John Chambers says the profits from Cisco Systems new strategy are still one to three years away. The strategy, however, is already becoming more clear: Big Data will only work if it’s delivered through the network, and that could go hand-in-hand with consolidation among companies that specialize in data analysis and networking or traditional computing.
“You can’t ship the information from 50 billion devices all the way up the line,” said Mr. Chambers, Cisco’s chief executive, in an interview last week. That means that increasingly sophisticated computing has to be built into networking devices.
This is, of course, an argument that plays to Cisco’s strengths. The company’s Unified Computing System, or UCS, of computer servers built into the network has in a relatively quick time become an important part of Cisco’s revenue.
In December, Cisco’s chief executive laid out a plan for the world’s biggest maker of computer networking equipment to move more into software and consulting services. It is not the first time he’s tried to expand Cisco’s reach in those valuable markets, but in this case Mr. Chambers hopes to achieve it through “the Internet of Everything,” or a world rich in sensors and monitoring systems.
Because of this trend, “We have the opportunity to be the top technology partner” for the corporate world, Mr. Chambers said last week. “Companies pay a premium to have a trusted partner.”
Just because he’s being a little self-serving, however, doesn’t mean Mr. Chambers is wrong about what is happening at the big technology companies.
Much the way Cisco has built UCS, IBM has spent over $16 billion on analytics companies. Hewlett-Packard, despite the problems associated with its $11 billion purchase of the Autonomy, is using aspects of Autonomy’s analytics in its next networking and security offerings. Much of that could also end up in HP’s substantial networking business.
Cisco has an advantage over those information technology companies, Mr. Chambers said, because the central issue is in a deep understanding how networks function.
“The IT players are trying to come into the network, and we’re becoming one of the world’s big server players. The two are collapsing into each other,” he said. “If things aren’t tied well together you’ll just cause a lot of complexity.”
Mr. Chambers’ argument is essentially that Big Data analytics companies will have something like the experience of network security companies 10 years ago. Originally, things like firewalls were sufficient to stop most Internet attacks, and stand-alone security companies thrived.
As the traffic increased in size and diversity, however, security had to become an aspect of more parts of the overall system. RSA, one of the first big security companies, was purchased by EMC, a data storage company. McAfee, another security company, disappeared into Intel.
As we rush to crunch data from more parts of both the Internet and the physical world, the argument runs, we will make analytics and computing part of everything. That could make it hard for independent analytics providers, or force them to also adopt networking or computing businesses. But that would require a lot of money.
The question could ultimately be whether the center of the system is in the data, as EMC thinks, or in HP’s servers, IBM’s software, or Cisco’s network. As the saying goes, where you stand has a lot to do with where you sit.