The online video revolution has begun, and Cisco Systems says it has designed a new strategy complete with new products to help its customers meet the demand.
On Monday, the company, which makes devices that shuttle traffic around the Internet, will announce a new architecture and strategy to help its customers better handle video traffic on their network. CEO John Chambers will be pushing the new architecture and initiative at the company's annual C-Scape press and analyst conference in San Jose, Calif., on Tuesday.
It's no secret that Cisco thinks that video is a big deal. The company spent $6.9 billion to buy Scientific Atlanta three years ago. And it's made other important video acquisitions, such as the purchase of Arroyo in 2006, which developed technology for improving video-on-demand. Also in 2006, it rolled out its telepresence product that uses high-definition video to allow corporate customers to re-create a virtual boardroom to meet with colleagues and customers over a video conference.
But now the company says it will help its customers build what it calls "MediaNets" or networks built specifically for video. Along with a new architecture, the company is introducing new products that will eliminate buffering delays and pixilation issues for video traffic traveling over an IP network.
"We believe there is an opportunity to add a set of new technologies and new devices to the network that are specifically designed for video," said David Hsieh, marketing vice president for Cisco's emerging technologies group. "Video is becoming the dominant source of traffic on networks. And we believe there is a huge opportunity to add new capabilities to make networks optimized for video."
This message will be an easy sell to its service provider customers who are already seeing huge demand in bandwidth from video traffic as people watch video from sites like Hulu.com or YouTube. And as phone companies and cable operators deliver more high-definition video programming of their own over IP networks, they will need even more help managing their networks to make sure they are efficiently using bandwidth. Experts predict that more than 4 billion video streams per month will be delivered through Internet-enabled set-top boxes by 2012.
New products, such as Cisco's ASR 9000 edge router, which is part of the MediaNet architecture, could help these customers better manage their networks to accommodate this surge in video traffic.
But the video push could be a tougher sell for the Cisco's core corporate customers, which so far haven't been big users of video. What's more, companies are already cutting back on their IT spending, and some may not see adding video as a top priority.
"One of the biggest challenges that Cisco faces is making companies realize how video can transform their businesses, " said Zeus Kerravala, a vice president at the Yankee Group. "Cisco needs to sell video to its corporate customers as an important collaboration tool that will change how they interact internally as well as with their the customers and partners."
Indeed, that is what Cisco is trying to do with the MediaNet initiative. CEO John Chambers has already been touting the company's high-end telepresence product as an alternative to face-to-face meetings with clients and partners. The idea is that companies can reduce their costs and improve productivity by meeting virtually instead of flying around the country or around the world. Cisco plans to take this idea down to the desktop level too.
The first product in the new portfolio of products is called the Cisco Media Experience Engine 3000. It's a hardware appliance intended to ensure that video can be delivered to any device on the network. The box, which sits in the corporate network, is intelligent enough to transcode video so that it can be played on any device, such as a digital sign, PC, or mobile handset.
If Cisco succeeds in convincing its corporate customers to jump on the video bandwagon, the company will not only be making additional revenue from a new set of products, but it will also drive demand for its traditional products, such as routers and switches.
"Video chews up a lot of bandwidth," Kerravala said. "So adding video to a network can drive a whole new upgrade cycle, and that means more business for Cisco."