Cisco Urging Convergence On Its Customers

Cisco, known primarily as a networking equipment vendor, is hoping to establish an early beachhead in “unified communications,” a market it believes will grow to $34 billion, with a flurry of new products for desktops, conference rooms and data centers it introduced today at the VoiceCon conference.

Broadly speaking, unified communications involves merging email, IM and Web conferencing technologies that use the Internet Protocol (IP) network with voice communications, video conferencing and other communication tools that have arisen under the Web 2.0 banner.

The purported benefits include lower costs for voice communications, simplification of management because there’s just a single network for voice and data, and productivity increases thanks to more efficient communications between employees and business partners.

The new suite of communications products, along with its plan to increase the number of products and services it sells in the data center, fits Cisco’s strategy to offset slowing growth in its core switching markets by parlaying its deep hardware expertise into a more diversified and service-oriented business.

But an increasing number of its potential customers see not only the advantage of merging their computing and telephony operations onto a single network, but of cutting costs by merging their telecom and computing departments as well. The shakeout from that consolidation could come at Cisco’s expense.

Indeed, this kind of organizational change often leads to power struggles between heads of formerly separate IT departments, with vendors caught in the crossfire of competing allegiances. When the head of one of these newly-merged departments emerges from the computing side, he or she is more likely to favor a familiar vendor like Microsoft or IBM, leaving Cisco on the outside looking in.

I put this paradox to Laurent Philonenko, vice president and general manager of Cisco’s unified communications business unit. While he agreed that convergence “extends the audience to more decision makers,” he disputed the notion that it puts Cisco at a disadvantage. “By all accounts, we are number one in enterprise voice, far ahead of our next competitor, which is Avaya,” he told me.

But if Cisco is truly relying on its reputation in voice technology, it will have trouble pushing away a coming challenge from the likes of Microsoft and IBM, both of which partner with Avaya for telecom equipment. Philonenko told me that Cisco can make these various technologies work reliably well because of its long expertise in networking. Cisco, he told me “is different because we have an end-to-end approach to unified communications and collaboration that is the result of years and years of investment. It’s not something you just put on a [PowerPoint] slide and get done.”

But the experience gap between Cisco and its rivals is narrowing every day, making it increasingly harder for Cisco to make that argument. That’s why it’s pushing these products so hard today.