Cisco to Acquire WebEx

This is a very bold move from the networking giant. Cisco is not only dominating the network corner of the triangle, they are looking at owning the content side (or supply side). How serious are they? Well, $3 billion looks like serious to me. What better strategy to sell more of their routers and Unified Communications products than to provide applications that will create a demand for higher bandwidth (voice and video) and quality of service. Microsoft will have to respond and will probably lower their prices or bundle office and VoIP applications with their Live Meeting offer.

What is the play for the Service Providers? Will they just resell either webex or livemeeting? The center of gravity of the network triangle is clearly shifting on one side away from them.

Evolution of the Data Center

As I am looking at the triangle to explain the transformations happening around content, networks, and devices I can't help thinking about the other changes happening in the IT industry. Is one driving or enabling the other?

In the past, I talked about utility or cloud computing and it seems that cloud computing is becoming the new buzz word. It is true that content providers, service providers and network infrastructure manufacturers believe in the same shared network service architecture. Cloud computing meets all the scalability, reliability, flexibility and performance (one could argue with this last one :-) required to deliver these services over the web.

Big players like Sun, Microsoft, IBM, HP, Oracle and Amazon are already offering cloud computing services to other companies to run their software. Like email and web hosting in the past, this is not for everyone. Large companies still see their data centers as a competitive weapon and won't let anyone running it outside their four walls. They are using the same convergent infrastructure (server, storage, software) to make their own data centers much more flexible but it will be a while before they transition. This explains the success of VMware ($700M of revenue can't lie).

In the meantime, more cash-sensitive companies will buy computing resources on the web to run some of their software (or buy the service outright from salesforce.com). The data center is evolving to better server the business model outlined in the triangle.