Cisco takes aim at network service providers

12 years ago

Cisco Systems Inc. wants to partner with more network service providers who seek to grow their unified communications offerings.

Within the next three to five years, Cisco foresees continued convergence of cloud computing, video and mobile technology, according to Peter Wells, senior director of strategy and business development for world-wide service provider sales operations at Cisco.

Wells and other Cisco executives provided a sneak peek at the company’s service provider and customer strategy during a presentation at its Toronto office on Tuesday.

“Companies are experiencing a major market transition towards cloud, BYOD, video and mobile…their customers are demanding what we call concierge Internet or Internet that comes to the user not the other way around,” he said. “And it is the network service providers who can deliver the services the users because they’re the ones who have the proximity to the users through their network connections.”

Well said Cisco will concentrate on providing the network architecture that enterprise organizations and NSP will need to federate and manage cloud, mobile and video services.

Cisco still dominates the computer networking market with as much as 85 per cent share of the market. For the second quarter of 2013, the company reported net sales of $12.1 billion.

However, like many giant tech companies such as IBM, Dell and Microsoft it has been struggling to come to terms with new market realities. For instance, customers no longer just want their suppliers to provide them with equipment. Now they also want the capability to better manage the Internet that connects to just about anything from PCs, to sensors, to smart phones and other networked devices.

Incumbent network service providers are also struggling to adopt to the changing landscape, according to Lawrence Surtees, VP and principal analyst for communications research at analyst firm IDC Canada.

“In the enterprise space, there’s a big demand for converged networks to handle the BYOD trend as well as the increasing use of video and cloud-based applications,” he said.

“The tier 2 service providers are the most adept in getting this vision of the Internet of everything,” Surtees said. “They have less capital investment in legacy technology and a more nimble to pivot.”

Allstream, the national business arm of Manitoba Telecom Services, says it has recorded a growing demand for cloud-based services among its customers. The business-focused service provider is a customer of Cisco and uses the networking giant’s Core and Edge unified communications products.

“According to industry estimates for 2013, managed CPE (customer premises equipment) will see a 27 per cent increase in 2013, SaaS (service-as-a-software) will grow by 23 per cent and hosted services will rise about 18 per cent,” according to Tom Jolly, VP of unified communications at Allstream.

Jolly said, what service providers are looking for networking equipment that would allow them to easily develop and provision cloud-based and mobile services needed by their customers.

“There are network gear providers that also go into service delivery,” he said. “What we need is a company that recognizes their role as a technology enabler and our role as a service provider.”

The pressure to find low-cost and easy to manage networking technology that is secure is crucial for smaller network service providers, according to Michelle Warren principal analyst at MW Research and Consulting, in Toronto.

“Tier 2 service providers are competing in already crowded market that’s dominated by incumbents like Bell, Rogers and Telus,” she said. “The key is to winning over businesses such as IBM and large banks, is to be able to offer cloud, mobile and video technology that has better privacy and security controls.”