Something Wicked This Way Comes from CiscoBy Michael Vizard | Posted 2008-03-10 Email Print
Cisco has revealed a new router architecture that could cause VARs to re-examine the margins around managed services.
In the course of the history of enterprise computing there have been a lot of times when new technology came along that helped propel the business of solution providers, and then there were some that actually hampered their business.
Unfortunately for solution providers, what looks like a major technology advance on the part of Cisco has the potential to not only significantly alter the landscape for providing managed services, but also the way we go about selling security products today.
The product in question is something that Cisco calls the Aggregation Services Router (ASR) 1000 series. This device is based on a new router architecture that Cisco spent more than $250 million developing over the past five years. As its name implies, this router is designed to aggregate a large number of network services that used to be delivered separately using a single device. Specifically, it is designed with the intention of being able to provide most of the security functions that are now provided to customers using any number of security appliances. And because it’s been designed around a new custom ASIC chip that leverages multicore processor technology, Cisco is saying that this device will be able to provide just about all the existing security functionality around a router required at speeds that means that customers will not need to purchase additional security appliances to augment their router infrastructure.
In the short term, this creates a potential opportunity for solution providers to sell their customers a device that can aggregate a large number of security appliances, but over the long haul the ASR 1000 has the ability to severely crimp appliance sales in the security hardware market.
But the channel implications of the ASR 1000 don’t stop there. Because you can stream almost any number of network services through the ASR 1000, it won’t be long before telecommunication companies such as British Telecom will be using the ASR 1000 to provide managed services on a global basis.
The ASR 1000 works to the advantage of these types of companies because it will allow them to bundle a large number of managed services on a single platform. And once they do that, it won’t be long before they are driving pricing for managed services down in the name of grabbing market share not just in the enterprise, but among small-to-medium business customers as well. With that kind of potential pricing pressure in the market, a lot of the profit margin assumptions that people are making about managed services may have to be revisited.
The ASR 1000 is one of those rare products that can come along that has the potential to radically transform a market place. The one caveat here is that Cisco has to actually execute on the potential of the platform. But as we look forward into the coming year, every solution provider out there should take a good look at what the implications of something that has the potential to transform the way we think about how networking is going to evolve.