Video is becoming the new networking star, says Cisco New Zealand country manager Geoff Lawrie. Video already takes up half the bandwidth on Cisco’s own network and this is fast becoming the trend for most organisations, says Lawrie. The demand for video is a major growth driver for the company on all fronts – not just in core switching and routing, but also in areas such as unified communications. Cisco’s high-fidelity TelePresence video conferencing system is an example of what can be achieved with better bandwidth. Louis van Wyk talks to Lawrie about how Cisco is gearing up for the advent of the next generation, video-centric network.
Louis van Wyk: You’ve been in this role for about two years. What are the major impacts you’ve had on the business in that time?
Geoff Lawrie: We have been able to grow the company in terms of both people and presence and the technologies we bring to market. Our historical pedigree has been in routing and switching. While that is still a strong core part of our business, about 30 percent of our revenues are from adjacent markets. That has developed very strongly in the past couple of years and has meant that we needed to broaden our skill set. We have some different sales models we are putting in place to do that as well. Part of our strategy now is how we market effectively in the commercial and SME space. We’re seeing technology transitions in terms of broadening the portfolio and transitions in terms of where Cisco is represented in the marketplace. We are now seen as a broader portfolio company, rather than just a networking and switching company.
LvW: What are some of those adjacent markets?
Gl: The biggest part of that is unified communications. People are starting to understand the network is an intelligent information platform and are wrapping a richer set of communications media into it. [They] understand the most effective way to deploy those technologies is within the network and that the quality of the network is the biggest determinant of success in unified communications deployments.
LvW: Is this network-centric approach the main differentiator between Cisco’s unified communications model versus Microsoft’s?
Gl: That would be one example. If you had to compare the visions, people have the same ideal endpoint in mind. But how you deliver on that is quite different. We have an enormous advantage coming from a network-centric view. By the same token most of our customers are looking for integration between Cisco and Microsoft as opposed to one or the other. The reality is most people have Cisco on the network and Microsoft on the desktop and they want the two to work together and not be faced with a binary decision between one and the other. Most of our effort goes into integration as opposed to figuring out how we can do it on our own.
LvW: How does your network-centric focus differ to the endpoint-centric view?
Gl: With unified communications the ideal is to connect from anywhere, anytime, using any kind of device. If you implement that just from software at your endpoints, it becomes incredibly complex. People are coming to the realisation the only way of doing that effectively is to have an intelligent place that decides how you render that information on the various endpoints – the network looks after that and understands where you are, what devices you have and what devices you prefer to communicate with.
LvW: Considering that most people use both Microsoft and Cisco, how come Cisco did not become Microsoft’s main unified communications partner instead of Nortel?
Gl: Nortel needed it I suppose. Cisco has been in the market for probably a decade – we are pretty firmly established as the leader by most measurement mechanisms in terms of both existing footprint and capability. Our strategy with Microsoft is about integration as opposed to Nortel which is ‘subsimation’ – they sit under [Microsoft] and provide some key elements, but ultimately that is going to be a full Microsoft environment. We see ourselves having a stronger ongoing role than just being a component.
LvW: Seventy percent of Cisco’s business is still from core switching and routing. What is driving this?
Gl: You could say it is a relatively mature market, but the reality is it is growing at an extraordinary rate in terms of capacity and quantity. The major growth is coming out of demand for capacity. Many organisations are seeing 100 percent plus growth in capacity requirements being driven by video. We’re seeing a focus on quality, as people move into sophisticated applications like unified communications. As [organisations] start to overlay voice over data and video over voice, they are starting to understand the quality requirements are much more stringent than before.
LvW: What impact has the increase in more media-rich websites had on Cisco’s business?
Gl: Fifty percent of our network is now video and it is growing strongly. The internet is the same – we’ve seen that change radically in the past few years with sites like YouTube that measure downloads in the billions each month. The reality is most commercial networks are going to be exactly the same in the years ahead. Not because they have everyone tapping into YouTube, but because the business is using video as a communication mechanism. We are going to see video content growing extraordinarily.
LvW: Is the state of broadband in New Zealand preventing us from taking full advantage of technology such as video conferencing?
Gl: The availability, pricing and quality of broadband has undoubtedly been an inhibitor in this market. My personal belief is that long-term the only way we’ll get to that endpoint is through fibre. Wireless technologies such as Wimax in particular will play a very useful role, but in general it [will be] a fibre deployment. As a capital issue that is a challenge for New Zealand because of the layout of our country and the geographical diversity, but it will happen. It is fantastic to see Telecom stumping up and committing to a pretty extensive capital plan to get fibre into the home. FX Networks already has a high-capacity fibre link running the length of the North Island, while other organisations are looking at how they might put in large fibre networks. The challenge is how they reach the last mile, but there is a good healthy debate going on as to how that might be organised. It has been frustrating, but is probably at a more encouraging stage now than it has been for several years.
LvW: Can the government do more to create a better environment for competition?
Gl: Government has a partial role, but it is really about private enterprise – building a business case for implementing competitive fibre. There are a number of organisations ruminating on how they might best be able to do that. It is more about private enterprise saying we can make this kind of capital investment pay. What the government is doing now around unbundling the local loop will be a competitive stimulus.
LvW: Where is the major growth going to come from for Cisco over the coming year – unified communications or the demand for increased network capacity?
Gl: It is going to be both. Growth, as much as anything, is driven by your ability to pick market transitions early and Cisco has an outstanding pedigree of being able to do this. We’ve been building the capacity for business video for three years; we’ve been building the capacity for unified communications for 10 years. Our growth is going to come out of our ability to pick those market transitions early and be ready with a relatively mature product set at a time when it starts to become a mass market phenomenon. Right now our pick is around business video. The whole Web 2.0 transition and software-as-a-service, point to the need for very high capacity networks with high quality video content. We see a lot of ongoing investments in networks that are capacity and quality driven by business video. We also see growth in the areas such as physical security – our vision is that it is going to be an IP-based service.
LvW: How will the Cisco sales model change to help the channel sell these new technologies?
Gl: Our model remains consistently and adamantly channel-centric. We are not building any direct capacity to take any of these new technologies – they are being presented as business growth opportunities to our channel. We’re building a richer portfolio solution set for our channel to take to their customer base. It requires the channel to invest to some extent, but the motivator is that their customers will be investing in [these technologies].
LvW:Cisco qualifications have always been highly sought after, but are they becoming more difficult to attain as the technology becomes more complex?
Gl: On a generic level, there is a skills constraint in this marketplace across the board. Talking to our key partners, if I had access to a couple of hundred Cisco-skilled people, I’d have no trouble placing them within our channel partners just to execute on existing projects. Our view is the quality of people is instrumental to the quality of the project. We are certainly not bowing under pressure in terms of certification and are keeping the standards high. But, we are very cognisant of the fact that as we get into newer markets, [some] partners can’t afford to invest in the kind of skill sets that are required. So we have different channel and certification programmes for different marketplaces. We’re coming out with a more sophisticated set of tools and capabilities that remove a lot of complexity.
LvW: What are some of the major initiatives Cisco will roll out to channel partners in the next year?
Gl: The constant evolution of our channel programmes is pretty significant. One way is us understanding how we can best support our partners getting into new markets around the expertise and capability they will need to build in their organisations. There is a lot of focus on how we invest in helping them grow through channel programmes. The second thing we focus on is our channel profitability programmes. Our programmes are somewhat unique in that they are not based on revenue, but based on investment in expertise and capability. I think that is an extraordinarily healthy approach that allows us to have a good focus around partner profitability.
LvW: You have been in this industry for more than 25 years, what has kept it exciting and stimulating for you?
Gl: Most importantly it has been about the outcomes you think you can deliver for your customers. If you look at how you work, entertain and educate yourself, it just wouldn’t be possible without the technology our industry has brought to bear over the past couple of decades. Technology has brought about fundamental changes to the way we live and I see it as ongoing. With the kind of opportunities we have going forward, particularly in the richness with which we will be able to communicate and collaborate, I think it is going to be a pretty interesting and rewarding career.