New Cisco Products May Foreshadow Licensing Changes

Cisco Systems CEO John Chambers hinted last summer he was going to shake up the way the networking company sells software, possibly even selling software and hardware separately. Last week, Cisco took its first step down that path with a new way of selling software for switches and an app for software asset management.

For now, there won't be price changes, big fixes to the licensing model, or unbundling of software from hardware, just a simplification of upgrades. But it's part of the groundwork needed for more significant changes. "It's our first step that you see as evolving to more of a software business, and we're looking at it as an evolutionary path," says Marie Hattar, Cisco's senior director of network systems.

Cisco's new IOS Software Activation provides an authentication key to implement purchases of software based on one of three tiers. Routers and switches will be sold with all features installed; the key turns on the ones that have been paid for. Cisco also is introducing Cisco License Manager, software that polls the infrastructure users have and determines which version is on each device.

As Cisco changes, customers will welcome some simplicity to the company's pricing plans and options. "I can't tell you enough how frustrated users are about the complexity of Cisco sales," says Forrester analyst Rob Whiteley. Cisco has a long way to go to fix that, but it might be getting closer.