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THE CUTTING EDGE | INNOVATION / STEVE G STEINBERG

Cisco's Shift in Focus May Well Have Cost It Its Vision

February 24, 1997|STEVE G. STEINBERG | Steve G. Steinberg (sgs@best.com) is a computer security consultant

The company seems to have understood that it would be unrealistic to plan on having the best networking product in every category, ranging from switches to remote-access devices. There are just too many. Instead, it is hoping to leverage its strength in a few product categories by having all its products support the same proprietary software. That software is the vaguely defined but much-hyped CiscoFusion. When an ISP manager knows that his existing Cisco router works best with a Cisco switch because they both use the software, the theory goes, Cisco's switch will be preferred over the competition even if the competition is technically superior.

It's a strategy that worked well for Microsoft. But networks and planned incompatibility are inherently at odds. If the history of networking says anything, it's that open standards win over proprietary ones every time. And while it's not at all clear what the benefits of CiscoFusion will be for customers, its immediate disadvantages for Cisco are becoming apparent.

Take Granite Inc., a company that was bought by Cisco in September for $220 million. At the time, Granite was well on its way to developing a gigabit ethernet switch--widely seen as the next big thing in local area networking. But today you'll find Granite engineers stuck in Cisco's integration lab as they struggle to make sure that their hardware can talk the esoteric protocols that make up CiscoFusion. Whereas other vendors who only had to worry about well-known and open protocols will announce their gigabit ethernet products this month, Granite doesn't plan to release its until early 1998.

That demonstrates that even if Cisco decided to buy a company such as Pluris--a one-man start-up with a revolutionary new router architecture--it would still take the company too long to bring it to market. This is the parable's kicker: Cisco's software-based business strategy is incompatible with its research-through-acquisition strategy.

How this morality tale will turn out is hard to predict. Cisco has dug itself into a deep hole, but its enviable distribution channel and massive installed base may buy it the time it needs to get out. The question is just how long an ever-more-demanding customer base will accept seemingly clever business strategies in lieu of true innovation.

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