It was easy to see this one coming as Cisco could only sit on the sidelines for so long.  OpenFlow and software defined networks (SDN) have too much momentum for Cisco to ignore.  When I recently heard the rumor that Tom Edsall (Cisco Fellow and my former CTO at Andiamo and Cisco) and Ned Hooper (SVP and Chief Strategy Officer at Cisco) paid a visit to Nicira I wasn’t too surprised.  Since Tom’s return, after some time abroad, he has been teaching part time at Stanford, the birthplace of OpenFlow.  No doubt Martin Casado, CTO at Nicira and fellow Stanford professor, has been planting the SDN bug in Tom’s ear.

So what does this really mean for Cisco, OpenFlow, SDN and potentially Nicira?  At this point I think Cisco is hedging its bets.  Merchant silicon combined with SDN has the ability to seriously erode Cisco’s hardware value and famous (or notorious depending on your point of view) 65%+ margins.  That means Cisco will have to unlock the value of it’s software, possibly by developing IOS and NX-OS based SDN solutions, coupled with its recent management technology from its acquisitions of LineSider.

Cisco could take the pressure off by snatching up Nicira or Big Switch Networks before they get too far along.  This would give them some quick IP but more importantly buy them time to develop a Cisco implementation of an OpenFlow ‘like’ solution.  Let’s face it; OpenFlow is too ‘open’ for Cisco.  They have a history of developing technology (great technology to be sure) and opening it up to the industry only after they can deliver hardware and software value on top of it.  One thing is clear; Cisco now recognizes the threat to its business and won’t allow others to grab more than crumbs of market share without a fight.  The next twelve months should be interesting in the networking space.

So where will the future take me?  That’s actually a good question to which a number of people, including myself, would like to know the answer.  I can say that whatever role I end up in will be more business driven.  We are in uncertain economic times and the days of simply outlaying capital to offset operational costs (which are already above 70% of the overall IT budget) with an return on investment beyond 12 months are over.  Anyone can insert themselves into an IT organization and declare server virtualization and consolidation as the IT mandate for the future.  We’ve been there and have been doing that for some time. Technology must be a driver that enables true business transformation moving into 2011.

Despite the fact that I spent over nine years at Cisco and have worked in some of the largest data center environments in the world I am only 32 years old.  The future is unknown but I’m extremely excited based on some of the conversations I’ve been having over the past few months.  My nine years at Cisco were wonderful and I can truly say, with few exceptions, that each and every person I worked with is of the highest professional and technical caliber.  I will sincerely miss each and every one of them.

Dan