Cisco Announces Major Software, Cloud Push

Last week, Cisco held a roundtable for reporters where it discussed its now-released Cisco ONE software strategy as well as how it’s building on the 2012 acquisition of Meraki — which at the time specialized in cloud-based wireless network management.

Cisco is moving from a perpetual licensing model tied to hardware to a more traditional annual licensing model. The company says it will create programs for channel partners to share in the recurring revenue stream.Cisco’s software-licensing plan seeks to take its myriad separately priced, hardware-specific software licenses and pull them together as a handful of software suites that can be licensed independently of the Cisco hardware in use. The motivation is fairly clear here: Except in the data center, where networking upgrades are still needed fairly regularly, business networks are now mature enough that CIOs can expect a decade or so of use out of networking gear. Once there’s gigabit Ethernet to the desktop, and a good 802.11n or 11ac infrastructure in place, there’s not a lot of need for upgrading other than for compute-intensive work going on within the data center.

However, software is a different story. Software definitely will evolve to provide better security and support for applications throughout the network and within the data center. Previously, Cisco’s licenses were tied to the hardware. Get new hardware, and you’ll need new licenses. That’s no longer the case. Simplification is always welcome; however, dropping from hundreds of SKUs to just four might remind some buyers of their home cable bills, where even if you want just one channel, you have to buy them in packages that are anything but cost effective.

Cisco has never been shy about its lack of interest in trading on low procurement costs. Its claim has been that while the upfront price of a Cisco network might be higher than from other vendors, the long-term management cost savings more than made up for it. That’s a claim that Gartner says doesn’t hold water. Be that as it may, reconciling software sets across dozens or hundreds of networking devices is a time-consuming task that will be made simpler by Cisco’s new approach.

The company did not release enough detail to tell whether this new approach will amount to sticker shock for its customers, or just a change in business as usual. Since the bundles will almost certainly contain more software than organizations currently license, there are bound to be some eye-popping invoices.

Cisco ONE Software is networking and infrastructure software that includes comprehensive software suites across the data center, WAN and access domains.  Data center covers both networking and compute (UCS); access covers wired switching and wireless; and WAN covers Intelligent WAN (iWAN) to connect branches and campus. These suites run on Cisco’s networking/server hardware and address relevant business/IT use cases. Cisco ONE Software suites aim to help CIOs reduce IT complexity by collecting all required software for particular use cases into simplified products which can be purchased as packages.

For partners, the Cisco announcements present a number of opportunities. First, Cisco is moving from a perpetual licensing model tied to hardware to a more traditional annual licensing model. The company says it will create programs for channel partners to share in the recurring revenue stream. Second, there will obviously be a lot of confusion around just which Cisco programs to adopt and how to implement them, likely including the inevitable question about whether a non-Cisco option might be more cost effective. Answering that question will have to wait, as pricing information will not be available until May at Cisco Live, but channel partners should get ready to field such queries.

Cisco’s other announcement was about Meraki. Originally, Meraki offered cloud-based Wi-Fi management for SMBs. Cisco has been selling Meraki services like crazy and has grown it from an SMB offering to an enterprise-ready cloud management system. Along with Wi-Fi management, the system also supports network infrastructure, unified threat management and mobile management. For those looking to get into managed services in the above areas, this is good news.  Meraki’s interface is intuitive and powerful and probably worth every cent of the $1.2 billion that Cisco paid for the company in 2012.

The announcement of new Meraki services was clearly aimed mostly at the enterprise.  Along with additional management tools, the Meraki cloud has grown to include Asia and Europe too. Of course, the Meraki management system is limited to Meraki-compliant infrastructure gear, which doesn’t include Catalyst switches or Cisco routers. Cisco Prime is still required for those systems. However, for smaller offices, the Meraki products with their simplified management make an excellent fit.

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