Tag Archive for Patent

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.

Facebook Friends Without Benefits

The USPTO has granted Facebook (FB) a patent that could be used to help lenders determine your creditworthiness. The Social Networker plans to allow creditors to look at who is in your social network in order to judge your creditworthiness.

Business Insider says the patent would make it possible for banks to check the credit rating of the members of you Facebook network to decide if you are worthy of a loan. It seems that your shiftless uncle Louie is going to determine if you get a mortgage. According to BI, the patent states:

… When an individual applies for a loan, the lender examines the credit ratings of members of the individual’s social network who are connected to the individual through authorized nodes. If the average credit rating of these members is at least a minimum credit score, the lender continues to process the loan application. Otherwise, the loan application is rejected.

The patent was first discovered by Atlanta legal tech start-up SmartUp, was part of a bundle of patents Facebook acquired in 2010 when it purchased the patents from failed social network Friendster for $40 million.

BI reports that the patent may walk a legal tight rope. The U.S. Equal Credit Opportunity Act requires creditors to tell applicants why they have been denied credit, so using social data to determine someone’s credit risk could walk a fine line. Despite federal law, the author points out that financial institutions are already using applicant’s social data to help verify their identity. For example, Lending Club, and Affirm uses online data for decision-making.

Back in 2010, I wrote about this day coming.

Many banks are now outsourcing their social network data mining operations to firms such as Rapleaf. (now TowerData).

Maybe it is time to un-friend your kid in college with no job and crazy aunt Patti in Paducah and instead friend Warren Buffet, Bill Gates and Mark Zuckerberg.

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.

Patent Wars Are Pointless

Patent Wars Are PointlessThe Business Insider cites new data from Florian Mueller, the founder of the FOSS Patents blog which says patent litigation is a waste of resources. The research found that the patent wars costs companies millions of dollars in time and lawyer fees. Mr. Mueller analyzed 222 smartphone patent assertions — with Android being a major target of many of them — only to find that 90% of those cases have gone absolutely nowhere.

Patent TrollAccording to BI Intelligence Mr. Mueller’s data, says that about half (49%) of the assertions have failed thus far, while 42% of assertions were dropped without a comprehensive settlement or a “comparably negative fate.” As it turns out, only 20 or the 222 patent assertions (9%) were able to establish liability, but even in that small sample, only 10 of those 20 cases resulted in “lasting injunctive relief.” Mueller says that number would be even smaller if “the patents underlying Nokia’s German injunctions against HTC (2498) had come to judgment in the Federal Patent Court.”

The Totally Useless Patent Wars

In other words, based on patent cases brought to court by Apple (AAPL), Google (GOOG), Samsung (005930), Microsoft (MSFT), Nokia (NOK), Motorola (MSI), and a host of others, litigation is, more often than not, a serious waste of time and money for all parties involved.


Back 2012 Boston University estimated that patent shenanigans has cost the US economy $29 Billion annually, now there is evidence it is a total waste of time and money and only funds the lawyers.

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.

Seacrest Firm Takes on BlackBerry

Seacrest Firm Takes on BlackBerry

– Updated 03-28-2014 – The Verge reports that Judge William Orrick granted BlackBerry a preliminary injunction halting sales of the Typo. In the ruling, Orrick said that BlackBerry had “established a likelihood of proving that Typo infringes the patents at issue and Typo has not presented a substantial question of the validity of those patents.”


Fox reality television series host Ryan Seacrest has invaded the tech world. According to CiteWorld, the pop diva has become involved in a patent trolling spat with ailing Canadian smartphone producer Blackberry (BBRY). The site reports that Typo Keyboards, the Los Angeles-based company, co-founded by the “American Idol” host Seacrest submitted documents the U.S. District Court for the Northern District of California that claim in part that BlackBerry’s patent claims are invalid.

Patent Troll

The start-up alleges that BlackBerry won’t suffer serious harm because its products aren’t selling that well anyway, and that it has focused on the enterprise market while Typo is targeting consumers.

BlackBerry seeks a monopoly on keyboards for any device. Regretfully, however, small keyboards with nearly identical layouts as the one ‘claimed’

The author says BlackBerry could not immediately be reached for comment.


How that a pop star diva the stature of Mr. Seacrest is involved in the wacky world of the mobile patent wars (Which I have covered many times), maybe we will get some new games shows like Whats My Lie, or The Patent Price is Right, or 3 Billion Dollar Pyramid Scheme – I’m just saying. 

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.

Rockstars Team Up Against Google

Rockstars Team Up Against GoogleTo usurp Mark Twain, the reports of Nortel‘s demise are greatly exaggerated. GigaOm reports that the defunct Canadian telco giant has found an afterlife as part of a patent trolling operation that struck Android phone makers and is now targeting network and cable operators with lawsuits in Texas and Delaware.

Nortel Zombie IPJeff John Roberts writes that Nortel’s second act as the walking dead is taking place thanks to “Rockstar Consortium,” a group formed by Microsoft (MSFT), Apple (AAPL), Blackberry (BBRY), Sony (SNE), Ericsson AB (ERIC)EMC (EMC) and other Google (GOOG) rivals, which bought bankrupt Nortel’s patent portfolio in 2011 for $4.5 billion. (rb- I covered the sale of Nortel’s IP here)

“Nortel was the source of many of the most important innovations in history in the field of telecommunications and networking,” says a new Rockstar lawsuit filed in the seemingly pro-troll U.S. District Court for the Eastern District of Texas that accuses Time Warner Cable (TWC) of violating six patents, including US Patent 6128649, which was issued in the year 2000 and describes a method to show multiple screens in a video conference the article summarizes.

RockstarThe complaint doesn’t say how exactly Time Warner Cable is infringing the old Nortel patents, but only notes that “TWC operates, sells and offers to sell video, high-speed data and voice services over its broadband cable systems throughout the United States.” The author says Rockstar, which is suing through a subsidiary called Constellation, also complains that the cable company walked away from its licensing demands in 2012.

GigaOm notes a second lawsuit, filed in Delaware by Rockstar under the alias “Bockstar” makes a series of broad-based allegations against Cisco (CSCO) that claim the company is violating six other old Nortel patents, including this one from 1998, related to routers and switches.

Patent trollingLike all patent trolling, the author says that has nothing to do with innovation, but it certainly will lead to higher cable bills as Time Warner will have to spend millions on lawyers to fight the suit or else pay expensive license fees for old patents from a dead company; either way, the costs are passed on to customers.

Joe Mullin of Ars Technica noted when Rockstar sued the phone companies, “it’s patent trolling gone corporate.” And there’s no indication of where this will stop. Apple and Microsoft are sitting on thousands of patents that date from an era when the Patent Office would grant a patent on nearly anything, and it looks like they’re going to use them to sue every industry they can think of.

Greedy politicanThe totally dysfunctional US Congress tried to take on patent trolling but caved into lobbyists. Microsoft has already succeeded in stripping out a part of the law that would have made it easier to challenge bad patents. This means the best hope for a return to patent sanity may lie with the Supreme Court, which agreed to consider what type of software patents should be granted in the first place.

GigaOm cites CBC reports that Ottawa, Nortel’s hometown has been transformed from a one-time innovation hotbed into a tech necropolis where once-proud engineers are paid to pick apart other people’s inventions in search of new patent violations that they can pass on their American masters.


I have covered the patent trolling mayhem in the mobile market for a while and this seems to be more of the same. Innovation is dead in the mobile market and they only way these firms can compete is in the court-house.

In addition to their choice of venue in the pro-troll Texas court, further evidence that Microsoft and Apple have created a patent troll can be found in the fact that Rockstar has filed suit against the leading Android phone producers:

  1. Samsung Electronics Co. (005930) (#1 Android OEM in U.S. sales),
  2. LG Electronics (LGLD) (#2),
  3. ZTE (763) (#4),
  4. Huawei (002502) (#6) and
  5. HTC (2498) (#7).

In addition DailyTech notes that Rockstar member Sony is a minor Android OEM.  If somehow Microsoft and Apple are able to troll other Android OEMs to death, Sony could see gains in market share, as the only OEM who doesn’t have to pay direct licensing fees to Microsoft/Apple (Sony also notably has preexisting licensing deals with Microsoft and Apple).

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.