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Cisco muscles into software

New AON business unit could bring Cisco into rivalry with integration software vendors and XML networking specialists.

Cisco lifted the curtain on a new business unit, setting the stage for a potential collision between the networking giant and integration software providers.

At its Cisco Networkers customer conference in Las Vegas on Tuesday, Cisco detailed the first products from its Application-Oriented Networking (AON) unit, a widely anticipated initiative meant to move the company beyond its core Internet routing business and into messaging middleware.

Partners, including SAP, Tibco Software and IBM, said they intend to build products tied to the AON gear.

News.context

What's new:
Cisco debuted its AON business unit, one of the company's forays beyond traditional routing and into message-level network devices.

Bottom line:
Although Cisco has an AON partner program, the company's hardware-centric approach to integration--a task typically done by back-end software and hardware servers--creates areas of competitive overlap with many software companies.

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With the AON business unit, Cisco is betting that it can stimulate revenue growth by adding more sophistication, or "intelligence," to its current networking hardware line. The AON products will be "application-aware," which means that they can inspect information that's being transmitted and route messages based on predefined policies, according to Cisco.

The company plans a multiyear introduction of products, starting with a blade that can be inserted into Cisco's Catalyst 6500 switches, and a branch office router, both of which will be generally available later this year. A standalone AON device and a branch office router that connects to SAP applications also are planned for completion within a year.

Cisco's foray into application networking represents a potentially significant shift in the competitive dynamics of the technology industry, said analysts.

By building appliances optimized to move data between systems, Cisco is giving corporate customers a hardware alternative to traditional integration software suites. The company promises the appliances will provide better performance and cheaper administration.

"No question--this is a game-changer," said Roy Schulte, an analyst at research firm Gartner. "Cisco isn't going to have a huge impact in 2005?but everyone's integration strategies will have to take this concept into account. It's a big change."

In particular, integration software vendors and start-ups that focus on XML networking hardware will need to consider areas of potential overlap with AON, Schulte said. Cisco's traditional networking hardware competitors are expected to enter the application networking market as well, analysts and IT executives said.

Cisco's heavy imprint
With AON, Cisco is lending credibility to a relatively young kind of networking gear.

Traditional routers and switches move packets of data around a network by viewing the Internet addresses of incoming traffic. AON products will be designed specifically for handling inter-application messages, said Taf Anthias, the general manager of the AON business unit. Anthias joined Cisco to develop the AON strategy about two-and-a-half years ago, after heading up development of IBM's MQSeries middleware.

"If the network could be made to speak the languages of various applications and be able to translate between the languages of various applications, much like a multi-protocol router can do, then we could have much better collaboration between applications," said Charles Giancarlo, Cisco's chief technology officer.

Cisco's approach will reduce the amount of application development required and provide a more efficient centralized system for making changes to business applications, he said.

For example, a retail store or warehouse can use AON gear to process data collected by radio frequency ID readers. Instead of sending large amounts of data over the network to a back-office system, a branch-office AON router can be programmed to automate certain tasks, such as sending an alert when inventory reaches a certain point.
"This is about taking dollars away from software and middleware and putting it into Cisco's pocket"
--Eugene Kuznetsov
CTO and founder, DataPower

Specifically, Cisco has developed AON gear to add security; to speed up XML processing time with caching and compression; to track performance or trigger responses to incoming messages; and to route messages across the network, Anthias said.

Cisco has licensed IBM's WebSphereMQ Client software to provide message transport in its AON devices. While traditional middleware systems traditionally run in data centers, AON technology will be used in data centers, small offices and potentially even in home computing scenarios, Anthias said.

With the hardware, Cisco will release new configuration tools. One design tool will allow application infrastructure specialists to set policies, such as how to treat a purchase order that exceeds $1,000.

The company has also made tools that allow network administrators--Cisco's traditional audience--to install the software on machines in corporate data centers and in remote offices, Anthias said.

Cisco's entry into the market will likely most affect the handful of companies that already make gear to accelerate performance and provide security for XML-centric applications. These vendors, which were started over the past five years, include DataPower, Sarvega, Reactivity and Forum Systems.

These XML hardware appliances can perform the job infrastructure software products might do. For example, rather than acquire more middleware or beefier servers to speed up XML processing time, a corporation could purchase a specialized device, which can be cheaper and potentially simpler to deploy.

By providing a product that handles these middleware jobs, Cisco can potentially get some of the money typically earmarked for infrastructure software in corporate IT budgets.

"This is about taking dollars away from software and middleware and putting it into Cisco's pocket," said Eugene Kuznetsov, chief technology officer at DataPower. "They're saying that AON will in no way replace middleware, but that's wishful thinking."

Given Cisco's market heft, the company's move poses a competitive threat to some of the smaller companies already in the field, analysts said.

"In the short term, it's going to raise the number of opportunities for start-ups, mainly because most (corporate customers) haven't figured out that they should invest in a hardware form factor to address these problems," said Ron Schmelzer, an analyst at ZapThink. "But in the long run, Cisco's going to be a real competitive threat."

"This will shift markets and maybe shift the balance of who owns what today."
--Wes Swenson, CEO, Forum Systems

As part of its AON launch, Cisco explained how third-party providers--even those that sell middleware and XML networking gear--can build add-ons to Cisco's gear.

For example, IBM and Tibco Software, two of the largest middleware companies, are building add-ons that will allow Cisco's AON devices to act on messages sent from IBM or Tibco middleware systems. Other partners are expected to build add-ons for reading different protocols or providing higher levels of security than Cisco plans initially.

Cisco envisions AON add-ons--built by the networking giant or its business partners--for handling proprietary protocols or XML document formats used in particular industries. Out of the box, AON will support Internet and Web services protocols, including Simple Object Access Protocol, or SOAP, and common proprietary protocols such as those used for Tibco and WebSphereMQ systems.

IT executives and analysts expect that other networking companies, such as Juniper and Nortel Networks, will also move into application networking as they seek out new capabilities for their routing products.

"This will put more pressure on networking vendors in the remainder of 2005 to catch up or release what they're working on," said Wes Swenson, CEO of XML security device maker Forum Systems, which intends to build an AON security add-on. "This will shift markets and maybe shift the balance of who owns what today."

No choice
Cisco's move into application-oriented networking does carry some challenges, noted analysts.

The company's sales force will need to make adjustments to dealing with a software-oriented product, because Cisco generally communicates with people responsible for networking purchases, analysts and competitors said.

Cisco's first AON product line will need to mature over time, Gartner's Schulte noted. And the company needs to sort out the areas of competition and collaboration with its partners, he said.

Cisco's Anthias downplayed any potential conflict with Cisco's partners. He said that putting application processing into network devices is the normal evolution of computing.

The middleware industry evolved to perform certain dedicated tasks, such as sending messages between applications, for several applications, he said. "It's the same thing here: Do it in the network on behalf of lots of different servers and different middleware systems," Anthias said. "It will probably get fleshed out as we get educated and learn about that."

Regardless of the technical and business issues, Cisco needs to push into new areas, such as application networking, said Jon Oltsik, an analyst at Enterprise Strategy Group.

Because many companies will be upgrading their network infrastructure to faster technologies in the coming year, many Cisco customers will invite competition from potentially cheaper rivals, he said.

"What Cisco wants to do is climb the 'up' stack and get hooks into applications and into middleware, because it protects their turf and enhances value of their business," Oltsik said.