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Cisco hopes for Australian economy rebound, NBN contracts

Cisco is hoping that Australian IT managers will begin reinvesting after holding off spending in 2013.
Written by Josh Taylor, Contributor

Cisco's business in Australia and New Zealand still recorded "mid single digits" of growth last year, despite a disruptive time for the IT industry with businesses holding off investment, according to Cisco ANZ managing director Ken Boal.

Boal, who was appointed as the head of Cisco's Australian and New Zealand operation in mid-2013, said the Australian economy is strong, but last year, IT businesses held off spending.

"The economy is on the surface pretty solid [but] a lot of our customers are still hands in their pockets about business investment," he said.

"The IT industry took a bit of a breather during 2013 in terms of capital spend, and I think the change of government promised there would be an unleashing of new budgets and more investment, and I think it's only now that we're just starting to see that."

Cisco globally is heavily invested in the "Internet of Things" market, with the company estimating $19 trillion in profits to be made from getting more devices connected across a range of industries from manufacturing to education to medicine.

In Australia, Boal said the company was getting into more and more discussions with local executives about the "industrialisation of the internet".

"We're really rolling up our sleeves in Australia and New Zealand on that vision," he said.

Cisco was also undergoing a "philosophical" change for how it goes to market, Boal said, with a focus moving from being a hardware vendor to a service provider as well.

"[Customers] will only part with their investment money if we can make them money, save them money, or keep them out of trouble," he said.

"There's still going to be thousands of customers that we still only provide products for, but the more substantial customers — or customers that want to go deeper into the engagement model — will move to an outcome-based model."

He said that of the $40 billion in revenue Cisco earns, about $7 billion is in software.

"We are moving from being a hardware player to a hardware plus software [player]," he said.

He said Cisco would look to shift from a capital expenditure model to a subscription-based model for products.

Cisco's cloud strategy was focused on building out private and public clouds, helping service providers offer cloud services, and putting Cisco's own apps into the cloud, Boal said.

Software-defined networking (SDN) is the next market transition that everyone is interested in, Boal said.

"I believe it is moving off the science project concept into enterprise business outcomes in 2014," he said.

"Last year, most IT execs didn't know what the heck it was. I think this year, we've got a job to educate and take a multibillion-dollar install base of networks that are managed and built the old-fashioned way towards SDN."

Cisco backs HFC for NBN

Boal said that Cisco is keen to participate in any new tenders for the revised National Broadband Network (NBN) project under the Coalition government.

He said he supports the proposal by the government's multi-technology mix proposal, and that he believes the existing hybrid fibre-coaxial (HFC) networks owned by Telstra and Optus could be quickly integrated into the NBN.

"It's faster to deploy because the infrastructure is all there. It's already there to 3 million homes, therefore it is much more cost effective to deploy. We believe that 3 million homes can be done in a very relatively short period of time," he said.

"We're obviously looking to respond to the government and NBN around how that's going to go to market, depending on the negotiations with the providers."

He said he believes that despite the asymmetrical nature of upload and download speeds for HFC, that the company's video conferencing technology would work well on the HFC network, with backhaul and contention ratios "more than adequate" for the NBN.

"It's all in the provisioning," he said.

"We wouldn't be putting forward HFC as a preferable alternative if we thought there was backhaul constraints in the platform."

Josh Taylor travelled to Melbourne as a guest of Cisco.

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