re: Chambers Reinventing Cisco, Or Recycling Tactics?
There hasn't been anything other than great financial engineering and cost reduction methods based primarily on using overseas labor in over a decade from IBM, HP, Dell, Oracle, Juniper or Cisco. Of the major vendors, the only one that's made successful forays into new markets has been Apple and to some extent, the acceptance of virtualization in servers and desktops as a cost reduction method. I guess one could say that Juniper's last good innovation was employing ASIC technology in routers and switches about 10 years ago, something that they couldn't deliver by themselves since this technology was delivered by IBM Microelectronics services because IBM had all that ASIC skill out of work as the mainframe business declined. There is nothing more awesome in in the IT business than the flash of success when two failing vendors (Juniper as a startup with business but without money and skill and IBM as a vendor with skills, money and no business) meet and embrace in the darkness of business failure.
The reality is that information technology from the established, old legacy high margin vendors has been nothing but BS. The inexorable move towards commoditization of hardware and software through open source and now services through globalization continues unabated. On Demand Computing, UCS, Cloud Computing, One Planet, etc.are just failed attempts through branding to re-package what is already old, aging technology. Even the Apple iPhone miracle is funded through the channeling of deferred costs to the customer via more expensive telecommunications billing plans. I find it ironic that the most cost effective supercomputer vendor product is the Sony PS3!
After Cisco destroyed IBM's networking business, IBM embraced Cisco and became their willing surrogate partner in selling Cisco products through its services business. As they say, "Services is the last refuge of a high margin vendor desperate to continue the fleecing of customers." The high services billing rates needed to support IBM's bloated bureaucracy at the time were subsidized through a volume discount on the purchase Cisco products, a great example of IBM's willingness to embrace monopolistic practices in the services business, just like it did in the hardware business years before. This was a losing strategy on IBM's part, but since they couldn't deliver the margins in hardware and software at the time, desperation guided this decision, which was bad strategically but good tactically until all of the services skills were moved offshore (now that part hasn't worked as well, I might add).
Cisco, seeing IBM's weakness in the data center, did what every single silicon valley based firm has done in the past: keep gnawing at the edges of the established vendors: the IBM-HP server business. Like Microsoft and Cisco's early networking business attempts, it will continue gnawing at the server business from the peripheral side until it wins market share. This was a well planned and well telegraphed move. The Cisco services business was well established (to cover the falling margin on their bloated but falling unit margins) and IBM and HP knew it, but as usual, never thought that THEY could be defeated in the services business on equipment they couldn't control! In a desperate move, IBM and HP went out and bought themselves some networking companies as a defensive move, but IBM (and less so HP since they saw the threat earlier and have been back into networking longer) has never regained a good name in networking. "Let's see....you abandoned me when I embraced SNA and Token Ring and now you're back again? Why should I believe you this time?"
Oracle is an interesting play. They saw a vendor that failed and are experimenting in combining the myriad of hardware-microcode-software-service lines into a optimized offering that they could maybe parlay into higher margins to stick it to the customer. Just like IBM software margins, this may play well for a while, but the commoditization trend has not slowed down and the smart CIO knows this well.
Customers should rejoice with this turmoil. The vendors: HP-IBM-Dell-Oracle-Apple are just a story of re-cycled old brand solutions. The end user is king, innovation, value and market differentiation is coming from the smaller firms. Keep up the pressure and the BS will all come out of the business. It's about time.