It’s not enough to make great routers – gear has to be able to provide a revenue stream for a buyer, and fast, said Cisco Systems Inc.’s strategist in a Web cast discussion about high-end routing.
The economy has taken its toll on Cisco, said Mike Volpi, Cisco’s chief strategy officer. “I used to be doing a hundred things, and now I can’t do that anymore,” buyers of routing technology say, according to Volpi. Businesses are focusing on single ideas and single strategies, and Cisco’s high-end routers will have to accommodate those needs.
For the moment, the focus is profitability. “We are now experiencing the bottom of a cycle that may plateau around profitability,” he said, expressing little hope that things will get better quickly. “I don’t think we’re very optimistic in the short term. Many of our customers have very high levels of debt and are struggling to pay of that debt … In some ways, you could say we’re still suffering from the after-effects of the (stock market) bubble.”
Cisco will remain committed to Internet protocol products, its key competency for years. But Volpi expects many of the functions of its high-end routers to move from the center of the network to the edge, as broadband becomes available to more consumers and businesses.
He acknowledged that network designers overbuilt the Internet’s fibre-optic backbone during the market’s hyperactive devotion to telecommunication and the Internet, leaving little immediate market for capacity-enhancing routers.
However, the metropolitan areas closer to business and consumers remain a ripe field for Cisco to harvest, said Roland Acra, Cisco’s vice-president and general manager for its service provider line of business.
New services tied to high-end routers will drive Cisco’s revenue, and the revenue of its service-provider customers, he said, citing voice over IP and video-on-demand as examples. “The richness of services you can offer on that network become the key to profitability.”
Cisco Systems Inc., in San Jose, Calif. can be reached at http://www.cisco.com.