Stephen,
Cisco also states on Page 3,
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Cisco estimates it will take three to five years to complete the move to software licensing and acknowledges that the potential for customer confusion is high.
Cisco must explain the new pricing, make pricing methods consistent across products, determine what becomes a line item and what stays in a bundle, and hash out the financial implications for customers and itself, Lloyd says.
If software licensing introduces unnecessary complexity, customers could end up paying more than they do today or it could persuade them to give a competitor a try.
Or it could make customers even more dependent on the vendor.
Cisco already knows customers will need its help: what releases to run, what's included in particular licenses, the need for buyers to track licensing for compliance purposes.
Some prices are sure to increase.
Chambers hinted at as much at the user conference.
"Do we charge as much as we should or as much as we could? Probably not," he said.
"All the major software companies in the world charge major amounts for upgrades, and customers don't even blink."
However, Cisco also could cut prices on hardware as software is decoupled, so a smart shopper may find ways to hold the line on costs.
Cisco is taking a big risk, one that could open the door to competitors.
It's also a risk that can't be quickly corrected by acquiring a company with a successful product, a standard Cisco tactic when it makes a bad decision on the direction of technology.
In the next few years, customers will get a menu of hardware and software, including operating systems, from which to choose, Forrester Research's Rob Whiteley predicts.
In that environment, it's possible that customers will decide to run third-party software and leave Cisco's software out of the equation as much as possible.
Page 4 states,
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Some customers don't see the appeal in an unbundled Cisco.
Indiana Farm Bureau Insurance has 130 field offices, all of which have older Cisco routers with standard software, making them easy to manage.
Network services manager Cook has no interest in buying software licenses, which he says would just complicate matters.
There are potholes in the road to unbundling.
Licensing models can become complex and difficult; just ask Microsoft customers.
And Cisco can't afford to become complacent or arrogant, something that happens on occasion, some customers say.
When Saint Luke's Hospital System, a 10-hospital chain around Kansas City with 5,400 network users, implemented VoIP three years ago, it chose Nortel Networks after a competitive bidding process.
Cisco wasn't happy--and made its feelings known.
"The implied comments were, 'I guess we're going to reconsider how much we're going to provide support'" for Saint Luke's remaining Cisco equipment, CIO John Wade says.
"Why would you threaten us because we're changing part of our own systems?
The answer was, 'Because we're Cisco.' To me, they're leveraging that very dominant position to the exclusion of your own business objectives."
Brad Reese Cisco Repair
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