From incumbent to instigator... How Cisco NZ plans to dominate Kiwi connectivity market
- 19 February, 2015 06:32
It seems in technology, both at home and overseas, usurpation is the name of the game.
The drill, it appears, is pretty standard across the board - dominate a market, prosper for years before slowly becoming complacent, leading to eventual demise and the emergence of those young show-off organisations, intent on providing better quality for half the price.
Established vendors such as Cisco fall into that category, the ageing dinosaur of the industry, clinging onto its market share like its future depends on it.
Yet this particular incumbent didn’t read the script, with stock reaching a seven-year high last week, fuelled by strong financials across the world.
“Cisco in New Zealand is a good news story,” says Geoff Lawrie, Country Manager, Cisco New Zealand.
While speaking as a veteran of the ICT industry may help generate a knack for detecting newsworthiness, Lawrie’s assessment stems from performance, one that has seen the Kiwi division record low double-digit growth across the business, ahead of both the company and industry averages.
“We’re driving business in New Zealand at a very satisfying rate and I believe that’s because of a number of factors,” explains Lawrie, entering his ninth year as Country Manager.
“For starters, the economy is very supportive of what we’re trying to achieve.
“New Zealand is a very mature and sophisticated market, especially for a smaller sized market, and it’s a market certainly in the ascendancy.”
Since taking the role in July 2006, Lawrie has double the overall turnover of the company’s operations in New Zealand, producing above-market growth during a volatile period for the tech market.
When measured against global achievements, IDC ranked Cisco number one in the New Zealand x86 blade server market at the end of December 2014, with a market share of 34.4 per cent, complimenting the company’s worldwide standing as the leading vendor within the networking space.
“Once I week I meet with my international peers who also operate in similar sized markets, and respectfully speaking, I wouldn’t swap New Zealand’s deck of cards with anybody,” he adds.
“From a Cisco perspective we have an incredibly broad portfolio which gives us an advantage because we’re moving towards a market place where it’s going to be harder to operate as a specialist niche player.
“And the fact that we operate broadly across cloud, security, mobile and networking has really played in our favour during the past few years.”
With around 650 partners across the country, 400 of which reseller and engage with Cisco products, Lawrie’s leadership has helped the global organisation formulate a local connection, helping the company measure the areas of high growth within the Kiwi marketplace.
“We’re seeing strong growth around security and mobility,” adds Lawrie, who has also worked in managerial roles for Microsoft and Unisys in New Zealand.
“Mobile is now most people’s window into the online world and while parts of the economy is now much more engaged than previously in a mobile sense, every organisation that is spending money on networking now has a mobile component to it.
“But it wasn’t always this way.”
Why so positive?
For Lawrie, businesses across New Zealand, and the wider markets, are investing in networking capability, not mobile, with strong growth also forecast around data centre capacity.
With 33 years of experience across the Asia-Pacific tech industry, 24 of those in General Manager or Managing Director positions, it’s by no means over-reaching for Lawrie to comment on local or global trends, such is his pedigree within the market.
But in taking a macro view of the market, Lawrie accepts it’s hard to think of a time when things “have been so positive, yet uncertain” for the industry.
“The reason why it’s so positive is because at the macro level the world is rushing to be connected,” he explains.
“Commercially speaking, organisations are starting to understand that connecting up a supply chain and experimenting with the Internet of Everything, alongside investing in collaboration tools, is one of the great ways to drive productivity.
“Delving deeper, government’s at a political level are beginning to realise that having an economy that is connected, and a group of citizens that is connected, is actually a great way to go.”
Politically, Lawrie believes connectivity is going to accelerate further, to a factor of tenfold in terms of pace and progress compared to the early years of the internet during the mid-1990s.
“We are becoming incredibly connected which is nirvana for a networking vendor such as Cisco, and helps directly play into the hands of the New Zealand business,” he adds.
Citing the “turning of a corner” in terms of Ultra-Fast Broadband adoption, Lawrie believes the increased awareness and general understanding of what UFB can achieve both socially and commercially is helping drive connectivity across New Zealand.
“Last year was interesting for Cisco in New Zealand,” Lawrie recalls. “We witnessed the entire Kiwi tech industry take a step up in terms of maturity, led by the successful listings of Orion Health, Xero and EROAD meaning suddenly the sector is highly regarded.
“It’s an incredibly positive time to be operating within the New Zealand market and another factor driving positivity is the Internet of Everything.
“Admittedly it can be difficult to comprehend because it happens on so many different levels under so many different guises, but the general notion underpins connecting people and driving new value which is gaining significant traction.
“While we didn’t always call it the Internet of Everything, Cisco are pioneers of this concept, the idea that you can create value by connecting devices. Two years ago we found it difficult to assemble an audience around this kind of topic but today, it’s almost impossible to not talk about it.”
The trigger? A sudden realisation of the scale and the potential enormity of pursuing this as a business model. “Almost like the penny dropping,” Lawrie summarises.
“And this is also happening at a micro level, and combined with the drive to be connected it generates an entirely new horizon for the industry around the Internet of Everything,” he adds.
“We’re in the business of doing this but if you look at the level just below the connectivity, it begins to become more complex, and that’s why we’re also entering uncertain times.”
Why so complex?
“The reason why its complex?” asks Lawrie, who has also played a senior role in Cisco’s business strategy development across the A/NZ region.
“Well, there’s a number of factors. The biggest one for me is security. Just as we are starting to understand the incredible benefits of being connected, and how this improves lifestyle and education in the economy, the risks are becoming apparent.
“So much so that I believe security is the biggest force in the industry, the counter force holding the market back.”
While continuing the battle to make security a proactive enabler, as opposed to a barrier, Lawrie also cites the cost of connectivity as a key area of complexity, admitting, “it costs a lot of money, an incredible amount.”
“If you add up what is being spent by the mobile operators in New Zealand, such as Spark and Vodafone, they spend tends of million dollars ensuring 4G capacity yet they are seeing average revenues decline,” he adds.
“It can be an incredibly challenging business model, particularly when you’re addressing an audience which has an expectation - one of complexities is how these operators are changing their business models to make this a paying proposition.
“There is an enormous focus on content at present and quality differentiation across services which adds another layer of complexity to the market.”
Citing the rise of the cloud computing, and its explosion across New Zealand during the past twelve months especially, Lawrie believes the whole issue of cloud has impacted how organisations and people use technology more so than any other contributing factor during the past 30 years alone.
“In my view, the opportunity in the industry around cloud has almost nothing to do with technology,” he adds. “We’ve had the capacity to centralise computing that is done at scale for decades, okay not with the sophistication of virtualisation but the notion that you could centralise IT is not new.
“What I believe is the biggest shift, and what’s driving the cloud market in New Zealand, is that it now shifts the risk and responsibility of a complex area which many organisations struggle to understand, to a third party.”
In measuring the impact of cloud on the Kiwi market, Lawrie says because cloud is a global play, this creates “enormous challenges and implications” for the New Zealand ICT industry.
“One of the scenarios is that we just become the tail end on the circuit of some global player,” Lawrie speculates. “There needs to be a role for New Zealand in that market place but against the huge opportunity that connectivity is driving, there are other disruptions and changes that need to happen which means this won’t be plain sailing.”
Fitting it should be that as Lawrie expands Cisco’s Kiwi offerings, including its enviable networking portfolio, CEO John Chambers continues to transform the company at a global level also, instigating a significant shift away from the vendor’s ‘one-trick pony’ status, to a more well-rounded, well-oiled machine.
In documenting plans to take down long-time partner turned industry rival VMware, Chambers’ is unwavering in his belief that Cisco can fend off the competition; “We will beat them and have fun doing it. I wish I was a better person, but I’m not.”
Personalities aside however, Chambers is taking Cisco into a new era of ICT, safe in the knowledge that in New Zealand, under the guidance of Lawrie, the vendor’s keeping up the pace.