Cisco To Expand 30 Market Adjacency Initiatives To 50


Cisco Systems has long sought to branch beyond its core networking business as the expansion of the router and switching markets slowed.

First it was into advanced technologies, such as home networking, unified communications and IP telephony.

Then it became “market adjacencies,” named as such because they were seen as adjacent to the company’s existing markets. Cisco is presently developing businesses in about 30 adjacencies, including the smart energy grid and what it calls smart connected communities, where cities use networks to drive economic development and deliver services.

That list will grow shortly to 50.

During a fourth-quarter conference call on Wednesday, CEO John Chambers said an expansion of the initiatives was likely. “Assuming we are successful, you will see us expand well beyond (the) 30 we have today,” he told analysts.

He pointed out that all adjacencies are designed to expand the role of the network and are opportunities that could grow into billion dollar businesses. They are in various stages of evolution, he added.

But he didn’t specify the extent of the expansion Cisco had in mind.

During a Thursday evening panel discussion, however, Cisco Senior Manager of Workplace Resources John Hailey let the number slip. There soon will be 50 initiatives, he said while discussing Cisco’s efforts to become a green company.

It will be interesting to discover what they are.

LED Lighting Will Be Big As Companies Go Green


Going green has many meanings at Cisco Systems.

It means monitoring energy use at 600 buildings across the globe to reduce a $130 million electric bill. It means locating data centers where power is not just cheap and plentiful, but where it comes from less-polluting sources.

And it means looking ahead to new technologies, such as LED lighting, which is destine to be big and smart enough to adjust to daylight conditions and instruct nearby lights to follow suit.

“Our customers and partners are demanding we be a green company,” Cisco’s Senior Manager of Workplace Resources John Hailey said Thursday evening at an SDForum Green & Clean event in Menlo Park. That’s why “we are now re-evaluating how we locate data centers and labs (looking) as to whether it is clean or dirty energy.”

While many companies justify environmental projects based on their expected cost savings, others have begun to look at a broader calculation. Customers, partners and suppliers now expect carbon reduction to be part of a company’s DNA – as can be seen in Cisco’s effort to seek cleaner power sources.
While the growing desire to be a good corporate citizen is nothing new, what was interesting was its emphasis at last night’s forum. With the Bush Administration a thing of the part, companies appear to be genuinely taking green to heart.

In other word’s, Cisco isn’t alone. At Hewlett-Packard, the company installed SunPower solar panels on six San Diego buildings last year. The benefits include an estimated $750,000 in savings over 15 years. But the company now realizes they go beyond that.

Customers want to see green data centers at their partners, notes Anne Marie Feldhusen, a marketing manager for the company’s green business initiative. The benefit is less tangible, but nonetheless important.

There will still need to be prodding, says Matthew Denesuk, a partner at IBM’s venture capital group, which is why large-scale environmental improvements will require government regulations.

But smart companies, it appears, are thinking a step ahead – to a time when green is not just good for business but necessary for business.

Because altruism will take a while to go mainstream, and because cost savings will motivate many projects even after, IBM’s venture capital group is seeking technologies that integrate with existing ERP systems and other widely used software, says Denesuk. A separate focus is on products tailored to an industry vertical, he says.

Products need to be flexible so they can respond to changing regulations and company initiatives, he says.

Cisco Sees Tipping Point And Revs Engines For Growth


Cisco Systems may have disappointed Wall Street with its fourth quarter results.

But the network giant says its recently completed fourth quarter may have been the “tipping point,” where sales declines from the global downturn began reversing themselves and growth resumed.

As a result, “we are now moving the entire focus of the company to growth,” says CEO John Chambers. It is possible a couple of quarters from now “we will look back and see that the tipping point was the fourth quarter.”

At first, the growth may be hard to see. The company projected first quarter sales would decline 15 to 17 percent from a year ago. But they will be up 1 to 3 percent from the fourth quarter, compared with the typical 1 to 2 percent rise expected from a fourth to a first quarter.

This is an “aggressive, bold statement,” Chambers said on a conference call with analysts. “Overall, this is business as normal.”

While a second quarter of positive quarter-to-quarter growth would be a welcome sign for the company (the fourth quarter also had quarter-to-quarter growth, the company’s first quarter in a year) it is not guaranteed. Cisco’s key router and switch businesses continued to decline in the fourth quarter, with router sales were off 27 percent and switch revenue slumping 20 percent.

But it reflects what Chambers said were improving business trends in the United States, Asia Pacific and in emerging markets. Only Europe appears to be lagging.

Cisco hopes to take advantage of the improving market place by investing in approximately 30 new business opportunities. These include what Cisco calls its smart connected communities (marketed to overseas governments) and its smart grid technologies for improving energy efficiency.

“It is too soon to call a recovery,” Chambers says. But the fourth quarter saw the first positive economic signals.

That means it is time for the aggressive equipment supplier to rev its engines.

Salesforce Described As The Old Guard Of The Software Industry


When a company is first in a market, it becomes a target. This appears to be what has happened to Salesforce.com, the startup that pioneered the software-as-a-service model.

A decade ago, Salesforce launched an attacked on the then old guard of the software industry (Oracle, SAP, Microsoft). It steadily built a business renting its software over the Internet instead of selling products customers install in-house. Quarterly revenue is now over $300 million.

After dismissing SaaS (for years), Oracle, SAP and Microsoft all mounted their horses and raced to develop offerings of their own.

The same rules of engagement are now turning against this leader. Software industry experts have begun asking whether its reliance on proprietary and expensive components (EMC storage gear, the Oracle database) creates a disadvantage when competitors, such as Zoho and RightNow, rely on open source

Zoho is quick to say yes. CEO Sridhar Vembu argues the differences create a “fundamental inefficiency” for Salesforce. This inefficiency is stubbornly reflected in the $65 a month price it charges, Vembu says in a recent blog post. Zoho charges $15, which includes a necessary mail account.

Maybe that is why Salesforce resorted to a $50 percent off promotion, he adds. “That gap, or may be I should call it the Grand Canyon (in price) is exactly what you have to resort to when you have a fundamentally inefficient business model that precludes you from dropping your price the honest way,” he says.

He could be right. While this disadvantage may take months, or perhaps years, to show up in business results, it is likely something Marc Benioff and crew are mulling. It is one thing to stay ahead with features and AppExchange partnerships. It is another to have cost on your side.

Switching Market In A Permanent Swoon


With Cisco Systems set to report earnings on Wednesday afternoon, it seems timely to report this downbeat view of the switching market.

Dell’Oro reported Tuesday morning that the Ethernet switching market, which Cisco dominates, should tumble 20 percent this year – its sharpest drop since 2001.

“Given the severity of the decline during the first quarter of 2009, it will be difficult for the market to rebound quickly to the revenue and port levels we saw in 2008,” said Alan Weckel, director of Ethernet switch market research.

Evidently Weckel expects some market improvement during the second half of the year. That may give some lift to revenue at Cisco. And he also predicts the market will begin expanding again in 2010, with purchases for busy corporate data centers and interest in new high-speed 10 gigabit Ethernet switches leading the way.

“However, it will be difficult for the market to return to the robust growth rates it enjoyed over the past five years,” says Weckel. (Some of those growth rates weren’t so robust, as a matter of fact.)

It will be interesting to see what Cisco says about the future of this key networking market. Permanent slowing would be an ominous sign for the company. However, it is clear corporate networks will need to expand dramatically in coming years as video is more routinely incorporated in reports and on Web sites.

There are reasons to think a wave of new buying could be on the way several years from now.

Ambitious Outlook For Mobile Internet Traffic


During the dot-com boom, research firms were beside themselves to project gargantuan growth for the Internet and Internet traffic. Many of these forecasts proved to be wildly overstated.

Could this be happening again?

A New York research outfit weighed in with an astonishing prediction Tuesday which at first glance seems like data deja vu. Five years from now, according to ABI Research, mobile data traffic to cellular handsets, such as the iPhone, and to computers with cellular modems will exceed all the Internet traffic (wired and mobile) in 2008.

Computers with cellular modems will lead the growth. Computers with built-in cellular modems (both 3G and 4G) will account for 50 percent of mobile traffic in 2014, the firm said.

In that year, mobile traffic volume will total 1.6 Exabytes, with a quarter coming from video and audio streaming. Peer-to-peer file sharing will account for just 1 percent of traffic.

ABI should be commended for putting a stake in the ground. Let’s see how the prediction holds up mid way through the next decade.

Can Cloud Computing Scale At Amazon And Elsewhere?


At the heart of the cloud computing debate is the assumption that the cloud can scale to significant heights. But can it?

Some customers say services, such as Amazon’s Elastic Compute Cloud, or EC2, are already bumping up against capacity limits – even at this early stage.

The three-year-old Internet-based service from Amazon allows customers to rent computers in the Amazon cloud, or data center, to install and run their applications.

Need more computer power? Pay for the extra CPU time by the hour. But some customers say it isn’t as easy as that. That’s because Amazon can’t install new equipment fast enough. The consequence is customers say they have difficulty getting the full number of machines they want, when they want them.

The customers asked not to be named for fear of endangering their relationship with Amazon.

But one entrepreneur said he asked for 1,000 additional servers and got only 500. Another recently requested an expansion of his compute farm by an additional 1,000 servers and couldn’t get the extra power.

The explanation appears to be that Amazon is unable to handle the spike in traffic that would occur if the new facilities were required simultaneously. In fact, the company appears to be working on a scheduling application that would allow it to better plan for spikes in customer needs.

The application would let customers schedule their workloads.

So will the cloud ultimately deliver the ease of use and flexibility advocate say it should? Only if it is big enough to replicate the in-house computers companies rely on to run their businesses.

That would make it one awfully large cloud.

Baidu Giving Google Fits In China


Baidu, the upstart Chinese search engine, is giving Google a run for its money in the world’s most populous country.

In June, the 9-year-old company passed Google in market share for the first time, riding a head of stream.

The switch in leadership illustrates how intense of a two-horse race the Chinese market has become. Yahoo trails in a very distant third place.

According to Net Applications, Baidu had 51 percent of the market at the end of the month compared with Google’s 44 percent. Yahoo had 1.6 percent and Microsoft, less 0.9 percent.

“Baidu is on a major growth curve” and benefiting as Chinese users migrate from Google, Net Applications says.

Baidu now accounts for 9 percent of global search usage (topping Microsoft). It will prove a formidable foe for Google.

More Experimentation With Online Ads


The need is clear: the Internet requires a new type of ad for the next stage of Web 2.0 (or Web 3.0, you attach the number).

Display ads work well for search engines and adequately for static Web sites. But real-time, interactive social networks and video sites require something different.

Companies such as Facebook, Twitter and You Tube continue to experiment. You Tube, in fact, claims it is finally making some progress. Users have begun to accept pre-roll ads, and the site’s search pages are soaking up an inventory of more traditional postings.

Experimentation outside the majors continues. JiWire, a company that earns its living selling ads at Wi-Fi hot spots, is rolling out an ad that promises an immediate payback

In short, not only is it potentially lucrative for the advertisers and JiWire, it rewards consumers - who are typically business travelers - killing time in an airport or hotel. If they watch a 30-second spot, they get 20 minutes or so of free Internet access.

JiWire, which groups the ads under its Ads for Access program, says it ran a test campaign for Hyatt Place hotels in the first quarter. One third of people attempting to go online clicked on the ad and 68 percent of those watched the 30-second viewing, which included a virtual tour of a hotel, says David Staas, senior vice president of marketing.

“We think that’s exceptional,” compared with the 0.1 percent conversion rate of a typical Internet ad, says Staas. The test was conducted at major airports in the U.S., including JFK and O’Hare.

Among the ads’ big advantages: advertisers got the attention of consumer for an extended period of time.

JiWire says more campaigns are prepared to roll out. While the ads may prove to be successful brand awareness tools, they accomplish a second goal. They engages consumers at a time when many people are adept at ignoring the ads they see as they search for information or conduct business.

Rewarding consumers for their time spent may be the new formula advertisers have been looking for. It will be interesting to see how it does.

Wikipedia Prepares To Add Video Alongside Crowdsourced Text


Wikipedia became the 10th most popular site on the Internet by mining the wisdom of the crowd to develop text-based encyclopedia entries.

Now is it ready to take on video.

The non-profit Wikimedia Foundation is expected to add technology in the next several months to let volunteers add video and multi-media to the general reference posts that in June alone drew 61 million Americans to the property.

There are a lot of components that need to come together, says Ron Yekutiel, CEO of Kaltura. But the plan seems on track for implementation by the end of the year.

Kaltura, the maker of open-source video management software, is supplying its software to the initiative. Yekutiel says there are many complexities, such as storing a history of the editing process for each clip posted.

In essence, the system will work the way the software does that Wikipedia uses to post text today. Editors will be able to follow changes to the material so as to understand how entries are created.

But while text is one thing, multi-media opens a new can of worms. Video clips can be editing in numerous subtle ways, and their source isn’t always obvious.

It will fascinating to see how thoroughly they can be policed – and exactly what value they bring. Will a picture indeed be worth a thousand crowdsourced words?

Cell Phone Shipments Up For First Time In Nine Months


The cell phone market rose in the second quarter for the first time since the third quarter of last year.

The modest rise – 4.7 percent from the first quarter, according to iSuppli – suggests that the mobile business hit a bottom in the past quarter and has begun a slow upswing.

Vendors shipped 265 million phones, up from 253 in the first quarter. Shipments were down 16 percent in the first quarter and 2.6 percent in the fourth quarter.

ISuppli says it expects a larger 6 percent rise in the third quarter and an 8.3 percent rise in the fourth quarter. For all of 2009, sales will be down almost 10 percent from 2008.

Lifting sales in the second quarter was strength in the emerging markets of the Middle East and Latin America. Promotional campaigns helped business in North America.

Zetta Does Not See Commoditization Of Cloud Storage


One of the big unknowns facing cloud computing is whether this business supplying computing services to companies will become commoditized.

This is especially true of cloud storage, where the differentiation among vendors is less dramatic than it is delivering computing power or application management over the Internet.

Data is either available or it isn’t, and access time can be measure quite easily.

So with new vendors entering the market, such as Microsoft (which is charging only 15 cents per gigabyte of storage), should an startup such as Zetta be concerned?

CEO Jeff Treuhaft says no. Cloud storage may get commoditized in the consumer market place, but not when it is offered to the enterprise, he says. “They are looking for something other than a raw disk,” Treuhaft explained this week during an interview at the Always On Summit.

Zetta says its infrastructure is a competitive advantage and that its 25 cents per gigabyte per month charge is attractive to customers. The company buys disks from third-party suppliers, but builds its own hardware and writes its own software for backup, or replication, management and encryption. The system makes extensive use of virtualization to spread data among machines and ensure it is available should one machine crash.

“We took the position you really have to build this as a multi-tenant service from day one,” he said. Multi-tenancy also translates into greater efficiency because it allows several customers to share the same piece of hardware.

Zettta is technically still in beta, but it says demand is healthy. “We have companies now that are not starting with one application but with three,” he said at the Stanford University gathering.

Still, with the market getting more crowded and competitors such as Amazon with its S3 service well established, commoditization over time is a danger.

Zetta doesn’t release its revenue figures and isn’t yet profitable. Monitoring these numbers over the next couple year will be an important market telltale – if the company is brave enough to report them.

Ron Conway Says Real Time Data Is A Real Big Market


Angel investor Ron Conway says real-time data is the next real big thing.

Yet it might not produce Silicon Valley’s next Google. One or two monster companies will not dominate the market. Instead it will nurture a wide range of firms, Conway said Thursday at the Always On Summit and Stanford University.

Conway, one of Silicon Valley’s top angel investors, has been touting this latest investment theme for several months. But on Thursday he attached numbers to the market opportunity.

Today, real-time data is 1 percent to 2 percent of Web content. In three years, it will climb to 25 percent of the content on the Web, he said. That will make the market a $5 billion opportunity.

“I think this is the next multi-billion dollar market,” he said.

Conway didn’t say how real-time he expects investment returns to be. But with Twitter and other companies beginning to focus efforts on making money, perhaps the pay days won’t be as delayed as in the dot-com world of Web 1.0.

Clean Tech Startups Will Make Big Money And See More Failures Too


Clean-tech investors profess a perennial optimism for the potential of their companies. But a dark reality clouds their sanguine outlook: few of their companies have scored big wins in the IPO and M&A markets.

This uncertain exit environment was a factor in this year’s swooning spending. Investments in clean-tech startups fell 70 percent in the recently completed second quarter.

But Vinod Khosla says confidence in clean tech will be rewarded - handsome returns will come with patience. So too will a greater failure rate than VC typically see with their companies.

“More money will be made in clean technology than traditional areas” of venture investing in Silicon Valley, said Khosla on Thursday at the Always On Summit at Stanford University.

Such an outlook might be expected from this head of Khosla Ventures, a firm specializing in clean tech with as many as 60 portfolio investments.

But Khosla is quick to admit the business “will see a higher percentage of failures” even if “the wins will be larger” than normal, too.

With respect to industry sectors, Khosla said he believes lithium battery investments are "over hyped." It is possible lithium batteries could be replaced by something better, he said.

If not, companies innovating in the market will do fine, he adds, noting that Khosla Ventures has invested in some of them.

Dutch Use Open Source For Car Design


The Netherlands is pondering one of the most ambitious ecological goals in the world: putting 1 million electric cars on the road by 2020.

The benefits would be many fold. The first is an almost certain reduction in greenhouse gases – 90 percent if the electricity to recharge car batteries comes from wind power. The second is a steady source of new infrastructure jobs as the country builds recharging stations and other needed facilities.

Some proponents of the grand project, referred to as C,mm,n (pronounced common), also claim electric cars could save drivers money. It isn’t clear yet exactly how. But it probably assumes the price of oil will rise in the next 10 years.

So how does the country get from here to there? It kicked off a community design project by providing the blueprint of an electric car to any one interested in contributing know-how or elbow grease.

"Everyone is free to use and modify the design. The only condition is that any resulting derived designs are returned to the c,mm,nity as open source. We believe that the best results are achieved through cooperation," according to the project.

Apply open source to the car industry is something that hasn’t yet been attempted. So it’s anyone’s guess whether it will succeed.

But considering the industry’s recent record of technological advancement, crowdsourcing a car is welcome approach that probably won’t leave the industry worse off than today.

The Changing Face Of Twitter


Ok. So nearly 70 percent of U.S. adults don’t know enough about the online service Twitter to have an opinion.

Despite its rapid growth, the micro-blogging sensation still appeals to only a small slice of the population – even as Facebook boasts of 250 million worldwide users.

What’s interesting, however, is how this Twitter-digerati has been changing the way it uses the service. According to a TNS and Conference Board survey, nearly a quarter of Twitter users now use it for work, and 26 percent say they log in to find news and stay updated.

Perhaps this is no surprise considering how widely Twitter was used to broadcast information from Iran during the recent presidential protests. And of course we all recall how Twitter was there when a jet went down in the Hudson River.

Still, Twitter’s business migration is an interesting confirmation of the growing role for micro blogging. The site got its start as a place to stay in touch with friends and for members to ell the world what they are doing.

Now it is finding a new, more necessary role in the office and for news distribution, as the Iran protests illustrate.

According to the survey, 22 percent of Twitter members use it for business. This is especially true among the 35 to 54 year old age group, and it is divided evenly among men and women.

Thirty-one percent of male uses say they use it to find news/

Welcome to the workplace, Twitter. Your presence will likely encourage the other 70 percent get an opinion about what you do.