The document discusses 10 things that were learned from Cisco's launch of its Insieme product line and strategy in response to software-defined networking trends. Some of the key points include: 1) Cisco takes the SDN threat seriously and spent $863 million to develop its next-generation data center products in response to SDNs; 2) Cisco's business model remains hardware-driven despite plans to increase software revenue; 3) Cisco intends to protect its installed base and profit margins by encouraging customers to purchase its Application Centric Infrastructure hardware rather than open source alternatives.

1. 10 Things We Learned-or didn't--from Cisco's Insieme launch
By Jim Duffy, from Network World
With Cisco/Insieme debut some things are clear but others are still open questions
Cisco's introduction of the InsiemeNetworksproduct line and strategy was the most
anticipated networking announcement in almost two years. It represents Cisco's
response to the software-defined networking trend pervading the industry, and
threatening Cisco's dominance and profits. While not a watershed moment–Insieme
didn't change Cisco's modus operando, as explained below--Insieme is nonetheless
one of the most important events and product introductions in Cisco's history. Here
are 10 things we learned or have yet to learn from the Insieme launch:
• Cisco takes the SDN threat very seriously–Otherwise, they wouldn’t pay up to
$863 million on an 20-month-old spin-in company to develop its next-generation
data center product line in response to SDNs. By comparison, the ASR 1000
router cost $250 million and took five years to develop.
• Cisco is still a hardware company–Why else would they respond to a software
trend and threat with hardware? Despite all of its stated plans to become more of a
software company and increase its software revenue, Cisco’s business model is
hardware driven. SDNs de-value Cisco’s hardware.
• Cisco is intent on protecting its installed base–The standalone version of the Nexus
9000 – open source controller extensions, merchant silicon–is for DIY users.
Customers leaning toward a completely integrated system are targets for the custom
ASIC-based Nexus 9000 with the Cisco-developed APIC controller. Enterprises will
likely adopt this platform vs. the standalone version, which might appeal to cloud
providers considering white box hardware and open source software. Cisco will eat
its own before allowing acompetitor to.
• Cisco is intent on protecting its profit margins–Another reason Cisco funded and
responded to SDNs with Insieme hardware. Cisco enjoys 62% gross profit margins on
its products. Margins on merchant silicon-based white box switches are one-third to
one-quarter that. If you are a Cisco customer and you want a programmable network,
Cisco will strongly encourage you to buy the Application Centric Infrastructure
(ACI)-mode Nexus 9000 hardware.
• Cisco believes the physical/virtual approach to programmability is the best–Cisco
argues that software-based overlay approaches to SDN are optimized for
provisioning virtualized applications and resources, while data centers have
both virtualized and physical resources. Those physical resources include the
networking infrastructure itself. Cisco claims its Application Centric Infrastructure,
which is founded in the new Nexus 9000 hardware, can capably provision both
physical and virtual resources in a data center.
• Cisco believes the software-based overlay approach is too costly – VMware
disagrees, but Cisco says when upgrading from 10G to 40G, ACI and the Nexus 9000
infrastructure reduce TCO by 75% over a merchant silicon-based infrastructure
running a software-based network virtualization overlay. Included in that calculation
is a “per-VM tax” levied on users of those merchant silicon switches running a

2. software overlay thataccounts for most of the cost. This is a key point in Cisco’s
argument against the software overlay approach and in its data center networking
competition with VMware.
• Cisco still has to partner with VMware for server virtualization–Even though Cisco
and VMware are becoming intense rivals in networking – thanks to VMware’s $1.26
billion purchase of network virtualization start-up Nicira–the two still have to partner.
VMware is the leader in server virtualization and Cisco is the leader in data center
networking, which makes it incumbent upon both to buddy up with the other. That’s
why VMware is a partner in the Insieme Nexus 9000/ACI launch – and why Cisco is
not for VMware’s NSX network virtualization platform.
• No future for FabricPath?–Cisco won’t admit it publicly but, why would there be?
The company’s investing up to $863 million in ACI as its strategic fabric, which is
based on VXLAN; FabricPath is based on TRILL. ACI is its response to SDN, which
wasn’t quite in vogue when FabricPath debuted over three years ago. When we
asked SoniJiandani, Insieme senior vice president of marketing, if ACI’s introduction
obsoletes FabricPath, she gave a noncommittal “I don’t think so” before explaining
that Cisco has many customer requirements to meet with its myriad data center
switching platforms – Nexus 2000, 3000, 5000, 6000, 7000, and now 9000. The Nexus
7000, however, upon which FabricPath resides is now being marketed as a fabric
“pod” and as a data center interconnect after the ACI launch. Maybe it’s us, but “pod”
sounds like a smaller scale limited deployment. And FabricPath and ACI would not
co-exist in the same fabric, said Insieme founder Mario Mazzola. Anyway, Cisco says
it has an evolution path for FabricPath customers to ACI.
• Is there a data center future in any previous generation Nexus hardware?–The
Nexus 7000 is now a pod and data center interconnect. The ACI Application Virtual
Switch that debuted with the overall ACI architecture and Nexus 9000 switches is an
adapted version of the Nexus 1000v Virtual Ethernet Module. The adaptations
include reliance on the ACI APIC controller for control plane functionality, not the
Nexus 1000V Virtual Supervisor Module; and support of the ACI policy model for
integrated physical/virtual visibility, traffic steering and common management
through APIC. Cisco also plans to extend ACI withOpen vSwitch as part of its intention
to open source the ACI policy model. The Nexus 2000 fabric extenders are supported
in ACI. The Nexus 3000 seems targeted specifically at ultra-low-latency, high
frequency trading. The Nexus 5000 will be used for Fibre Channel and Fibre
Channel-over-Ethernet applications, but these are also expected to be added to
Nexus 9000 ACI leaf switches. The Nexus 6004 is a 40G, 4RU switch that Mazzola says
could be “leveraged” as spines in the ACI fabric architecture. Could the 1RU 10G
Nexus 6001 be leaves then? Cisco says its customers have many requirements that
necessitate many different form factors to satisfy.
• Maintaining dominance in networking is vital to Cisco’s IT ambitions–Cisco’s goal
in IT – to be the No. 1 IT company in the industry–is rooted in the network, where it
is dominant. Any incursion into Cisco’s data center networking bedrock, be it from
VMware, Arista, white box, HP, Juniper or anyone else, is not only a threat to that
foundation but to Cisco’s broader IT ambitions. Connectivity is Cisco’s game. Servers

3. and storage and virtualization all hang off of that. Any disruption to its core is also a
disruption to its periphery. ACI and the Nexus 9000 is intended to thwart any
potential disruption and clear any obstacle in Cisco’s path to becoming the No. 1 IT
company.
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