Our roadmap is to really think of communications beyond just your traditional voice. In fact, that's why we really moved forward with renaming all of the products through the unified communications brand, moving ahead from IP communications. Because we believe that it isn't just VoIP, it's how you interact with voice, video and messaging -- video messaging, audio messaging and instant messaging. Our plan is to continue to look at how people communicate and how we can use the network to better integrate the elements.
I often talk about the fact that we as people have become human middleware gluing together our multiple productivity devices. Unified communications should help us integrate those elements significantly better. What will be the reaction from customers and the user community to all of that integration and tying together?
The reaction so far has been very good. People resonate with the challenge of trying to manage all of the multiple devices from a wide variety of elements. There's managing the security elements of it. There's managing the features and the availability side of it. But everyone recognizes [that] things need to work better together and that, as much as possible, … we [should] work with what they already have, because users love to be able to leap from something they're familiar with, so it's not a fundamental shift. What do you see as Cisco's next big step in
I believe that the whole market is a very iterative process. We entered the Voice over IP business in 1996 on our routers, then really moved into the enterprise telephony business in 1999, and the market now -- you can see from the statistics -- is moving along quite significantly. I think this is going to continue to evolve as a variety of things happen. One, new technologies come into play. Network services and network pricing continue to get more attractive; broadband availability continues to grow. And also the way that users work. Who would've thought a few years ago that instant messaging would be such a major method of communication? I expect that we're going to see … video as an integral part of a phone call be as normal [as instant messaging]. It's an iterative thing. Microsoft's been making some plays in the unified communications space recently, announcing that it's pairing with Nortel and announcing a roadmap for the future. How is Cisco going to keep itself on customers' radar screens, especially when there are so many Microsoft loyalists out there?
We introduced the concept about three years ago. We don't make an IP PBX. What we actually make is a voice application within the network. And it's true. It's a server that exists in the network. It can be replicated. It can be geographically dispersed, and you can draw from it as you would any other network-based resource.
So our opportunity here is enormous, which is continuing to help our customers move forward, which they're doing at a rapid pace. Are any parts of Microsoft's recent push seen as threatening what Cisco is trying to accomplish?
Actually, we've been saying [unified communications] has got to have a different paradigm. And we really did articulate a different paradigm a couple of years ago. We first had to come out saying that this is like your PBX that works over IP, because users would never have bought into the whole concept of this being an application in the network. I think that would've been too far for them to stretch.
I personally think this kind of validates the objective, [namely], it's an application. I'm sure there are areas where we're going to have products that are competitive, and there are also a lot of places where we can work complementarily. And what about that head-to-head competition? Do you foresee anything specific that Cisco and Microsoft would be competing on -- the two powerhouses going head to head?
The interesting thing is it's not in either of our companies' interests to really do that. Our customers use products from both of us. There are some areas [instant messaging and collaboration] … where there are going to be choices from both of us. And I expect a lot of our customers are going to expect us to inter-work together. We are very actively working on that. You mentioned before that the IP PBX is an application. Which is better for customers: a hardware IP PBX or a software call control solution?
I do think it's software. We have an application that's software that runs under either your Windows or Linux appliance environment. We do have servers that we specify more because we've tested the resiliency of the servers, but they are industry standard servers. And then the network elements, of course, are switching and routing elements. It does seem to be logical to me that this would be very much software-oriented. Now the question is, where does the software live? How smart are the endpoints versus how much is in the center? I think you end up with a balance between the two. Obviously, one of the most important things they need to be able to do is connect other users quickly and easily and in a paradigm that's already well established. You know how to make a phone call; it can't be any different in an IP world. What are customers really demanding? What do they want to see when they're starting to consider some kind of unified communications solution? What are they really looking for?
They want something that they couldn't have had in the previous paradigm. They want something that is more. And that's a variety of different things. Sometimes we see things like the fact that they can geographically disperse the organization, and people can sit anywhere in any kind of location yet all work like one group, cost effectively, without the old era of tie trunks and complicated dialing plans.
A lot of customers are looking for IP to be able to provide them with a level of business resiliency that they didn't have before. Because it's an application in the network, they've architected their network to be extensible so they can put call center agents wherever they need to, for example. Or they can make the Call Manager servers redundant in the network so that, in addition to disaster recovery, even something like a snow day doesn't have to stop their business. It's very easy for them to just draw the resources from anywhere else within the network.
And then, last but not least, is the integration with other pieces. We see a lot of people very interested in the desktop-to-desktop video piece as well. For example, I'm using the Cisco Unified Personal Communicator. It ties together my voice messaging, my meeting place sessions for the collaboration element; it ties together directory, so I can cut and paste. It means that I can actually make my telephone -- which I'm using as the phone part -- and my desktop work together like a team rather than competing against each other. So I didn't have to dial the phone number. I just double-clicked on it and it automatically initiated the phone session. That kind of stuff people get pretty excited about. Aside from integration, what's ultimately going to be the deciding factor among customers who are considering these technologies? Is it going to be the features or the cost?
I think it's both. Nobody in today's world is buying technology [just] because technology is fun. We had a little era of that in the late 1990s, but that era is gone. Helping customers work through the business case is definitely part of what we always do. I would tell you that when we go to customers -- and we've done a lot of engagements with customers to talk about the business strategy -- many times they actually don't quite realize what their costs are because they're scattered into so many different locations in their business. Let me make this pretty straightforward: It has to make economic business sense, No. 1. And No. 2, it has to be helping the customer improve the way his business runs. Because otherwise, I have to say, the existing telephones are designed to run for 25 years. The challenge is they will never be able to do anything more than what they do today. What do you say to companies that aren't yet considering going forward with unified communications? How is Cisco, as a company, going to convince them that it is something that really should be considered now?
The thing is to show them compelling applications that are appropriate to their business, oftentimes things that their peers might be doing. Really kind of help them through the decision process. I can walk in there and say, "Do it because it's IP." That's kind of interesting, but that's not a business criterion. You have to show them why (and continue to show them why) this will help them in their business and [make them] more competitive.
Or, in the government case, where competition's not quite the same, what additional services and capabilities can they use to optimize the fixed dollars they have in their revenue stream? What are the key services and capabilities that Cisco offers right now?
The contact center space has been extremely popular because we can create contact centers that are no longer geographically dependent. So we can put agents anywhere in the network, so you can dynamically add and subtract them as your business requires. They don't have to be in one building or one location.
On the messaging and collaboration side, we see a lot of people very excited about being able to integrate all of their messaging into one platform. We've seen customers through our community product, our messaging product, be able to compress literally hundreds of standalone voicemail systems into a few networked systems that support all the different locations. At the end of the day, this helps them reduce their total cost of ownership. And at the same time, the users get all of the functionality they had before, plus something else. For example, in the networked voicemail side, it is all networked, so it's easy for users … to send messages back and forth around the company and make multiple locations look like one big location, which is much like the way email works, too. You mentioned a few times that a lot of these solutions are really good from a business continuity standpoint. Do you see a lot of customers turning to unified communications for their disaster recovery planning or for planning for the event of the avian flu, or something along those lines? Do you see that as a driver bringing them into unified communications?
I wouldn't say it was a unique driver, but it is unquestionably on most businesses' minds. There may be cases that I'm not aware of where it was the primary decision factor, but a lot of customers do like the idea that we can do some really nice business continuity pieces with it. I hear that all the time. Is there anything else you'd like to share with our readers?
In closing comments, I just want to say that this market is just fun. I've been in the business for well over 20 years, and this is not the move from analog to digital, where we just kind of took a phone call and changed the way a phone call worked. This is, I think, fundamentally changing the whole nature of what the communication element is. We can bring in broadband audio so we can change the quality of communication. We can add or subtract video, and we can interrelate it with not only desktop apps but also with server-based applications like ERP and CRM and make it easy for people to do.
Look a couple years down the road, and this just keeps getting more exciting.