September 3, 2008
In response to concerns from their many mutual business customers, last year the chief executives from Cisco Systems and Microsoft talked publicly about creating a more focused program to improve interoperability between their respective networking and software products. Termed an "alliance of necessity" by The New York Times, both Cisco's John Chambers and Microsoft's Steve Ballmer said the companies were undertaking this effort for the greater good of their customers, a list which includes most of the world's leading corporations.
Though Cisco and Microsoft have long partnered on many technology initiatives, increasing competition between the two companies, particularly in the field of unified communications, has raised concerns with chief information officers. They fear this competition will lead to interoperability issues among products from two of their most important vendors. In response to their customers, Cisco and Microsoft have been collaborating more intently during the last year on ways to improve interoperability among their technologies, especially in areas such as security, mobile communications, application performance, and unified communications.
The executives responsible for managing this initiative, Cisco senior vice president Kathy Hill and Microsoft senior vice president Bob Muglia, provided News@Cisco a progress report on the partnership, detailing new benefits for customers and discussing where the relationship goes from here.
When you originally embarked on this collaboration a year ago, what was your objective?
Kathy Hill: A year ago we announced a commitment to working together so that our customers can be successful regardless of whose solutions they choose. Our approach is based on a commitment that where we do compete, we will continue to address our customers' needs for interoperability between our respective products.
Bob Muglia: Yes, our customers were very clear in voicing their desire for greater interoperability between their Cisco networking gear and Microsoft software. Cisco and Microsoft have participated in many areas of customer-driven interoperability for more than a decade. In fact, prior to the 2007 announcement we accelerated many areas of collaboration to better address our customers' needs-from IT architecture to security to management scenarios-to name but a few. Last year, we realized we needed to do a better job of communicating about those areas of collaboration and how committed the companies are to providing highly interoperable solutions to our customers.
What have been the chief accomplishments of the Microsoft-Cisco partnership over the past year?
Bob Muglia: Last year, we outlined the work we were doing across seven areas: IT architecture, security, management, wireless and mobile, unified communications, connected entertainment, and small and medium-sized businesses. While we continue to make progress in each of these areas, the three that stand out over the past year are network optimization, IT architecture, and connected entertainment.
A great example of this progress is Cisco's work in optimizing customer networks for efficient deployment of Microsoft software. Cisco's efforts at network optimization for Microsoft applications has helped our customers deploy SharePoint, Windows Vista, and Windows Server 2008 out into their branch offices and over their wide area networks (WANs). It's an arena in which we've been able to work harmoniously together, generating some nice synergies between our respective technologies for the benefit of our mutual customers.
I'd also highlight our joint efforts embedding Windows Server 2008 on Cisco's Wide-Area Appliance Service (WAAS) branch office solution [called "Windows Server on WAAS"], which gives our customers an integrated appliance for their branch offices. It provides customers with a single solution that delivers the core IT services of Windows Server 2008 at the branch location, improving efficiency and responsiveness, while helping the network support quick and reliable application delivery.
Finally, I think this joint commitment has allowed us to be very upfront and open with our customers about our unified communications offerings, spelling out how we will compete and how our software will work with Cisco products.
Kathy Hill: It has been a productive year, as Bob explained. We've also made progress in a few other areas. Cisco recently decided to join Microsoft and other vendors as a member of TSANet, an industry organization that is trying to make it easier for companies to manage multi-vendor IT contracts. I'd put this in a similar category as our ongoing work with the Interop Vendor Alliance, a community of software and hardware vendors dedicated to improving the interoperability of their products with Microsoft systems.
The other result we're proud of is our continued momentum with Internet TV, where we have an ongoing partnership. In January, we launched the Linksys Media Extender, which works in conjunction with Windows Vista Media Center to deliver streamed content from the PC to the TV. Meanwhile, we recently surpassed the million-unit mark for shipments of Cisco IP set-top boxes supporting the Microsoft Mediaroom IPTV platform. That's powerful proof of the business case for the partnership.
Besides these developments, I'd really underscore the importance of Windows on WAAS, which is a great example of the kind of mutually beneficial initiative we've been able to spearhead under this partnership. It's a scenario in which the two companies joined forces to be better together. Customers can use two solutions that actually enhance each other. We are truly going to market hand-in-hand, which our customers have really appreciated.
What other benefits have Cisco and Microsoft's mutual customers seen from the partnership?
Bob Muglia: By providing our customers with a clear picture of where we're working together, we're helping them make informed investment decisions with reduced risk and as much foresight as possible. It is our goal to make sure our customers know where we stand so they have the peace of mind that they are not locked into a particular type of technology as their needs evolve. This clear picture allows them to evaluate the technology that represents the best fit for their specific needs, based solely on its merits, without needing to juggle other considerations.
I think we've been able to help ensure that our customers can deploy the very latest Microsoft software as easily as possible and that it will work with Cisco's networking technologies. To provide more information about this effort, we worked with Cisco to produce a white paper detailing how Cisco's network optimization can help customers deploy Microsoft Office SharePoint Server and Windows Vista more efficiently with lower risk and at a reduced cost.
Similarly, Windows running on Cisco WAAS enables customers to roll out Windows Server 2008 features in their branch offices with reduced administration and management overhead and enhanced control over Windows services across their branch network.
Although Microsoft and Cisco will continue to compete for customers in the unified communications arena, both of our companies share a joint commitment to ensuring the appropriate level of interoperability between our respective products. We will keep working together to ensure greater clarity in communications-to our customers, partners and sales forces-on how we are competing and cooperating.
Kathy Hill: The partnership has been well received by our joint customers, which represents a significant number of organizations. The vast majority of Global 2000 companies are Cisco-Microsoft shops, and we estimated that 98 percent of our mutual large company customers use both Cisco and Microsoft products.
Aside from the general positive feedback, Windows on WAAS really highlights how the fruits of our cooperation are squarely addressing our customers' needs. Branch offices are proliferating to the extent that as much as 90 percent of employees now work outside of their organizations' headquarters. Satellite offices also represent an increasingly strategic component of any enterprise because they are closer to customers in the field. They are becoming major consumers of IT resources and an increasingly important consideration for IT and business decision-makers.
Beyond direct customer benefits, our partners and systems integrators are also gaining opportunities from our collaboration, which translates into additional benefits for our customers. The interoperability and integration road map means our services partners can develop better, more customer-focused offerings, expediting their time to market and deployment. To these partners, our collaboration is making all the difference and delivering some nice top-line benefits to their business.
How has the partnership taken account of key industry trends and developments since its announcement last August?
Kathy Hill: Addressing emerging customer needs is what this partnership is all about. We put our heads together to get out in front of our customers to anticipate their needs and address the real-life technology issues they face. For example, many of our customers are considering shifting from running some of their IT services in-house to having them hosted remotely. Cisco and Microsoft are working together to identify how this change affects the network and computing resources in order to ensure that our customers' requirements are met.
Bob Muglia: One of the biggest trends we've seen has been in online services. To address this we recently brought together the key people responsible for the online services strategies in both companies. They shared their respective views and brainstormed how we might best combine our efforts for the benefit of customers and to accelerate take-up of this exciting new paradigm. Our partnership is ongoing, and we are in touch regularly, so we're always on the lookout for fresh ways we can deliver value and address the emerging needs of our customers.
How have Cisco and Microsoft been able to juggle this cooperation with their ongoing competition in product arenas such as unified communications?
Kathy Hill: It is fair to say that both companies are aggressive growth engines, so there's going to be overlap in certain markets where we are looking to help our mutual customers. In markets where we intersect like the connected home, unified communications and security, we've made a conscious decision to take extra steps to improve the interoperability of our products for the benefit of customers. And even though unified communications is clearly an area of competition, it is also one of the areas into which we've directed much of our collaborative energy. This has been done in the spirit of giving our customers the choice and flexibility they've told us matters to them.
Bob Muglia: I'd agree. We think competition is great for our customers because, especially in new and fast-growing markets like unified communications, it gives them choices between alternative technologies. And in the long run, competition will help accelerate the market for unified communications by spurring new technologies and driving down costs.
At the same time, we've got people on both Cisco and Microsoft teams tasked with advancing unified communications interoperability working alongside people dedicated to other areas of interoperability. We do this because it is what our customers have expressly asked for.
Looking ahead, how will the partnership evolve and develop?
Kathy Hill: For the future, our customers can count on the continued strength of our mutual commitment, and they should certainly look for us to expand our portfolio of joint products. We are working closely with customers like Monsanto and Arthur J. Gallagher & Co., and we will continue to gain feedback from them on our progress.
At the end of the day, we don't want to lose sight of the fact that Microsoft is the biggest producer of software and we're the biggest maker of networking technology. Computer software and the network must work together to drive business innovation and deliver a more compelling user experience. Through this partnership with Microsoft, we're working together to push the boundaries of what's possible with networking and software innovation coming together.
Bob Muglia: Looking ahead, we'll continue to focus on datacenter architecture, security, IT management, and online services-related scenarios. These continue to be significant areas of interest to our customers and areas where our collaboration can continue to advance work happening in the industry.
Going forward, our customers have the assurance that this is an initiative to which both companies attach the utmost importance. The fact that we have executive-level buy-in right up to the boardroom-as evidenced by the joint launch of the initiative by both CEOs last year-is a measure of our collective commitment to making it work on behalf of our customers.
In addition, Kathy and I get together quarterly and check in with each other even more often than that. We also bring together the leads of the individual areas of collaboration at least once a quarter. We have people on the Microsoft side for whom the relationship with Cisco constitutes a significant part of what they do.