (IME), a new technology to replace PSTN with its Internet equivalent. Cisco's goals are audacious: