Tag Archive for CSCO

Whats Up With Cisco?

Whats Up With Cisco?What is up with Cisco? Their fiscal results for the recently closed 2017 Q3 showed revenue of $11.9 billion, a 1% decline in revenue, compared to the same quarter last year. This is the 6th consecutive down quarter. The networking goliath also issued downward guidance for 2017 Q4. They estimated a revenue declines of 4-6% year-over year.

Cisco logoOn the earnings call, Cisco CEO Chuck Robbins blamed several factors for the lower guidance. He cited:

  • “a pretty significant stall right now” in the U.S. federal public sector
  • Service provider revenues were down in Mexico.
  • United Kingdom business is being dampened by currency issues.
  • Middle East, there is “pressure… relative to oil prices.”

Then there are the layoffs. Cisco buried the announcement in a footnote in the company’s SEC 8-K report that 1,100 more layoffs are coming, on top of the 5,500 announced Layoffsin August 2016.

In May 2017, we extended the restructuring plan to include an additional 1,100 employees with $150 million of estimated additional pretax charges.

According to SDXCentral, the Cisco CEO stressed several times on the earnings call, that the company is transitioning to more software and subscription-based business. He declared,

I am pleased with the progress we are making on the multi-year transformation of our business.

These weak fiscal results and the move to a subscription-based business have led to speculation about what the Cisco business will look like in the future. TechTarget speculates that Cisco may go so far as to separate the Network Operating System (NOS) from the hardware. They contend that such a move would be a dramatic departure from Cisco’s traditional business model of bundling high-margin hardware with its NOS. The author believes that market trends will likely force the vendor to release an open NOS.

Cisco Catalyst 3750-E.TechTarget cites reports from the The Information that a hardware-independent NOS called Lindt is coming. Reportedly Lindt will run on a white box powered by merchant silicon. According to the article, a number of market trends are driving the move to a hardware-independent NOS.

The first market trend forcing Cisco to release a hardware-independent NOS is the company’s declining dominance of the Ethernet switch market. Since 2011, the company’s share has dropped from about 75% to less than 60% last year, according to the financial research site Trefis. The decline is important to Cisco’s bottom line because switches accounted for 40% of Cisco’s product sales in 2016, 30% of net revenues and 20% of the company’s $162 billion valuation, Trefis reported.

Infrastructure as a ServiceCisco’s weakening performance in switching is tied to the second market trend forcing Cisco to release a hardware-independent NOS. It’s customers are turning to public cloud providers, such as Amazon (AMZN) Web Services, Microsoft (MSFT) Azure and IBM (IBM) SoftLayer, for their IT infrastructure. The more enterprises subscribe to infrastructure as a service, the less networking gear they need in their data centers.

The shift to cloud providers is found in the latest numbers from Synergy Research Group. Revenue from public cloud infrastructure services is growing at almost 50% a year. In the fourth quarter of last year, revenues topped $7 billion.

Cloud providersThe third market trend forcing Cisco to release a hardware-independent NOS is the trend where enterprises that were Cisco’s largest customers are joining cloud providers in building open networking hardware and software to replace inflexible proprietary systems that lock them to a vendor. Those companies include large financial institutions, like Bank of America, Goldman Sachs and Fidelity Investments, and communication service providers, such as AT&T (T), Deutsche Telekom and Verizon (VZ).

The technology shift is driving an enormous amount of spending on IT infrastructure. Worldwide spending on public and private cloud environments will increase 15% this year from 2016 to $42 billion, according to IDC. Meanwhile, spending in Cisco’s core market of traditional infrastructure for noncloud data centers will fall by 5%.

Arista NetworksWhile Cisco is ignoring the trend away from proprietary hardware, the article says Cisco’s rivals are embracing it. Juniper Networks (JNPR) and Arista Networks (ANET) have released a version of their NOS for white boxes favored by cloud providers and large enterprises. Both companies reported year-to-year revenue growth in switching last year. Even Cisco’s patent lawsuit against upstart Arista was set-back by the courts.

Rohit Mehra, an analyst at IDC hypothesized that Cisco’s resistance to change is likely due to fear that giving customers other hardware options would accelerate declining sales in switching. “There would be potentially some risk of cannibalization in the enterprise space,” he added.

Cisco insists its customers are not interested in buying networking software that’s separate from the underlying switch. The Cisco spokesperson told TechTarget:

Cisco insists its customers are not interested

The vast majority of our customers see tremendous value in the power and efficiency of Cisco’s integrated network platforms, and the tight integration of hardware and software will continue to be the basis of the networking solutions we offer our customers

TechTarget adds that Cisco doesn’t say the article is wrong. Instead, the company falls back on a corporate cliché for refusing to discuss a media report. “We don’t comment on rumor or speculation,” a Cisco spokesperson said.

The networking market is evolving away from the hardware that Cisco depends on for much of its valuation. Cisco will resist changing its market approach for as long as possible. But in the end, the company will have to become a part of the trend with an open NOS capable of running on whatever hardware the customer chooses.

Mergers and acquisitionsRather than change its model for selling networking gear, Cisco has spent billions of dollars on acquisitions over the last few years to create software and subscription-based businesses in security and analytics. But Cisco’s software push has yet to pay off with 5 conservative down quarters.

Finally, Cisco just recently patched a flaw in IOS software that affected more than 300 models of its switches. Despite issuing an advisory on March 17, Cisco did not release the patch for this vulnerability until May 8, 2017. The Cisco vulnerability was part of the Vault 7 WikiLeaks dump of alleged CIA hacking tools.

Alleged CIA hacking toolsThe vulnerability, rated a critical 9.8 out of 10 by the Common Vulnerability Scoring System, is in the Cluster Management Protocol, or CMP. could allow a remote, unauthenticated attacker to reload devices or execute code with elevated privileges. This vulnerability can be exploited during Telnet session negotiation over either IPv4 or IPv6.

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Ralph Bach has blogged from his Bach Seat about IT, careers and anything else that catches his attention since 2005. You can follow me at Facebook and Twitter. Email the Bach Seat here.

Avaya Goes Chapter 11

Avaya Goes Chapter 11-Updated- 03-07-17 As predicted Avaya spun off its networking business. The lucky winner is Extreme. The presser from Extreme is here.

In one of the worst kept secrets in tech, Avaya has finally declared bankruptcy. The Santa Clara, CA-based communications company filed for chapter 11 protection on January 19th 2017 in the U.S. Bankruptcy Court for the Southern District of New York. Reports are that Avaya faced an end of January deadline to reach agreements with creditors to address its $6.3 billion debt or potentially default.

Avaya Goes Chapter 11The company’s presser announcing the bankruptcy characterizes the decision to seek Chapter 11 as a necessary re-do on deals made a decade ago. The company was spun off from Lucent, a former AT&T unit, in 2000. Avaya went private in 2007 when private equity firms Silver Lake Partners and the Texas Pacific Group took over the firm for $8.2 billion. Avaya was set up as a leveraged buyout – loaded with debt. At the time the new owners said going private would help Avaya to accelerate product development. In 2009 Avaya scooped up the remnants of Nortel for $900m.

The Nortel acquisition added Ethernet switching and VoIP to Avaya’s portfolio. While the move added needed hardware to the Avaya portfolio the rest of the tech world started the shift towards software-as-a-service and the cloud. Avaya was not able to digest Nortel while taking on Cisco, Microsoft and the cloud at the same time.

$6.3 billion debtAvaya was both late with VoIP and Unified Communications. Neither Microsoft nor Cisco were competitors in the TDM/PBX era. Cisco joined the race with VoIP and Microsoft then came along with Unified Communications. Both have tremendous enterprise penetration and brand recognition.

The pressure forced Avaya to consider selling it’s crown jewel, its contact center products to Genesys in 2016, in the hope it would raise some cash. When the deal with Genesys fell through, Avaya decided to file for bankruptcy. Avaya CEO Kevin Kennedy said in a statement, “…chapter 11 is the best path forward at this time.

In order to keep the lights on during the reorganization, the company has secured a $725 million loan underwritten by Citibank.

As part of its debt load, Avaya owes its pensioners $1.7 billion unfunded pension liabilities. According to NoJitter Avaya will honor it obligations to maintain and continue the pension (as did GM in its reorganization).

Chapter 11 only impacts Avaya’s United States operations. In the rest of the world the company is moving to assure customers and stakeholders that it’s business as usual.

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My experience is that the Avaya IP Office product is way over-priced, even in a bid environment. Why would anyone buy an Avaya Ethernet switch or access point when you can get a Cisco or an HP?

So what is to become of Avaya? One likely case is that all of business units will be sold off to satisfy the creditors. The only thing left of Avaya will be a service organization to care for the huge installed base of orphaned Nortel and Avaya systems.

I know people are already getting calls from Cisco about replacing Avaya.

Ralph Bach has been in IT for fifteen years and has blogged from his Bach Seat about IT, careers and anything else that catches his attention since 2005. You can follow me at Facebook and Twitter. Email the Bach Seat here.

Ethernet Marches On

Ethernet Marches OnIt has been a while since we talked networking on the Bach Seat. So it is time to get back to my roots. Ethernet continues to dominate the world. The IEEE 802.3 Ethernet Working Group recently ratified 4 new Ethernet related standards. The committee approved IEEE 802.3bp, IEEE 802.3bq, IEEE 802.3br, and IEEE 802.3by.

IEEEEIEEE 802.3br has implications for IoT and connected cars. This new standard addresses the needs of industrial control system manufacturers and the automotive market by specifying a pre-emption methodology for time-sensitive traffic. IEEE 802.3bp, addresses now Ethernet operates in harsh environments found in automotive and industrial applications.

The 2 more interesting new standards to networkers are IEEE 802.3bq and IEEE 802.3by. These standards help define how 25 GB and 40 GB Ethernet will work and more importantly how products from multiple vendors should interoperate in the data center. For a summary of the rationale for the new standard here is the IEEE presentation  (PDF).

Data centerIEEE 802.3bq, “Standard for Ethernet Amendment: Physical Layer and Management Parameters for 25 Gb/s and 40 Gb/s Operation, Types 25GBASE-T and 40GBASE-T“, opens the door to higher-speed 25 Gb/s and 40 Gb/s twisted pair solutions with auto-negotiation capabilities and Energy Efficient Ethernet (EEE) support for data center applications.

IEEE 802.3by, “Standard for Ethernet Amendment: Media Access Control Parameters, Physical Layers and Management Parameters for 25 Gb/s Operation”, introduces cost-optimized 25 Gb/s PHY specifications for single-lane server and switch interconnects for data centers.

Siemon’s Standards Informant explains that 25GBASE-T will be backwards-compatible with existing BASE T technology and both 25GBASE-T and 40GBASE-T are planned for operation over TIA category 8 cabling. The deployment opportunity for 25GBASE-T is aligned with 40GBASE-T and defined as the same 2-connector, 30 meter reach topology supporting data center edge connections (i.e., switch to server connections in row-based structured cabling or top of rack configurations).

BASE T technologyThe standard’s ratification comes shortly after the Telecommunications Industry Association (TIA) approved its standard specifications for Category 8 cabling, the twisted-pair type designed to support 25GBase-T and 40GBase-T.

Though 25 Gigabit Ethernet is only now becoming an official standard, Enterprise Networking Planet reports that multiple vendors already have technologies in market. Among the early adopter of 25 GbE is Broadcom (AVGO) which announced back in 2014 that its StrataXGS Tomahawk silicon would support 25 GbE. In 2015, Arista (ANET) announced its lineup of 25 GbE switches. Cisco (CSCO) is also embedding 25 GbE support in some of its switches including the Nexus 9516 switch.

That is where 25-Gb/s Ethernet comes in. It uses the same LC fiber cables and the SFP28 transceiver modules are compatible with standard SFP+ modules. This means that data-center operators can upgrade from 10 GbE to 25 GbE using the existing installed optical cabling and get a 2.5X increase in performance.

The IEEE 25GbE standard seems to have come out of nowhere, (especially considering the L O N G D R A W N O U T 8 0 2 . 1 1 n process but the technology actually came into being as the natural single-lane version of the IEEE 802.3ba 100-Gb/s Ethernet standard. The 100-Gb/s Ethernet standard uses four separate 25-Gb/s lanes running in parallel, so defining a single lane makes it a straightforward and natural subset of the 100-Gb/s standard.

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IEEE P802.3by and P802.3bq were initially targeted for server connections in mega data centers like Amazon, Facebook and Google. In the next 5 years, 25G will be the next mainstream server upgrade from 10G, even for smaller data centers. SMB data centers will be facing a connectivity crisis in the future as the pace of virtualization increases.

According to IDC, the typical virtualized server supported about 10 virtual machines (VMs) in 2014 and will support in excess of 12 VMs by 2017. In many organizations, the majority of production workloads are already virtualized and almost all new workloads are deployed on virtualized infrastructure, placing inexorable stress on server connectivity.
In order to accommodate this growth Twinax copper and short-reach MMF are included in the “by” standard, while 25GBASE-T (twisted pair) was added to the existing 40GBASE-T “bq” project making 25G possible in smaller data centers without having to re-wire the data center.

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Ralph Bach has been in IT for a while and has blogged from his Bach Seat about IT, careers and anything else that catches his attention since 2005. You can follow me at Facebook and Twitter. Email the Bach Seat here.

How Much Cash Do Tech Firms Stash Overseas

How Much Cash Do Tech Firms Stash OverseasA new report (PDF) from charity Oxfam says American companies stash a significant part of their cash overseas to take advantage of more favorable tax laws in other countries. They claim that tech companies take particular advantage of this practice, also known as “tax havens.” Oxfam which is crusading to get the U.S. government to crack down on this practice says tax havens costs the United States more than $100 billion a year in lost tax revenue.

Off shore tax havenThe Business Insider brought us this Statista chart, based on the Oxfam report. Tech firms are hoarding nearly $500 Billion overseas. The chart shows how much money major US tech companies have stashed overseas, and how many subsidiaries they have set up in countries that Oxfam defines as tax havens, “which can be characterized by secrecy, low- or zero-tax rates and the almost complete lack of disclosure of any relevant business information.”

Money held offshore by tech firms

While tech is the most prominent sector on Oxfam’s list, the article claims tech is not alone — large companies in other sectors like General Electric ($119 billion), Pfizer ($74 billion), Merck ($60 billion), and Exxon Mobile ($51 billion) also have lots of money stashed overseas.

TAX HAVENThere’s nothing illegal about this practice. But Oxfam believes it contributes to income inequality, and is urging U.S. lawmakers to make it harder for companies to use international tax laws to their advantage in this way.

Overseas tax havens have been the focus of recent revelations about tax scams by wealthy individuals, based on the leak of the “Panama Papers,” documents from a single Panama-based law firm, Mossack Fonseca, involving 214,000 offshore shell companies. The firm’s clients included 29 billionaires and 140 top politicians worldwide, among them a dozen heads of government.

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List list looks a lot like the one for the top lobbying spender firms. I wrote about the tech titans lobbying efforts just a couple of weeks ago here.

RankFirmCash $ held off shoreLobbying rankLobbying $ spending
1Apple181.1B104.5M
2Microsoft108.3B78.5M
3IBM61.4B114.6M
4Cisco52.7B142.7M
5Alphabet/Google47.4B116.6M
6HP42.9B
7Oracle38.0B134.5M

Ralph Bach has been in IT for a while and has blogged from his Bach Seat about IT, careers and anything else that catches his attention since 2005. You can follow me at Facebook and Twitter. Email the Bach Seat here.

 

Schools Face RansomWare Risk

Schools Face RansomWare RisKMore than 2,000 machines at K12 schools are infected with a backdoor in unpatched versions of JBoss that could be used at any moment to install ransomware such as Samsam. TargetTech defines ransomware as malware designed for data kidnapping, an exploit in which the attacker encrypts the victim’s data and demands payment in Bitcoins for the decryption key.

TolosRansomware has typically been spread through drive-by downloads or spam emails with malicious attachments. One of the latest victims of Samsam was MedStar Health, a not-for-profit organization that runs 10 hospitals in the Washington, D.C., area.

PCWorld reports that the Cisco (CSCO) Talos threat-intelligence organization, announced that roughly 3.2 million machines worldwide are at risk. The article says that many of those already infected run Follett’s Destiny library-management software, used by K12 schools worldwide. According to Cisco, Follett responded quickly to the vulnerability,”Follett identified the issue and immediately took actions to address and close the vulnerability”.

JBossIn a presser, Follett offers patches for systems running version 9.0 to 13.5 of its software and says it will help remove any backdoors. The author states that Follett technical support staff will reach out to customers found to have suspicious files on their systems. Follett even offers SNORT detection rules on the presser page.

Snort is a highly regarded open-source, freeware network monitoring too which detects attack methods, including denial of service, buffer overflow, CGI attacks, stealth portscans, and SMB probes. When suspicious behavior is detected, Snort sends a real-time alert to syslog, a separate ‘alerts’ file, or to a pop-up window.

BitcoinJBoss the vulnerable underlying system is described as an open-source Red Hat product which serves as an application server written in Java that can host business components developed in Java. Essentially, JBOSS is an open source implementation of J2EE that relies on the Enterprise JavaBeans specification for functionality.

PCWorld reports that compromised JBoss servers typically contain more than one Web shell. Talos advises that it is important to review the contents of a server’s jobs status page. “This implies that many of these systems have been compromised several times by different actors,” the company said.

Backup your filesWeb shells are scripts that indicate an attacker has already compromised a server and can remotely control it. The list of those associated with this exploit are listed in Talos’s blog post.

Companies that find a Web shell installed should begin by removing external access to the server, Talos said in the article. The security firm recommends quick action.

Ideally, you would also re-image the system and install updated versions of the software … If for some reason you are unable to rebuild completely, the next best option would be to restore from a backup prior to the compromise and then upgrade the server to a non-vulnerable version before returning it to production.

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I have worked with a number of customers on their library automation projects. The cost of these systems is as usual in the data. There is a great deal of time and effort that goes into creating the proper MARC records, especially for books that are out of print and kiddie books. If these files get locked up by the ransomware, the system is useless and expensive to replace.

K12 schools are notoriously cheap, but the advise is the same as always,

  1. Keep your software UP TO DATE
  2. Use a real virus scanner on your servers and administrative stations
  3. Back Up – Back Up – Back Up – With a good backup, you can just blow the machine away, re-install and restore the data. and be back in business.

Ralph Bach has been in IT for fifteen years and has blogged from his Bach Seat about IT, careers and anything else that catches his attention since 2005. You can follow me at Facebook and Twitter. Email the Bach Seat here.