Better details on the Cisco/Google partnership around kubernetes and Istio

The cloud initiative combines Google’s de facto standard Kubernetes cluster orchestration platform for managing applications and services across hybrid infrastructure with Cisco’s networking and security expertise. It also leverages Cisco’s push into hyper-converged infrastructure. Along with extending security to application containers and other micro-services, the deal would allow users to monitor application behavior running on hybrid platforms, the partners said.

The other pillar of the collaboration is Istio, another open source tool released earlier this year to help manage micro-services via what developers call a “service mesh network.” Working with Kubernetes, Istio aims to provide a uniform means of connecting and managing micro-services.

And, more here:

The companies will offer the joint solution to a limited number of customers during the first part of 2018 with generally availability coming later in the year.

Source: Cisco, Google Join Forces on Hybrid Cloud

TIBCO agrees to acquire Cisco’s data virtualization business – 451

The details of the acquisition were not disclosed, but we would be surprised if Cisco made back any of the $180m it paid for Composite Software in 2013. Cisco did at least manage to grow the data virtualization business during its ownership. The company told us in September 2016 that it had 250 paying customers for what was then Cisco Data Virtualization (up from 200 at the time of its acquisition of Composite Software). The deal is expected to close in the coming weeks.

Source: TIBCO agrees to acquire Cisco’s data virtualization business

So you want to become a software company?

Hey, I’ve not only seen this movie before, I’ve did some script treatments:

Chief Executive Officer John Chambers is aggressively pursuing software takeovers as he seeks to turn a company once known for Internet plumbing products such as routers into the world’s No. 1 information-technology company.

Cisco is primarily targeting developers of security, data-analysis and collaboration tools, as well as cloud-related technology, Chambers said in an interview last month.

Good for them. Cisco has consistinly done a good job to fill out its portfolio and is far from the one-trick pony people think it is (last I checked, they do well with converged infrastructure, or integrated systems, or whatever we’re supposed to call it now). They actually have a (clearly from lack of mention in this piece) little known about software portfolio already.

In case anyone’s interested, here’s some tips:

  1. Don’t buy already successful companies, they’ll soon be old tired companeis – software follows a strange loop. Unlike hardware where (more or less) we keep making the same products better, in softare we like to re-write the same old things every five years or so, throwing out any “winners” from the previous regime. Examples here are APM, middleware, analytics, CRM, web browsers…well…every category except maybe Microsoft Office (even that is going bonkers in the email and calendaring space, and you can see Microsoft “re-writing” there as well [at last, thankfully]). You want to buy, likely, mid-stage startups that have proven that their product works and is needed in the market. They’ve found the new job to be done (or the old one and are re-writing the code for it!) and have a solid code-base, go-to-market, and essentially just need access to your massive resources (money, people, access to customers, and time) to grow revenue. Buy new things (which implies you can spot old vs. new things).

  2. Get ready to pay huge multipules – when you identify a “new thing” you’re going to pay a huge multipile 5x, 10x, 20x, even more. You’re going to think that’s absurd and that you can find a better deal (TIBCO, Magic, Actuate, etc.). Trust me, in software there are no “good deals” (except once in a lifetime buys like the firesale fro Remedy). You don’t walk into Tiffany’s and think you’re going to get a good deal, you think you’re going to make your spouse happy.

  3. “Drag” and “Synergies” – not gonna happen on any scale that helps make the business case, move on. The effort it takes to “integrate” products and, more importantly, strategy and go-to-market, together to enabled these dreams of a “portfolio” is massive and often doesn’t pan out. Are the products written in the exactly the same programming language, using exactly the same frameworks and runtimes? Unless you’re Microsoft buying a .Net-based company, the answer is usually “hell no!” Any business “synergies” are equally troublesome: unless they already exist (IBM is good at buying small and mid-companies who have proven out synergies by being long-time partners), it’s a long-shot that you’re going to create any synergies. Evaluate software assets on their own, stand-alone, not as fitting into a portfolio. You’ve been warned.

  4. Educate your sales force. No, really. REALLY! – you’re thinking your sales force is going to help you sell these new products. They “go up the elevator” instead of down so will easily move these new SKUs. Yeah, good luck, buddy. Sales people aren’t that quick to learn (not because they’re dumb, at all, but because that’s not what you pay and train them for). You’ll need to spend a lot of time educating them and also your field engineers. Your sales force will be one of your biggest assets (something the aquired company didn’t have) so baby them and treat them well. Train them.

  5. Start working, now, on creating a software culture, not aquiring one – the business and processes (“culture”) of software is very different and particular. Do you have free coffee? Better get it. (And if that seems absurd to you, my point is proven.) Do you get excited about ideas like “fail fast”? Study and understand how software businesses run and what they do to attract and retain talent. We still don’t really understand how it all works after all these years and that’s the point: it’s weird. There are great people (like my friend Israel Gat) who can help you, there’s good philosophy too: go read all of Joel’s early writing of Joel’s as a start, don’t let yourself get too distracted by Paul Graham (his is more about software culture for startups, who you are not – Graham-think is about creating large valuations, not extracting large profits), and just keep learning. I still don’t know how it works or I’d be pointing you to the right URL. Just like with the software itself, we completly forget and re-write the culture of software canon about every five years. Good on us. Andrew has a good check-point from a few years ago that’s worth watching a few times.

  6. Read and understand Escape Velocity – this is the only book I’ve ever read that describes what it’s like to be an “old” technology company and actually has practical advice on how to survive. Understand how the cash-cow cycle works and, more importantly for software, how to get senior leadership to support a cycle/culture of business reneweal.

There’s more, of course, but that’s a good start.

Finally, I spotted a reference to Stall Points in one of Chambers’ talks the other day which is encouraging. Here’s one of the better charts you can print out and put on your wall to look at between meetings:

That charts all types of companies. It’s hard to renew yourself, it’s not going to be easy. Good luck!

Our surveys show Cisco has too many people, often takes too long to get things done and has become reactive to changing market dynamics,” Sue wrote. “Big layoffs and restructuring have become routine for the past four years. A more proactive change may kick Cisco’s underperforming stock into gear.

Cisco’s 19 years of mega-growth

Since being tapped to lead Cisco in 1995, Chambers has grown the company from a $2.2 billion hardware manufacturer to a $48.6 billion network hardware, software, security and services powerhouse that’s more bullish than ever on becoming the world’s No. 1 IT company. Cisco had 3,827 employees when Chambers was appointed CEO. Today, there are more than 70,000.

Also, a somewhat random DevOps callout from a senior executive:

“We are going to move the entire engineering organization to a DevOps and an Agile development model,” Lloyd said. “That’s hard work. But, in many cases, it’s a different way of doing things that will allow us to do things quicker, faster and much more customer-centric.”

And, on whatever InterCloud is, perhaps “EverythingCloud”?:

“Intercloud is a step beyond a public cloud,” Chambers said. “Think of Intercloud as Cisco services delivered from a cloud: hosted communication, security, collaboration. Think of it as our customers’ private cloud capabilities. Think of it as our partners’ and Cisco’s architectural implementation of this, if you will, in terms of our partner clouds. And think of it in terms of a public cloud.”

Cisco’s 19 years of mega-growth

Cisco not looking at Rackspace, doesn’t fit M&A criteria

“We don’t move into a market unless we think we have a realistic chance of gaining 40% market share with sustainable differentiation,” Chambers said at the Cisco Live conference when asked if the company needs to acquire an established cloud provider like Rackspace to succeed in cloud services. “And we try not to move into markets that don’t have really good gross margins, unless they’re unusually strategic for us. That’s a market that is very, very price sensitive; that’s taking on the big giants in Google, Facebook, Amazon, Microsoft, etc. So those are the types of scenarios we look at as a partnership opportunity (rather) than we do acquisitions. I’m not going to comment on if we looked at them or not. It doesn’t fit into our normal sweet spot and core competency area.”

That’s a pretty clear criteria and close to what many large tech companies would want.

Cisco not looking at Rackspace, doesn’t fit M&A criteria

“Leveraging OpenStack”

In the context of covering Cisco’s “InterCloud” announcement, the following is quoted:

The Cisco Intercloud will be built upon industry-leading Cisco cloud technologies and leverage OpenStack for its open standards-based global infrastructure. We’ll support any workload, on any hypervisor and interoperate with any cloud.

You see that notion frequently now-a-days, the idea of OpenStack being part of a cloud. As I recall, Oracle said they had (would have?) OpenStack compatibility. One would expect that IBM SoftLayer (built on CloudStack) will have something in this realm of “based on” and “plays nicely with.” Of course, there are plenty of others that are “100% OpenStack” (or as close as one can get) as well.

“Leveraging OpenStack”

A nice illustration of the problem shifting your customer base from on-premises to public cloud

Buried in this piece on Cisco doing some public cloud stuff is this little description about how the shift to public cloud creates a strategic threat to incumbent vendors:

Cloud computing represented an interesting opportunity to equipment companies like Cisco, as it aggregated the market down to fewer buyers. There are approximately 1,500 to 2,000 infrastructure providers worldwide verses millions of businesses; reducing the buyers to a handful would lower the cost of sales. And, as cloud sales picked up, reducing on-premises equipment spending, those providers would represent an increasing share of sales and revenue.

The problem with this strategy, as companies like Cisco Systems and Juniper Networks discovered, is the exchange of on-premises buyers to cloud buyers is not one to one. Cloud providers can scale investments further than any individual enterprise or business buyer, resulting in a lower need for continually adding equipment. This phenomenon is seen in server sales, which saw unit shipments fall 6 percent last year and value fall nearly twice as fast.

This re-arranging of one of Porter’s forces (the buyers get more power because there are fewer of them) is one of the reasons I go on about “IT – SaaS = what?”; namely, selling to SaaS/cloud companies is not going to be as fat as selling to the more numerous and inefficient (read: spends more money) on-premises market.

A nice illustration of the problem shifting your customer base from on-premises to public cloud