4 Steps to Reviving Cisco

In the wake of initial restructuring moves at Cisco Systems Inc. (Nasdaq: CSCO) -- killing the Flip video camera and hinting at possible changes to its Linksys consumer router business as well -- it's interesting to speculate on what the networking behemoth should do to revive its fortunes. I have some suggestions, all focused around the concept of "infrastructure in a box."

1. Get rid of the councils: As I wrote in my last blog post, the most immediate next step Cisco chairman John Chambers should take is to shutter the "councils" he put in place in 2009. That move put decision making in the hands of dozens of committees, and it's been a prescription for disaster. (See: As Embattled Cisco Shutters Flip, More Cuts Are Certain.)

In an internal email sent to Cisco employees on April 4, Chambers wrote: "We will simplify the way we work." Thus, there's some hope he'll jettison the councils, which have sucked up much of the energy that might have been used to respond to customers -- I call it a "bandwidth bureaucracy."

2. Reach for the cloud: Next, Chambers should encourage a bold initiative that's already begun to take shape. This is the effort to win the race to be the provider of foundation technology for cloud computing. That's a cumbersome sentence, so let me explain what I mean and why it's so important, because if Cisco succeeds here, it could be to the cloud during the next three decades what Intel has been to the PC for the last three.

Supporting cloud computing means more than just selling switches and routers and managing virtualization. It means enabling enterprises to dynamically reallocate their resources, so that computing power can be accessed by the people and applications that need it, when and where they need it. The same goes for storage, which is tied to all those virtualized servers in the cloud, as well as the networking bandwidth to move data around.

Currently, it requires a lot of expertise to manage a cloud. Moreover, the smarts you need vary, depending on whose equipment you're using. What Cisco is doing is working to enable enterprises to turn cloud setup from a kludge into a streamlined set of repeatable processes. When I talked recently to Lew Tucker, Cisco's chief technology officer for cloud computing, he referred to this technology as "cloud in a box."

Actually, Cisco is extending this work beyond the cloud to apply more broadly to networking itself, which the company wants to re-envision as a platform. As Tucker told me, "You want to be able to treat the network as a system -- not a set of boxes -- with an application programming interface so you can automate deployment."

Keying off of the aforementioned "cloud in a box," I'd call this "infrastructure in a box." The ability of Cisco to bundle all of its technology under meaningful umbrellas such as cloud or infrastructure in a box is important because it gets it out from under its biggest weakness, which sparked its restructuring frenzy. Namely, Cisco is just too darn large and has too many product lines to adeptly manage. It's a technological Titanic -- breathtakingly vast, but kind of fragile as well, on account of its lack of maneuverability.

The cloud and infrastructure "in a box" initiatives tie everything together in a nice, neat wrapper, and make it look like all the disparate parts are deliberately working in concert. Which they in fact are. It's a great way to "brand" Cisco for the 2010s -- much better than having consumers think the face of the company is Ellen Page emoting in front of a tele-presence box. Wouldn't Cisco much rather be "the company that builds the cloud"?

3. Go deeper into networking: This is another factor that I believe will play to Cisco's advantage, because it enhances the value of the deep networking expertise that only the company, and a very few other players, can deliver. That would be the proliferation of network end points.

Any user with a smartphone, who connects to a corporate network, is an "end point." That person has to be authenticated -- via security and permissions checks -- on the network and then supported throughout the connection cycle. It's obvious that millions of additional smartphone endpoints are being added every year. Now, there are millions of tablets in the hands of knowledge workers, too, proliferating the complexity of the process. Don't think that security isn't also a rising concern, because with more ways to log into enterprises, threat levels are increasing, as well.

4. Invest more in Unified Computing System: Finally, a word about UCS, Cisco's Unified Computing System, which combines computing, storage, and networking fabric in a well designed, one-stop package. UCS, launched in 2009, is Cisco's entry into the server market and a way to compete on that front with Hewlett-Packard Co. (NYSE: HPQ) and IBM Corp. (NYSE: IBM).

Some pundits have called for Cisco to kill UCS as part of its restructuring, on account of the fact that UCS is seen as more of a locked-in approach that's harder to integrate into the datacenter than competing best-of-breed solutions.

I completely disagree. UCS's drawbacks are its high margins and pricing, not its positioning or technology. Indeed, UCS serves as a smart entry point for the "infrastructure in a box" play, through which I believe Cisco will successfully rebound from its current, and temporary, doldrums.