It takes a lot of guts for a successful company to reinvent itself while the going is still good. Just ask Cisco Systems and Nortel Networks. Both networking giants are making waves by diving into the software pool.
Cisco is racing to make its software business a $1 billion operation within two years, according to James Richardson, senior VP of enterprise business and Cisco's application technology group. At Nortel, software sales could top $1 billion this year. For a bit of perspective, consider that Novell's annual revenue was $1.27 billion in 1999.
The Cisco and Nortel software push could be a big win for solutions providers. For starters, the efforts could ease network configuration and management. Target markets for the software will include voice and data management, call-center solutions and customer relationship management (CRM).
Cisco hopes partners understand the value of its software push. "The value isn't in integrating network hardware," says Cisco's Richardson. "It's in software and services integration."
Three 1999 acquisitions will drive Cisco's software initiative: Amteva, GeoTel and WebLine Communications.
Amteva specializes in IP-based middleware that consolidates voice mail, e-mail and fax on a single IP network.
GeoTel's software, by contrast, targets distributed call-routing centers. Cisco hopes major partners like Oracle, SAP, Siebel Systems and Vantive will write voice-enabled applications that integrate with GeoTel's offerings.
Finally, WebLine develops customer management software that could bolster e-commerce.
In some respects, Cisco is giving chase to rival Nortel Networks, which expects to launch a $1 billion e-business applications division in the next few weeks.
Al DeLorenzi, CTO of Nortel Networks' enterprise solutions division, calls the company a "software powerhouse" that will work closely with channel partners.
Nortel's e-business software group will comprise CRM applications from Clarify, as well as call-center software from Periphonics and Nortel's Symposium team. Nortel won't formally announce the division until its Clarify acquisition gains regulatory approval, according to Clarify VP of corporate marketing Ben E. Kiker.
Meanwhile, other network hardware specialists are bolstering their software portfolio. Lucent Technologies, for one, is pushing the Java-based ToolBox Pro for creating messaging services for its AnyPath Messaging Platform.
Lucent and Organic Online also have demonstrated MyNetWorks, an IP-based multimedia application that lets customers prioritize phone calls, faxes and e-mails. Lucent also has made extensive CRM deals.
Not to be left out, network switch maker Cabletron Systems is breaking itself up into four companies. One of the spin-offs is Aprisma Management Technologies, which develops the Spectrum network-management platform.
Network hardware companies are not expected to compete with the likes of Microsoft, but smaller software players could be at risk. Nortel's Clarify group, for one, is targeting Siebel's CRM business. Earlier this month, Clarify said its goal is to leapfrog Siebel in the near future.