7 ms·

Cisco Systems and Financialization

60 points by hunglee2 3y ago

deleted 3y ago
[deleted]
PaulHoule 3y ago
... today I can't think about anything but that astronaut meme with the "always has been" line. I mean, always rent-seeking, always overpriced. My first exposure to the internet was through the network stacks of Solaris and the open source Linux and my first instinct was that high-priced routers didn't have to exist. That wasn't entirely right because those routers really do have accelerator hardware and are economical to handle high traffic volumes but the real thing that has kept Cisco going is that people know how to set up networks with their stuff. I went to a conference put on by AWS where I skipped a lot of the overcrowded technical talks and went to more of the business talks particularly those who were selling AMIs (something I tried for a while) and the happiest people there were from Cisco who boasted that the AMIs they made running their network software where the most profitable product they'd ever made all on the strength of network admins who didn't want to learn anything new to move to the cloud. When rent-seeking is so profitable you just can't afford to innovate, that's the problem.
- seabird 3y ago
  Not every business model you dislike is rent seeking. I really wish people would quit throwing that term around -- it means something and it's very rare that I see it used properly. Cisco's value is in their huge userbase, (at least historically, not sure what the story is recently) access to their TAC, and their ability to absorb finger-pointing. They're expensive, they throw their weight around, there's more exciting or outright better options, but to claim they're providing little to no value for the money you pay them is absurd.
  - PaulHoule 3y ago
    You're right, I did abuse the term "rent seeking" but history really does show that high margin businesses would rather go out of business than stay competitive. If people weren't afraid of China, Cisco would be gone already. If Xi could have just put off the scary behavior to his successor, our carmakers and other major industries would have put themselves out of their misery too. (e.g. GM's plan is to have electric Cadillacs and I guess everybody else rides a bike)
    - cscurmudgeon 3y ago
      You bemoan rent seeking but seem to adore China which is the ultimate rent seeker as it bans companies and competition arbitrarily than any other nation.
      - tivert 3y ago
        > You bemoan rent seeking but seem to adore China which is the ultimate rent seeker as it bans companies and competition arbitrarily than any other nation. China doesn't ban "companies and competition arbitrarily," they have fairly clear goals which are just different than those of neoliberal free-market types.
        elefanten 3y ago
        Yes, that’s the primary meaning of “arbitrarily”. Party elites ban companies and competition at their whim for purely their own selfish ends, rather than according to principle. They act as the arbiters of the matter.
        glogla 3y ago
        Yes, to take over the world and turn every person of different ethnicity than Han Chinese into a slave or servant.
        saiya-jin 3y ago
        Look how entire effin' world treated them up to this point - exactly as ultra low wage servants and slaves. Read a bit about british opium wars if you actually care about the topic. We got so used to cheap chinese goods, yet nobody gave a nano fraction of a fuck that fellow human beings destroyed their lives in horrible conditions absolutely unacceptable anywhete in the west, including children just that you could have (massively overpriced) iphone or some fashion sneakers. I am still waiting on a single social justice warrior here to abandon say Apple brand because of frequent suicides at their Foxconn plants. How long did you expect them to bow and work for nothing? What goes around, comes around eventually. West really doesnt have any moral upper hand here, I wish people had a bit more humility.
- quadrifoliate 3y ago
  > ...all on the strength of network admins who didn't want to learn anything new to move to the cloud. Anyone who thinks this way is super cynical, including Cisco salespeople. Isn't "keep the same interface when you move to the cloud" a desirable thing? This is like saying "People who use RHEL AMIs on AWS are lazy because they don't want to learn anything new, they should just migrate en masse to Lambdas or some other cool new tech". It's ridiculous that we bemoan the state of moving-every-night Javascript framework on HN and also claim that network admins "don't want to learn anything new" just because they pay Cisco for working AMIs. I think you're just jealous that network admins don't have to deal with the messes of Next.js and Kubernetes ;) I wish I could get the stability of the Cisco CLI in my day-to-day work on cloud infrastructure.
  - wmf 3y ago
    Keep the same interface at what cost? Public cloud is already expensive and Cisco-on-AWS or VMware-on-AWS are really expensive. In many cases customers are buying the same functionality twice which feels exploitative.
    - quadrifoliate 3y ago
      I don't think anyone is buying Cisco-on-AWS at anywhere near the same volume as Cisco gear in its heyday. It's likely for applications where traffic throughput is low or unimportant — e.g. training labs, etc. These are likely applications where it would have been cost prohibitive to buy a "real" Cisco router. I'd be pretty surprised if people were running an actual large production network on Cisco-AMIs-on-AWS.
    - numpad0 3y ago
      Is people paying amounts of money to a company is the problematic part? I mean, I get it, but that is not enough literal justification to single out Cisco Systems from myriad other large corporations.
  - jiggawatts 3y ago
    > Isn't "keep the same interface when you move to the cloud" a desirable thing? NO. I wish I could somehow bold that and make it 100 pt size. The cloud is the interface. It’s a distributed multi-tenant operating system with accounts, ACLs, event logs, scheduled tasks, processes (lambda), and so forth. Most critically: it has a fully virtualised software defined network already! Layering anything on top is absolute madness. It’s complex enough as it is. The built-in networking is integrated into the monitoring, has the same RBAC model as everything else, and can be templated out using a uniform API and declarative deployment syntax. Something like Cisco will sit on top of that like a steaming hot turd on a manicured lawn. Last but definitely not least: the cloud-native network is hardware accelerated into FPGAs (Azure) or custom silicon (AWS). There is absolutely no way for a vendor like Cisco to even begin to approach the scalability or the latency of the native network in software. A customer of mine has made the catastrophic mistake of adopting Aviatrix instead of educating their network team (or simply making them redundant.) Aviatrix introduced a latency overhead of 3-5ms within the same zone compared to the native latency of 80 microseconds! That’s a brutal amount of overhead for everyone else to pay for “our network staff act like dinosaurs before the impact and I’m too scared to tell them their careers are over”.
- nick__m 3y ago
  I really like some of the Cisco gear at work, ACI is a great software defined network solution and the UCS are by far the nicest blades system I ever used. But I have only have an idea about the cost... probably expensive!
- jeffrallen 3y ago
  I worked for Cisco, and I agree. I was in what the local government had been told was a special research unit in order to get a billion dollar tax break, fixing decade old bugs in some stupid built-in ping tester that old customers liked. Cisco's innovation was weighted down by the solid gold boat anchor known as classic IOS. The biggest innovation I saw in my team was to carve out a piece of the 90's style C code from the embedded (i.e. untestable) system as a library and test it on Linux with C++ and valgrind.
- Bluecobra 3y ago
  AMIs are the most profitable because they don’t need to manufacture physical hardware/ASICs and can just charge $X per hour for software that was already written for their hardware. There are plenty of legitimate reasons to chose to do this and it’s not because network engineers are lazy. For example, if your business uses AnyConnect for corporate VPN on prem, it might make sense to have a cloud instance as well for better integration. In AWS, Transit Gateway is a pretty recent thing and prior to that you would need to use cloud routers to route between VPCs since VPC peering is not transitive.
cvccvroomvroom 3y ago
To be fair, late stage corporations almost all look alike: unwieldiness, complexity, inflexibility, bureaucracy, sluggish inertia, inefficiencies, and disconnection from users. Add incentives for short-term gains, and gamification will ensue that doesn't necessarily promote long-term, enduring dominance and may well permit foot machine-guns. Despite a large market share, often with similar orgs, these attributes make them easy prey for startups without these dysfunctions. One holistic solution is to do as Sir Richard Branson: continually striving to have it both ways: operate with the nimbleness of a startup while seeking economies of scale and automation of a megacorp. Largely, the cultural attitude is the source problem and the source of solution.
nitwit005 3y ago
This is, in essence, condemning the company for paying shareholders dividends, rather than reinvesting all the profits. The whole concept of a public company is to generate dividends for shareholders. Why invest if there is never any payout for the investment? Of course this means there is less to invest in R&D, but they got to use that investor money to build the firm earlier.
- anon291 3y ago
  Because investment leads to better future payouts?
- wmf 3y ago
  Yes, but the argument is more specific: if Cisco had reinvested some profits into 5G, arguably the company would have been even more profitable long-term.
  - nitwit005 3y ago
    Sure, and then after that the best growth decision would be to invest in something else instead of paying dividends. The investors want money before they die of old age.
    - kqr 3y ago
      Next best, or same thing? Putting money in the hands of investors generally leads to investment. Dividends and buybacks are sort of an investment into your infrastructure, because the money goes through your investors into investments in the same general area.
      - depereo 3y ago
        Dividends are explicitly not an investment into your company's technology and capability. They're an admission that you cannot invest in yourself with a decent rate of return. Returning money to shareholders in this way is what you do when you cannot grow TAM and cannot grow profits with investment.
PreInternet01 3y ago
The premise of this article seems to be that, if only Cisco had not been so focused on stock buybacks, it (and by extension the US) would have been a 'leader in 5G'. I... sort of doubt that? First of all, the Cisco strategy has pretty much always been to acquire the lead player(s) in any sector it's truly interested in. R&D for possibly emerging markets is seen as a distraction that's best done outside the company: just fund it, spin it out even, then buy it back later when it turns out to be a good idea. Secondly, Cisco has been burnt badly in the past by telco-related technologies (DSL and cable), where its US customers (Comcast, AT&T et al) rewarded its significant investments by rapidly turning to cheap commoditized competitors instead. Same thing happened in the 3G era to Ericsson/Nokia (with world-wide customers), and until the much more recent "well, you can't really use any Chinese equipment in your telco network" trend, you can't really blame anyone for actively ignoring that market. Finally, it's debatable how much money there actually is to be made in '5G' as a standalone technology: like land-line telephony, the stack is pretty much indistinguishable from 'regular' datacenter tech these days, and apart from some niche management software and ultra-specialized radio hardware, it's hard to see where Cisco could have made a real difference, given the total lack of promising US-based (or even EU-based) acquisition targets in that space.
- bombcar 3y ago
  Has 5G done anything really earth shattering? Or has it been a hype bubble trying to bring back the glory days of ‘99?
  - masfuerte 3y ago
    As far as I can tell the benefit of 5G is that a single tower can provide different service levels, so the telecoms companies can offer cheaper IoT connectivity. But for an IoT manufacturer this is more expensive and more bother than just using wifi. Is anyone aware of IoT using 5G? In consumer products?
- meltyness 3y ago
  Yeah, this reeks of mostly being wordy propaganda. Particularly equating Cisco with the entire US ICT industry, it's blatantly nuts. I mean for sure I agree with their conclusion that Cisco has neglected innovation but they don't really expound on Cisco's real missteps clearly. I guess I recall some supporting facts; closure of NH optics plant, Webex splintered to Zoom, but there's just a political undercurrent here to maintain there's some conspiracy and irrevocable bond between the US and Cisco as leading infrastructure hardware manufacturer, that seems to be the focus of the article. Hence, propaganda.
RayVR 3y ago
The whole article rests on this being true, but I don’t see the evidence > over the past two decades, the United States has fallen behind global competitors, including China, in mobile-communication infrastructure—specifically 5G and Internet of Things (IoT).
nickdothutton 3y ago
I was a small part of Cisco’s GPRS+3G JV with Motorola (Invisix). The idea being to ride (and drive) the influx of IP into the mobile world. It was not very successful. Of course IP won anyway (I was also part of 3GPP, 3GIP, and MWIF/OMA) but Cisco did not manage to establish itself as a major player in the current (at the time) and future rounds of the technology. MOT was a fading star by then, and you cant expect to just walk into a market like global mobile telecoms in a few years and 1 technology cycle.

60 points by hunglee2 3y ago

deleted 3y ago

[deleted]

... today I can't think about anything but that astronaut meme with the "always has been" line. I mean, always rent-seeking, always overpriced. My first exposure to the internet was through the network stacks of Solaris and the open source Linux and my first instinct was that high-priced routers didn't have to exist. That wasn't entirely right because those routers really do have accelerator hardware and are economical to handle high traffic volumes but the real thing that has kept Cisco going is that people know how to set up networks with their stuff. I went to a conference put on by AWS where I skipped a lot of the overcrowded technical talks and went to more of the business talks particularly those who were selling AMIs (something I tried for a while) and the happiest people there were from Cisco who boasted that the AMIs they made running their network software where the most profitable product they'd ever made all on the strength of network admins who didn't want to learn anything new to move to the cloud. When rent-seeking is so profitable you just can't afford to innovate, that's the problem.

seabird 3y ago
Not every business model you dislike is rent seeking. I really wish people would quit throwing that term around -- it means something and it's very rare that I see it used properly. Cisco's value is in their huge userbase, (at least historically, not sure what the story is recently) access to their TAC, and their ability to absorb finger-pointing. They're expensive, they throw their weight around, there's more exciting or outright better options, but to claim they're providing little to no value for the money you pay them is absurd.
- PaulHoule 3y ago
  You're right, I did abuse the term "rent seeking" but history really does show that high margin businesses would rather go out of business than stay competitive. If people weren't afraid of China, Cisco would be gone already. If Xi could have just put off the scary behavior to his successor, our carmakers and other major industries would have put themselves out of their misery too. (e.g. GM's plan is to have electric Cadillacs and I guess everybody else rides a bike)
  - cscurmudgeon 3y ago
    You bemoan rent seeking but seem to adore China which is the ultimate rent seeker as it bans companies and competition arbitrarily than any other nation.
    - tivert 3y ago
      > You bemoan rent seeking but seem to adore China which is the ultimate rent seeker as it bans companies and competition arbitrarily than any other nation. China doesn't ban "companies and competition arbitrarily," they have fairly clear goals which are just different than those of neoliberal free-market types.
      - elefanten 3y ago
        Yes, that’s the primary meaning of “arbitrarily”. Party elites ban companies and competition at their whim for purely their own selfish ends, rather than according to principle. They act as the arbiters of the matter.
      - glogla 3y ago
        Yes, to take over the world and turn every person of different ethnicity than Han Chinese into a slave or servant.
        saiya-jin 3y ago
        Look how entire effin' world treated them up to this point - exactly as ultra low wage servants and slaves. Read a bit about british opium wars if you actually care about the topic. We got so used to cheap chinese goods, yet nobody gave a nano fraction of a fuck that fellow human beings destroyed their lives in horrible conditions absolutely unacceptable anywhete in the west, including children just that you could have (massively overpriced) iphone or some fashion sneakers. I am still waiting on a single social justice warrior here to abandon say Apple brand because of frequent suicides at their Foxconn plants. How long did you expect them to bow and work for nothing? What goes around, comes around eventually. West really doesnt have any moral upper hand here, I wish people had a bit more humility.
quadrifoliate 3y ago
> ...all on the strength of network admins who didn't want to learn anything new to move to the cloud. Anyone who thinks this way is super cynical, including Cisco salespeople. Isn't "keep the same interface when you move to the cloud" a desirable thing? This is like saying "People who use RHEL AMIs on AWS are lazy because they don't want to learn anything new, they should just migrate en masse to Lambdas or some other cool new tech". It's ridiculous that we bemoan the state of moving-every-night Javascript framework on HN and also claim that network admins "don't want to learn anything new" just because they pay Cisco for working AMIs. I think you're just jealous that network admins don't have to deal with the messes of Next.js and Kubernetes ;) I wish I could get the stability of the Cisco CLI in my day-to-day work on cloud infrastructure.
- wmf 3y ago
  Keep the same interface at what cost? Public cloud is already expensive and Cisco-on-AWS or VMware-on-AWS are really expensive. In many cases customers are buying the same functionality twice which feels exploitative.
  - quadrifoliate 3y ago
    I don't think anyone is buying Cisco-on-AWS at anywhere near the same volume as Cisco gear in its heyday. It's likely for applications where traffic throughput is low or unimportant — e.g. training labs, etc. These are likely applications where it would have been cost prohibitive to buy a "real" Cisco router. I'd be pretty surprised if people were running an actual large production network on Cisco-AMIs-on-AWS.
  - numpad0 3y ago
    Is people paying amounts of money to a company is the problematic part? I mean, I get it, but that is not enough literal justification to single out Cisco Systems from myriad other large corporations.
- jiggawatts 3y ago
  > Isn't "keep the same interface when you move to the cloud" a desirable thing? NO. I wish I could somehow bold that and make it 100 pt size. The cloud is the interface. It’s a distributed multi-tenant operating system with accounts, ACLs, event logs, scheduled tasks, processes (lambda), and so forth. Most critically: it has a fully virtualised software defined network already! Layering anything on top is absolute madness. It’s complex enough as it is. The built-in networking is integrated into the monitoring, has the same RBAC model as everything else, and can be templated out using a uniform API and declarative deployment syntax. Something like Cisco will sit on top of that like a steaming hot turd on a manicured lawn. Last but definitely not least: the cloud-native network is hardware accelerated into FPGAs (Azure) or custom silicon (AWS). There is absolutely no way for a vendor like Cisco to even begin to approach the scalability or the latency of the native network in software. A customer of mine has made the catastrophic mistake of adopting Aviatrix instead of educating their network team (or simply making them redundant.) Aviatrix introduced a latency overhead of 3-5ms within the same zone compared to the native latency of 80 microseconds! That’s a brutal amount of overhead for everyone else to pay for “our network staff act like dinosaurs before the impact and I’m too scared to tell them their careers are over”.
nick__m 3y ago
I really like some of the Cisco gear at work, ACI is a great software defined network solution and the UCS are by far the nicest blades system I ever used. But I have only have an idea about the cost... probably expensive!
jeffrallen 3y ago
I worked for Cisco, and I agree. I was in what the local government had been told was a special research unit in order to get a billion dollar tax break, fixing decade old bugs in some stupid built-in ping tester that old customers liked. Cisco's innovation was weighted down by the solid gold boat anchor known as classic IOS. The biggest innovation I saw in my team was to carve out a piece of the 90's style C code from the embedded (i.e. untestable) system as a library and test it on Linux with C++ and valgrind.
Bluecobra 3y ago
AMIs are the most profitable because they don’t need to manufacture physical hardware/ASICs and can just charge $X per hour for software that was already written for their hardware. There are plenty of legitimate reasons to chose to do this and it’s not because network engineers are lazy. For example, if your business uses AnyConnect for corporate VPN on prem, it might make sense to have a cloud instance as well for better integration. In AWS, Transit Gateway is a pretty recent thing and prior to that you would need to use cloud routers to route between VPCs since VPC peering is not transitive.

cvccvroomvroom 3y ago

To be fair, late stage corporations almost all look alike: unwieldiness, complexity, inflexibility, bureaucracy, sluggish inertia, inefficiencies, and disconnection from users. Add incentives for short-term gains, and gamification will ensue that doesn't necessarily promote long-term, enduring dominance and may well permit foot machine-guns. Despite a large market share, often with similar orgs, these attributes make them easy prey for startups without these dysfunctions. One holistic solution is to do as Sir Richard Branson: continually striving to have it both ways: operate with the nimbleness of a startup while seeking economies of scale and automation of a megacorp. Largely, the cultural attitude is the source problem and the source of solution.

nitwit005 3y ago

This is, in essence, condemning the company for paying shareholders dividends, rather than reinvesting all the profits. The whole concept of a public company is to generate dividends for shareholders. Why invest if there is never any payout for the investment? Of course this means there is less to invest in R&D, but they got to use that investor money to build the firm earlier.

anon291 3y ago
Because investment leads to better future payouts?
wmf 3y ago
Yes, but the argument is more specific: if Cisco had reinvested some profits into 5G, arguably the company would have been even more profitable long-term.
- nitwit005 3y ago
  Sure, and then after that the best growth decision would be to invest in something else instead of paying dividends. The investors want money before they die of old age.
  - kqr 3y ago
    Next best, or same thing? Putting money in the hands of investors generally leads to investment. Dividends and buybacks are sort of an investment into your infrastructure, because the money goes through your investors into investments in the same general area.
    - depereo 3y ago
      Dividends are explicitly not an investment into your company's technology and capability. They're an admission that you cannot invest in yourself with a decent rate of return. Returning money to shareholders in this way is what you do when you cannot grow TAM and cannot grow profits with investment.

PreInternet01 3y ago

The premise of this article seems to be that, if only Cisco had not been so focused on stock buybacks, it (and by extension the US) would have been a 'leader in 5G'. I... sort of doubt that? First of all, the Cisco strategy has pretty much always been to acquire the lead player(s) in any sector it's truly interested in. R&D for possibly emerging markets is seen as a distraction that's best done outside the company: just fund it, spin it out even, then buy it back later when it turns out to be a good idea. Secondly, Cisco has been burnt badly in the past by telco-related technologies (DSL and cable), where its US customers (Comcast, AT&T et al) rewarded its significant investments by rapidly turning to cheap commoditized competitors instead. Same thing happened in the 3G era to Ericsson/Nokia (with world-wide customers), and until the much more recent "well, you can't really use any Chinese equipment in your telco network" trend, you can't really blame anyone for actively ignoring that market. Finally, it's debatable how much money there actually is to be made in '5G' as a standalone technology: like land-line telephony, the stack is pretty much indistinguishable from 'regular' datacenter tech these days, and apart from some niche management software and ultra-specialized radio hardware, it's hard to see where Cisco could have made a real difference, given the total lack of promising US-based (or even EU-based) acquisition targets in that space.

bombcar 3y ago
Has 5G done anything really earth shattering? Or has it been a hype bubble trying to bring back the glory days of ‘99?
- masfuerte 3y ago
  As far as I can tell the benefit of 5G is that a single tower can provide different service levels, so the telecoms companies can offer cheaper IoT connectivity. But for an IoT manufacturer this is more expensive and more bother than just using wifi. Is anyone aware of IoT using 5G? In consumer products?
meltyness 3y ago
Yeah, this reeks of mostly being wordy propaganda. Particularly equating Cisco with the entire US ICT industry, it's blatantly nuts. I mean for sure I agree with their conclusion that Cisco has neglected innovation but they don't really expound on Cisco's real missteps clearly. I guess I recall some supporting facts; closure of NH optics plant, Webex splintered to Zoom, but there's just a political undercurrent here to maintain there's some conspiracy and irrevocable bond between the US and Cisco as leading infrastructure hardware manufacturer, that seems to be the focus of the article. Hence, propaganda.

RayVR 3y ago

The whole article rests on this being true, but I don’t see the evidence > over the past two decades, the United States has fallen behind global competitors, including China, in mobile-communication infrastructure—specifically 5G and Internet of Things (IoT).

nickdothutton 3y ago

I was a small part of Cisco’s GPRS+3G JV with Motorola (Invisix). The idea being to ride (and drive) the influx of IP into the mobile world. It was not very successful. Of course IP won anyway (I was also part of 3GPP, 3GIP, and MWIF/OMA) but Cisco did not manage to establish itself as a major player in the current (at the time) and future rounds of the technology. MOT was a fading star by then, and you cant expect to just walk into a market like global mobile telecoms in a few years and 1 technology cycle.