Cisco has built its $40 billion fortune by providing routers and switches for enterprise computing networks. It is no more content with the back-end alone and has set its sights on all aspects of video collaboration, including gadgets for consumers. Home networking, TV set-top boxes and video cameras have all been integrated in its new strategy. With online video and cloud computing, Cisco plans to offer companies tools to make all their communication virtual and visual. It were to offer content and service providers tools to reach the home user, and the consumer gadgets and suites to collaborate virtually on a bigger scale. In this it will be up against competition from the likes of Microsoft, IBM, Hewlett-Packard and Skype Technologies. India, though, might have to wait for a better broadband network, Cisco India & SAARC President and Country Manager Naresh Wadhwa tells Sayantani Kar.
Why is Cisco looking at the consumer now? Does it have anything to do with the fact that the computer switching colossus is trying to change from the Internet’s ‘plumber’ to a platform? We are proud to have been present in the back-end (internet protocol networks) so far. There is no problem with that. But Cisco has always looked at markets that can be disrupted. It has never entered a new market unless it can initiate a transition and ride the wave.
The networking innovations Cisco made so far happened at the enterprise level. In the last three to five years, innovations in networking have come from the end consumer, and then gone up the enterprise chain. The biggest example is the advent of video-sharing in social media, driven by the user. It has raised the bar of collaboration. What started with Skype, Yahoo Messenger and YouTube is now being demanded at the enterprise level too. People want to blog, collaborate through videos more effectively even at work. Hence, video at both enterprise and user level is what Cisco will now look at. Video is going to be the game-changer for networks everywhere.
Where will you get your video expertise for consumers from? First, in 2006, we launched TelePresence for life-sized video conferencing. Till then, despite video-conferencing being available, companies hardly used it. TelePresence made the entire process more lifelike and practical. That is when we unveiled our new logo and campaign on the ‘Human Network’. But that was video through high-end studio equipment. We still had to tap the user-end of the market.
By 2003, we had already taken the first step into the consumer market (including small and medium businesses or SMBs) by acquiring the home-networking company Linksys Group (home switches and routers). This was in line with the set-top boxes from Scientific Atlanta, which we bought in 2006, that connect broadband with televisions in homes.
But there were still missing pieces of the puzzle. In 2009, we acquired Pure Digital Technologies, makers of the handheld video recorder, Flip. High-definition, sleek and handheld, Flip was the replacement for camcorders and there was already a sizeable band of users in the US (by then Pure Digital had sold 2 million Flips since its launch in 2007). Flip is the face of our video networking strategy for consumers, because it allows users to connect to social networking sites and upload videos at the touch of a button.
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Tandberg of Norway is the other important piece in the puzzle. With Flip, we are still not talking about live video conferencing at the consumer and SMB level. Tandberg, which we acquired in the same year, has given us end devices which allow real-life video exchanges on personal computers (low-end video conferencing).
Does that mean you will depend on acquisitions for your consumer and video strategy? We didn’t have certain pieces in the video architecture for consumers. Acquisitions have helped us save on the time to market. We had TelePresence. Then again, if you look at the companies we have acquired, were they betting on video the way we are? Probably not. At Cisco, we are aware of the architecture of the network that can carry video communication smoothly. We will work with service providers for application support and evolve forms of delivery, support interactive video experiences, and of course, by integrating it in our network platforms, reduce operating costs for providers.
How have these acquisitions translated into products from Cisco? We have launched two set-top boxes for different video functions for television. UMI is a consumer telepresence set-top box (with a camera). Most households in the US have large high-definition display panels (LCDs or LEDs). UMI will connect broadband network with television to allow a video call from your living room to someone else’s.
In January this year, we have launched Videoscape, which is an open platform for service providers of broadband and cable TV, to publish content in a way not done before. It combines IP set-top box, a media gateway, software clients, a media suite and a Cisco Conductor to converge digital TV and online content with social media applications. This platform can use both the broadband network and the cloud to bring next generation on-demand TV to users at home and in enterprises. There are also low-end TelePresence solutions for SMBs thanks to our Tandberg acquisition.
Flip has already been in the market. CIUS is next for enterprises and SMBs. It is less of a tablet and more of a mobile collaboration device because of its HD-video capabilities. It is geared to give seamless mobility to the user through local area networks, WiFi and 3G. We will bank on the clouds of large companies who are early adopters to begin with, while we manage the transitions within the cloud. For example, the user on a video-call on the move, using the CIUS, might want some data on her internal (office) network which has to be pulled up from the cloud. Or, when the user moves out of the local network and into a WiFi-enabled area, the call should not drop. We will be hosting applications in the cloud needed for such seamless shifts. Once, large enterprises have adopted it, we plan to work with network service providers who can lease their clouds to SMBs for adopting such a device. The device (CIUS) caters to an individual’s need as a consumer and an enterprise user.
The lines are blurring: What happens when one goes back home from work? Many applications are entering the enterprise framework because of being used by individuals as consumers. More and more businesses will want mobility as an integral part of their video collaboration. CIUS will enable such an ecosystem. We have the back-end figured out; CIUS would be the device at the front-end.
What has been the learning from dealing with consumer brands? We realised the need for such products to be user-friendly and good-looking. We also got into the habit of talking to retailers apart from distributors which we had never done before.
When will these offerings be launched in India? UMI is available in the US with service providers of broadband networks. However, India still has 9-12 months to go before such an infrastructure of high-bandwidth broadband can be installed. India has so far focused on the voice-side of the network. The wave of 3G and WIMAX is what will bring in high capacity broadband. UMI and Videoscape for homes will have to wait for that.
With CIUS, we will first go to large enterprises. That will be in tune with what our distributors of high-end networking products do. Eventually, we will talk to telecom players to rent their clouds to smaller businesses.
Flip is already available with retailers since there is traction among consumers who have seen the product in the US. As of now, it will be available in five cities across Karnataka. Stores such as Reliance Digital, Whizz, Computer Planet and Access2Future are retailing them. It will also be available online at ZoomIn.com. Cisco Flip MinoHD and Flip UltraHD have been introduced.
How are you laying the ground for retail distribution which some of your products will now need? Our distributors in India have already handled high-end corporate products. We have to start enabling them for retail business by telling them about our markets and the ecosystem we want to build. We are also in talks with electronic retail chains. We already sell home routers and security cameras through them. The other route to market is through subscription models of telecom service providers. Most of them are already our managed service partners for enterprise network solutions. But so far, they have partnered in voice and data products. We will extend it to include video services on the network. But broadband has to reach the next stage.
Consumer marketing is different from enterprise marketing. What will you tell the end user? Mostly, we will rely on on-ground activations. On mass media such as television, we will not do product-specific advertising. It will continue in the same vein as our Human Network campaign with a lot of in-film branding. Our corporate ad could show someone using a Flip, for example. Or, a movie or serial could depict a character using our products. On-ground thrusts will be more important because the different video products will have varied channels such as service providers, retail shelves and enterprise offices.
This time there are other players in the market. There are tablets, media centres and video cameras from other companies. How do you hope to tackle them? We are not saying that no one else will have products like ours. But we are saying that video is an imperative going forward. Video networking will change from the consumer to the enterprise. At an enterprise level, colleagues, partners, customers across the globe will need to collaborate and Cisco will have the wherewithal to dramatically enhance the quality of a video chat, even without studio-devices. Web cameras have been around for almost a decade now, but how often are they used for high level collaboration?
We will benefit with growth in video sharing, directly or indirectly, because the traffic will come to our platform. We will also know how to handle the products at the user-end rather than just manage the back-end this time. A three-minute video clip will generate demand for 50 times the bandwidth than transferring days of data would. For a network platform company like us, the more applications that come on the network, the better off we are. After all, we provide the infrastructure for the network’s bandwidth. It will raise demand for our back-end solutions as well.
Will the slant towards end consumers compromise your focus on enterprise networking? Our philosophy at the back-end continues to be the same — the internet protocol network is becoming a platform for application software and communications. Whether it is data, voice, applications and now video, all can play on the same network-platform, saving costs, bringing efficiency. We have been in the right place at the right time with the opportunity to converge the different technologies on to a single platform.
We had started by connecting disparate networks (different protocols). It was a result of the founders asking 25 years ago in Stanford, ‘Why couldn’t networks of different universities talk to each other’. At first, there were routers (which connected different networks by translating protocols) and then came the ethernet switches (which connected different devices on the same local area network). Cisco had realised the bigger market lay in switches so it went about acquiring companies for it.
At the turn of the century, Cisco realised that there was another transition possible. Since we had the fabric (the IP network), so why not combine voice with data? Voice could get digitised at the back-end, saving cost and space. That is how we pioneered VoIP. It was a huge move against the industry which had large legacy players for telephone exchanges. Soon, we realised that the network was becoming a platform. We brought in voice, firewalls, caching and applications on to the common platform of the IP. Now we are bringing in ways to make management systems in buildings on to the IP for smart energy grids. By bringing devices such as air conditioners, lights, security devices cameras, lifts and so on to the IP platform, not only are infrastructure costs of wiring saved, but also power and space are used more efficiently.
Collaboration through video will be a key focus but other areas of growth for us include cloud computing, mobility and security.