Speculation Rife Regarding Cisco Shift to Software-Based Pricing

Nobody knows precisely how Cisco will implement a software-based pricing model across most of its product offerings during the next three to five years, but some of the scenarios mentioned in an InformationWeek feature article seem far-fetched.

Not many details have been forthcoming from Cisco, which probably still is getting its collective head around the concept, so it’s understandable that we’re seeing free-ranging conjecture and speculation on the subject. Still, InformationWeek seems to go into the weeds occasionally in exploring a potential and sweeping decoupling between hardware and software at Cisco.

I don’t see that happening. Why would Cisco do that? Where’s the value to Cisco — or to its channel partners, or even to its customers (if you really think about it) — in having Cisco routing and routing code sold purely as software and run by the buyer on any server it chooses for the task? For some Cisco products, the software and hardware are fused architecturally, with the hardware specially designed to accelerate the performance of sophisticated software functionality.

Besides, the pure-software sales model (selling only software and letting the customer fend for himself in finding the hardware on which to run it) is one from which even open-source router vendor Vyatta is having to migrate, moving instead to an appliance-based approach.

An appliance-based approach is where I believe most of Cisco’s product portfolio will ultimately transition. There will be some network-management offerings that will be sold exclusively as software, for the customer to choose whether he or she wants to install and run it on the hardware of his or her choice, but generally I foresee Cisco closely coupling hardware and software for architectural, business, and design reasons.

What will be different from the past, though, is that Cisco, wherever appropriate, will call attention to the value of its software in its pricing model by implementing subscription charges for updates to the code. These charges will be separate from existing maintenance and support charges. This model probably will span much of Cisco’s product line, encompassing routers, switching, security, and VoIP-related offerings such as its CallManager IP PBX.


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