Listen to expert IDC analysis in an enlightening discussion on the impacts of Total Cost Of Ownership for service provider network infrastructure. Eve Griliches, Program Director of IDC’s Telecommunications Equipment Group, and moderator Ian Hood, Sr. Marketing Manager, Cisco Systems, discuss the findings of a comprehensive IDC analysis of a network’s Total Cost of Ownership (TCO), including a case study applied to the Cisco ASR 9000 Series. IDC Whitepaper – Impact of a TCO Analysis http://www.cisco.com/en/US/prod/collateral/routers/ps9853/ impact_of_total_cost_ownership_model__idc_0928.pdf Cisco ASR 9000 Series Router http://cisco.com/en/US/products/ps9853/index.html Cisco Service Provider Network Infrastructure Solutions http://cisco.com/en/US/netsol/ns340/ns394/ns398/ns406/networking_solutions_market_segment_solution.html

1. Impact of a TCO Analysis
Eve Griliches
IDC
Copyright 2009 IDC. Reproduction is forbidden unless authorized. All rights reserved.

2. Webinar Team:
Eve Griliches—Director, Telecommunications Equipment
Ian Hood—Sr. Product Marketing Manager, Cisco
Eve Griliches is the Director of IDC’s Telecommunications Equipment group.
Ms. Griliches joined IDC in 2005 after 10+ years in product management for a
number of network equipment vendors. She worked at Marconi, PhotonEx,
Wellfleet/Bay Networks and Nortel Networks with strong inter-working with
Nortel's Optical division. Additionally, she spent 4 years at Thinking Machines
Corporation, one of the first parallel processing supercomputer companies.
Ian Hood is a Senior Product Marketing Manager,
Carrier Ethernet Solutions At Cisco
Since joining Cisco in 2006, Ian is responsible for driving the global market
expansion of Carrier Ethernet, IPTV and Mobile services transport solutions
based on Cisco’s IP NGN architecture. With over 25 years of experience in
networking, Ian has held prominent roles leading the innovative and
successful IPTV and Carrier Ethernet business operations for Motorola and
Nortel / Bay Networks. Ian is a licensed Professional Engineer, and holds
an Honours BA.Sc in Electrical Engineering from the University of Waterloo.
Copyright 2009 IDC. Reproduction is forbidden unless authorized. All rights reserved.

3. Agenda
• Video Traffic Statistics
• Decision parameters
• Ingredients of a good TCO
• TCO Assumptions
• Benefits of Capital Investment
• TCO Comparisons
• Architect for the Future
• Recommendations
© 2009 IDC 11-09

4. Digital Explosion of Video
• All forms of video will account for 90% of video traffic by 2013
 A majority of traffic flows between content providers, datacenters, and consumers
• Massive multi-user on-line gaming e.g World of War Craft (> 40% CAGR)
• Mobile traffic will grow 66x by 2013 – 64% will be video in 2013
• Traffic is shifting from peer-to-peer to real time streaming
• Real time streaming video is increasing – and already 27% of Internet traffic
• 30 large companies generate / consume 30% of Internet traffic
• Studies include end-user demand & application adoption
Sources – Cisco VNI, Sandvine and Arbor traffic studies 2009
© 2009 IDC 11-09

5. Proportion of the Decision Process
© 2009 IDC 11-09

6. Ingredients of a Comprehensive TCO
• Hardware and software costs (CAPEX)
 Software license / upgrade costs may be hidden
• Installation, service, training and maintenance
 Training factors on whether product(s) are new / similar to existing
• Operational costs (OPEX)
 Power, cooling, space, GREEN,…
• Security assurance and upgrades
• Scalability and reliability
 How reliable is the solution and will it scale for new services
© 2009 IDC 11-09

7. Ingredients of a Comprehensive TCO
• First year cost versus 5 year cost
 Be wary of low first year costs as it may prove more costly over the 5 year term
• Services growth for your market
• Capacity growth to meet service demands
• Feature sets for new IP services
 Ensure that vendor evolves the solution to support new services
• Impact of appliance integration
 Limit the proliferation of appliances to simplify operations
• Intangibles
 Partnership, existing deployment, customer service
© 2009 IDC 11-09

8. Assumptions in the TCO Analysis
Access Aggregation Core
CPE UPE NPE
• Includes CapEx, OpEx and standard next day maintenance
• Baseline system capacity (UPE): 160 x GbE, 8 x 10GE
• Baseline system capacity (NPE): 32 x 10 GE
• Assumes bandwidth grows at 50% and 100% per year
• 7 node network model starting at baseline capacity (UPE/NPE)
• All pricing based on current shipping list prices (USD)
• Model with Juniper MX960 DPC-R “low queue” cards (8 Q/Port)
• Model with Cisco ASR medium queue cards (24K Q/Port)
• 60% discount rate applied across the board
• List price for services at a percentage (%) of capital
• Cost of capital - 5 year lease adjusts NPV and TCO / GE
• Video monitoring includes hardware, plus software and licensing fee
© 2009 IDC 11-09

9. Benefits of Cisco Capital
• Leasing and financing tend to lead to
 Faster time to revenue
 Lower cost entry to market
 Visibility to long term costs
 Better overall customer service
• Business dynamics often require new features
• Migration plans may include ‘swap-outs’
© 2009 IDC 11-09

10. Cost per GbE of Capacity
– Baseline UPE with a 50% growth rate
25% 34%
Average Average
CapEx and OpEx Savings CapEx and OpEx Savings
with Cisco Capital
50%
Growth
Rate
Total 5 yr cost/GBE: Total 5 yr cost/GBE:
ASR $7,931 ASR $7,004
MX $9,876 MX $9,327
© 2009 IDC 11-09

11. Cost per GbE of Capacity
– Baseline NPE with a 100% growth rate
32% 44%
Average Average
CapEx and OpEx Savings CapEx and OpEx Savings
with Cisco Capital
100%
Growth
Rate
Total 5 yr cost/GBE: Total 5 yr cost/GBE:
ASR $5,852 ASR $5,107
MX $7,689 MX $7,262
© 2009 IDC 11-09

12. Low Entry Level Cost w/ Cisco Capital
Baseline UPE – 50% Growth
29%
Average
Savings
Total 5 yr cost:
ASR $10,093
MX $13,054
© 2009 IDC 11-09

13. Enabling Video Monitoring
• Cisco ASR 9000
ASR 9000
Integrated in-line video monitoring on Baseline NPE – 320 Gbps
all Ethernet modules
8 x 10GE
8 x 10GE
8 x 10GE
8 x 10GE
Simultaneous monitoring on all
RSP
RSP
interfaces
One Vidmon software license per node
in-line Video Monitoring
80 Gbps / Slot
• Juniper MX 960
Video probe software on multi-service MX960
DPC (MS-DPC) module Baseline NPE – 320 Gbps
Third party software license
4 x 10GE
4 x 10GE
4 x 10GE
4 x 10GE
4 x 10GE
4 x 10GE
4 x 10GE
4 x 10GE
MS-DPC
SCB
SCB
SCB
per MS-DPC
Video Probe Software
Up to 20 Gbps / Module
© 2009 IDC 11-09

14. Cost per GbE of Capacity
NPE with Video Monitoring at 100% Growth Rate
47% 60%
Average Average
CapEx and OpEx Savings CapEx and OpEx Savings
with Cisco Capital
100%
Growth
Rate
Total 5 yr cost/GBE: Total 5 yr cost/GBE:
ASR $5,852 ASR $5,107
MX $9,060 MX $8,236
© 2009 IDC 11-09

15. Architect for the Future
• Cisco ASR9000
In-line Vidmon: QoS with low, medium and high queuing
Announced 16 x 10GE: Available December 2009
• Juniper MX 3D
Announced 16 x 10GE MPC: Available December 2009
Higher queuing MPC Modules: Mid-year 2010
Pricing not available for detailed comparison
Ensure comparison matches quality of service (queues/port)
Expect ASR9000 to Maintain TCO Advantages
© 2009 IDC 11-09

16. Recommendations
• Beware low first year cost packaged offers
• Examine and analyze on 5 year criteria
• Review the value and impact of appliance integration
• Weigh consolidation benefits with increased bandwidth
requirements or the impact of future network growth
• Allow a shift between multiple cost centers (capital and
operational)
• Examine if one vendor can provide all the solutions
• Determine if advisory services can assist in faster time to
revenue or new revenue sources or completely outsource
• Analyze the full network architecture and its potential growth
© 2009 IDC 11-09

17. More Details?
IDC Whitepaper – Impact of a TCO Analysis
http://www.cisco.com/en/US/prod/collateral/routers/ps9853/
impact_of_total_cost_ownership_model__idc_0928.pdf
© 2009 IDC 11-09

18. Contact Info
508-935-4632
Egriliches@idc.com
http://
www.twitter.com/
EveGr
© 2009 IDC 11-09 18