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Cisco finished 2019 with a blitz of announcements that recast the company's service provider business. Instead of offering just integrated hardware and software, Cisco became a supplier of components for open gear.
Cisco enters the new decade with rearchitected silicon tailored for white box routers favored by cloud providers and other organizations with hyperscale data centers. To add punch to its new Silicon One chipset, Cisco plans to offer high-speed integrated optics from Acacia Communications. Cisco expects to complete its $2.6 billion acquisition of Acacia in 2020.
Cisco is aiming its silicon-optics combo at Broadcom. The chipmaker has been the only significant silicon supplier for white box routers and switches built on specifications from the Open Compute Project. The specialty hardware has become the standard within the mega-scale data centers of cloud providers like AWS, Google and Microsoft; and internet companies like Facebook.
Chris AntlitzPrincipal analyst, Technology Business Research Inc.
"I think the Silicon One announcement was a watershed moment," said Chris Antlitz, principal analyst at Technology Business Research Inc. (TBR).
Cisco designed Silicon One so white box manufacturers could program the hardware platform for any router type. Gear makers like Accton Technology Corporation, Edgecore Networks and Foxconn Technology Group will be able to use the chip in core, aggregation and access routers. Eventually, they could also use it in switches.
Cisco 2020: Silicon One in the 5G market
Cisco is attacking the cloud provider market by addressing its hunger for higher bandwidth and lower latency. At the same time, the vendor will offer its new technology to communication service providers. Their desire for speed and higher performance will grow over the next couple of years as they rearchitect their data centers to deliver 5G wireless services to businesses.
For the 5G market, Cisco could combine Silicon One with low-latency network interface cards from Exablaze, which Cisco plans to acquire by the end of April 2020. The combination could produce exceptionally fast switches and routers to compete with other telco suppliers, including Ericsson, Juniper Networks, Nokia and Huawei. Startups are also targeting the market with innovative routing architectures.
"Such a move could give Cisco an edge," said Tom Nolle, president of networking consultancy CIMI Corp., in a recent blog. "If you combine a low-latency network card with the low-latency Silicon One chip, you might have a whole new class of network device."
Cisco 2020: Trouble with the enterprise
Cisco will launch its repositioned service provider business, while contending with the broader problem of declining revenues. Cisco could have difficulty reversing that trend, while also addressing customer unhappiness with the high price of its next-generation networking architecture for enterprise data centers.
"I do think 2020 is likely to be an especially challenging year for Cisco," said John Burke, an analyst at Nemertes Research. "The cost of getting new goodies is far too high."
Burke said he had spoken to several people in the last few months who had dropped Cisco gear from their networks to avoid the expense. At the same time, companies have reported using open source network automation tools in place of Cisco software to lower costs.
Cisco software deemed especially expensive include its Application Centric Infrastructure (ACI) and DNA Center, Burke said. ACI and DNA Center are at the heart of Cisco's modernized approach to the data center and campus network, respectively.
Both offer significant improvements over Cisco's older network architectures. But they require businesses to purchase new Cisco hardware and retrain IT staff.
John Mulhall, an independent contractor with 20 years of networking experience, said any new generation of Cisco technology requires extra cost analyses to justify the price.
"As time goes on, a lot of IT shops are going to be a little bit reluctant to just go the standard Cisco route," he said. "There's too much competition out there."
Cisco SD-WAN gets dinged
Besides getting criticized for high prices, Cisco also took a hit in 2019 for the checkered performance of its Viptela software-defined WAN, a centerpiece for connecting campus employees to SaaS and cloud-based applications. In November, Gartner reported that Viptela running on Cisco's IOS-XE platform had "stability and scaling issues."
Also, customers who had bought Cisco's ISR routers during the last few years reported the hardware didn't have enough throughput to support Viptela, Gartner said.
The problems convinced the analyst firm to drop Cisco from the "leaders" ranking of Gartner's latest Magic Quadrant for WAN Edge Infrastructure.
Gartner and some industry analysts also knocked Cisco for selling two SD-WAN products -- Viptela and Meraki -- with separate sales teams and distinct management and hardware platforms.
The approach has made it difficult for customers and resellers to choose the product that best suits their needs, analysts said. Other vendors use a single SD-WAN to address all uses.
"Cisco's SD-WAN is truly a mixed bag," said Roy Chua, principal analyst at AvidThink. "In the end, the strategy will need to be clearer."
Antlitz of TBR was more sanguine about Cisco's SD-WAN prospects. "We see no reason to believe that Cisco will lose its status as a top-tier SD-WAN provider."