Q: Just why are AT&T, banks snubbing kit from Cisco & co? A: Control

What surprises me most about this article is the timing - that it's happened so late.

If you dig more into what Werner Vogels says about the shift to commodity and beyond, his key point is that when you compare server price and performance over time, it's predictable in it's decline. However when you apply the same logic to networking equipment, you see a totally different graph in terms of price per port over time.

I suspect it's taken quite some time for people to realise that you can move away from Cisco and get the same (or in some cases, better) performance for much, MUCH less.

When you start to think of how many hundreds of millions AT&T spend on equipment each year, it's really not surprising that they'd be interested in even a 5% cost saving exercise.

Of course we care

"if [Cisco] can put that same box with better performance and better programmability in your data center, cheaper than a white box out of Taiwan, do you care?"

Of course I do! Cisco cheaper than anyone!? That's one of the signs of the apocalypse!

Read this - and follow the link the Credit Suisse report

http://www.businessinsider.com.au/source-cisco-1b-amazon-deal-led-to-insieme-sdn-2013-10

They're hosed.

Training? Just read a manual twice. We are talking basic networking infrastructure.

The price of complexity

Modern switches and routers are a full of unneeded features and those all cost lots of cash. Now that the chipsets are doing more and more of the real work, the only thing the vendors can provide is a stable environment for those chips and that means a minimal OS with only core features and a way for 3rd parties to provide the heavy lifting software. Sun, Apple and Microsoft all forgot that they are run the core stuff and others do their part and the greed only leads to messes.

"Commodity Networking Hardware": Another way to fund the executive bonus pool.

First off, I am NO FAN(boi) of AT&T, but this new mechanism to fund increases in the executive bonus pool is sheer genius.

Get your suppliers to fund it!!!!

If anyone out there thinks, even for one minute that AT&T will reduce their pricing to reflect their lowered equipment costs; then I have some swampland in Flori-duh I have for sale!!!!

IT WILL NEVER HAPPEN!!!!!!

All of this bullshit about cost controls is just crap to feed to the BoD and stockholders.

AT&T execs: "Look at all of the savings we will accumulate, so why shouldn't we participate in the savings?"

It will end up in the pockets of the execs. COUNT on it!!!!

Interesting....

...Microsoft also reduced prices on OS licensing to woo low-end tablet manufacturers. I think Cisco is just coming back down to reality and noticing that people aren't necessarily selecting their stuff as the only choice anymore. Maybe this means no more insane list prices for basic network hardware? Naah...

The things I see Cisco, Microsoft, HP, etc. providing to businesses that they can charge a premium for are:

- Service and support

- A stable platform with a known release schedule that doesn't throw in the latest new cool thing just for fun

- A well-known product supported by many IT pros with a training and certification program to at least give you a starting point evaluating candidates

The problem with all these vendors is that these things have been watered down over time in pursuit of higher license profits. Cisco can't just keep commanding the premium pricing it does and not give businesses what they're looking for. Eventually even the execs start noticing.

My personal favorite with Cisco these days is that they ship equipment that's intentionally crippled until you pay for feature licenses. One set of SSL VPN license features I saw at work cost almost $25K for a piece of paper with a serial number on it...in addition to the actual hardware which was incredibly expensive for what it was. We haven't even started looking at the Cisco UCS server hardware yet just because we know it's going to be insanely expensive and require $$$ in ongoing maintenance contracts.

There is something to be said for having a source of trained individuals though...if that training program is decent. I work with a very niche-market systems management product from a very large enterprisey software vendor, and it is very difficult to find anyone who knows about the particular quirks of the product. It doesn't help that this particular vendor doesn't provide good documentation or even a product that can work out of the box with most environments, or that the core of the product is almost 20 years old and all the top-layer cool stuff is wrapped around a completely proprietary protocol stack from the 90s. If I were using something like System Center, there's Microsoft certified individuals who know the product, an active user community and easy access to help. Right now, our only source of help is the enterprisey vendor's "professional services" teams...groan.

Pricing vs value

The networking industry has had good margins for a long time. This isn't because of the hardware being intelligent or not (which is the wrong way to think about it btw). It's because there hasn't been much competition. The thousands of features that get deployed mean that the number of functionally equivalent devices for a particular spot in the network is small. With little competition, pricing stays high.

Things like SDN are important for two reasons: first, they reset the architecture to some extent, which reduces the power of all those legacy features, and second, it helps automate workflow. The first point increases competition (read: drives prices down). The second addresses the bigger cost issue: managing all the devices.

Ultimately, Cisco will drop their prices as competition heats up. They will be a player in the future of AT&T, just maybe not to the same extent they are today. But the real battle is going to be over long-term OpEx reduction. Merely making a cheaper switch doesn't really address that. If AT&T just wanted the same network they have today at lower prices, they would put pricing pressure on Cisco. That's not what this is about.

Mike Bushong (@mbushong)

Plexxi

Cannibalize your own products and services before someone else does it for you.

There is a pattern here

Microsoft-Cisco

1. It's well known that Microsoft are seeing their market share eroded due to a) Mobiles/tablets and b) cloud solutions.

2. Similarly/Consequently, SMEs are increasingly allowing their 'stuff' to be looked after in the cloud, so that they no longer control the technology strategy that was previously spoon fed to them by MSFT/Cisco.

3. Cloud people are technology experts that understand networks in just the same way that Mobile/Tablet/Server OS technology experts understand hardware & computer platforms (and in the same way that SME people often/generally don't), and are most definitely choosing their own technical strategies rather than having it spoon fed to them.

4. Even outside of big Cloud/Datacentre operations such as Amazon, the volume of data is now so high that technology experts are also forming enterprise strategies.

ergo, Cisco Lock In is lost in that same way as Microsoft's

I know why...

just saw a Dell networking (Dell-Force10) quote for our refresh. The Cisco price was more than twice the cost of Dell's proposal.