Is it really true that “no one ever got fired for buying Cisco”? Maybe, but following their party line is no sure recipe for getting promoted either. Read Cisco’s comments below and you’ll see the truth: if you blindly follow their lead, you could hurt your company and ultimately hurt yourself.

Consider these statements recently made by a sales manager on a Cisco sales conference call:

“If Xsigo’s in [your customer] and the server guys are managing it, you need to talk to that network team and get them aware of the situation, right, because they are losing control.”

Think about this. Cisco is advising customers that the first priority should be maintaining the status quo rather than comparing solution merits.

Later in the call, the manager underscored this point by stating, “…we’re going to be more expensive, right, so bring that up up front.”

In other words, “don’t seek the better solution and don’t worry about price.”

This is like a car dealer saying, “you can buy a better car, but you can’t pay more.” It kind of has a catchy ring, but the logic is all wrong.

A monopoly in action

Such distorted reasoning becomes all too predictable when you acknowledge that Cisco behaves as a monopolist. Analysts estimate that Cisco has a 72% share of the networking market, well beyond the 50% share that Forbes magazine sets as a “monopolist” threshold. With that share, Cisco can exercise the traditional monopoly powers: stifle innovation, control prices, and excise would-be competitors.

In their position, the customer’s best interests become secondary to the greater goal of maintaining market control.

Non-monopoly companies don’t behave this way. They compete with other companies, vying to offer you the better solution.  A monopolist, on the other hand, competes with the more fundamental market forces that would create better technologies. Suppressing competition is a lot easier than surpassing it.

Cisco’s objective is to make the networking component of the data center more dominant, not less. Preserve the existing approach, even if alternative solutions could result in better economies.

We’ve seen this movie many times before

History has so many sorry examples of companies exhibiting the same behavior. Microsoft fixated on the operating system and missed multiple industry transitions: to the web, to search, and again to software as a service.

For another example, look at server virtualization. This revolution began not with Microsoft, Compaq or HP, any of whom could have led it. After all, virtualization technology was well known, having been established back in the 1960’s. But their interests were to sell more sockets and systems, not less. So the answer emerged from an outsider, VMware, who had no vested interest in maintaining the status quo.

What’s at stake: Your company and your career

Why should you care about all this? This matters because your company wins when you innovate. You help get products to market faster, develop better customer relationships, and become more profitable. And when the company wins, so do you, the innovator. You have to. You hold the keys to the newer, faster machine.

Blindly following Cisco’s lead – or blindly following anybody’s lead – makes both you and your company followers, and puts you on the fast track to being outsourced.

If your value comes from doing what Cisco tells you to do, well anyone can do that.  On the other hand, look for example at what the new breed hosting and cloud service providers like Bluelock and dinCloud are doing by pursuing innovation.

Gartner summed this up pretty succinctly in this article: “Network architects and CIOs who don’t re-evaluate long-held incumbent vendor decisions (with any vendor) on a periodic basis are not living up to fiduciary responsibilities to their organization.”

The bottom line is that a single vendor track will always be more expensive and provide you with less innovation. Is this really the choice you want to knowingly make?

StubHub, a division of eBay, reported savings of 50% using Xsigo. And got what they believe is a better solution than what Cisco was offering. This is straight from an article today on Bloomberg.

Here are some excerpts from the article:

“When StubHub Inc. executive Robert Capps oversaw the building of a new data center, he shunned Cisco Systems Inc.”

“‘Cisco wasn’t serving our needs,’ Capps said. ‘They were not innovating in the areas of data-center operations that we needed innovation.”

“For years, Cisco has benefited from the impression that its products are a safe bet, said StubHub’s Capps, who switched to gear from Arista Networks Inc., Xsigo Systems Inc. and Mellanox Technologies Ltd. to outfit his data center.”

StubHub did the research in building out their cloud and found what they considered to be the most flexible, cost effective solution. And it was not from Cisco.

The entire article can be found here.

HP this week announced a decision in favor of vendor lock-in. They halted the anticipated introduction of a rack-based VirtualConnect product. With this one decision, they messaged their intention to own the entire stack and to limit their customer’s options to configure best of breed solutions.

A rack-based VirtualConnect would have allowed customers to configure I/O on both rack servers and blade servers within a single management environment.

And it may even have also allowed customers to configure I/O on mixed-vendor rack servers. But we’ll never know.

While the decision is distinctly not customer-friendly, the reasons behind it are pretty easy to deduce. VirtualConnect has reportedly been a financial winner for HP. It produces terrific margins and it provides a strong competitive advantage for HP’s blade systems vs. other blade systems.

And perhaps best of all, it reinforces vendor lock-in.

VirtualConnect ONLY works with HP blades. The implications of that are huge. The whole point of virtual I/O is to unify management — you achieve the greatest value when you can leverage the tools and techniques across more and more servers. But HP is saying you can do that only if you buy more of their own blades.

Xsigo on the other hand works with every x86 system out there. Every x86 vendor sells the mezzanine cards, blade switches, and PCI host adapters needed to connect Xsigo. You can buy and configure a system – either blade or rack – from your favorite vendor and get virtual I/O functionality.

So the choice just became even more clear. With HP’s VirtualConnect, you can buy any server you want… as long as it’s HP blades. Xsigo gives you an open management environment that lets you leverage the capabilities of virtual I/O across all your servers, both now and in the future.

Cisco struck again today. On a webinar this morning they spent 40 minutes arguing their competitive position vs. Xsigo.

The fact that Cisco would host a webinar to target one specific competitor seems pretty amazing in itself. And to then consume 40 minutes of valuable airtime to make their case is also amazing.

But that’s what they did.

As with their previous FUD document (read that document here), their facts were a bit mangled.

And again they completely ignored the fact that Xsigo has an Ethernet fabric product and an InfiniBand fabric product. (Well, in fairness, if I had created an entirely new technology, FCoE, to accomplish what Xsigo does with standard Ethernet, I wouldn’t highlight that either…)

So, for your convenience we’ve repeated all of their points below, along with our response.