If Cisco has its way, users will have already bought their last PBXs. They will have begun migrating call processing to LAN servers, routers and switches, running voice over their data networks as if it were just another packet. Indeed, Cisco plans to be a PBX-free enterprise within 18 to 24 months.
Cisco, king of the data network, is moving aggressively into the voice world in an attempt to become king of telephony.
As the Internet becomes a commonplace service infrastructure or utility - like water, electricity and, yes, telephones - Cisco is leading the charge into the new world of packet telephony.
"Circuit switches and PBXs are dinosaurs of the past," said Cisco president and CEO John Chambers earlier this year. "If you're building out your circuit-switching infrastructure and not writing it off, you're putting your company at a major disadvantage."
Strategic acquisitions
Cisco is building its entire line of small office/home office, remote access, branch office and mid-range and high-end routers with voice capabilities. Call processing and voice quality-of-service (QoS) enhancements are on tap for its LAN switches. And Cisco made what is arguably its most strategic acquisition since the 1996 purchase of StrataCom: this week's $US2 billion deal for GeoTel, a developer of Internet-based customer service call-routing software.
GeoTel software integrates enterprise data applications with voice devices such as PBXs to deliver integrated data and voice to call centers over the Internet and the public switched telephone network. The software routes a customer to an available customer service representative independent of physical location, Cisco says.
GeoTel products will enable Cisco to offer its partners and customers a software platform to develop Internet voice applications, Cisco says.
Another key Cisco voice acquisition was last October's purchase of Selsius Systems, a maker of packet-switched PBXs.
Selsius' Network PBX, call management software and IP telephones, combined with Cisco's voice-enabled network products, lets Cisco offer an alternative to a traditional PBX. IP telephones connected to LANs provide PBX functions at a lower cost on a more scalable, distributed and open architecture, Cisco says.
Cisco emphasises the products are a PBX alternative, not a replacement.
"No one is ripping out their 20,000-seat PBX to replace it with voice over IP," says Byron Henderson, director of marketing for Cisco's enterprise line of business. "And we're not recommending that. Now is the time for small sites and small enterprises to be trying this stuff out and begin the migration."
Five-phase plan
Cisco's telephony products and acquisitions are the underpinnings of a methodical five-phase strategy for converging voice and data networks in the WAN and campus. Cisco's goal, and the fifth phase of its multiservice initiative, is to create an open architecture for intranet and Internet telephony that can perform end-to-end, policy-based call management.
Early returns look promising. Cisco claims to have shipped more than 300,000 packet telephony ports in the first half of its 1999 fiscal year.
But Cisco will have plenty of competition and a raft of new challenges as it ventures off into the voice world.
There are the well-entrenched incumbents - Nortel Networks, Ericsson, Lucent, Alcatel and Siemens, the NELAS, as Cisco refers to them - with which it will now compete. The NELAS have been building global circuit-switched voice infrastructures for decades, each earning a reputation for bulletproof reliability and continuous service availability.
So Cisco will have to persuade carriers and service providers that have been doing business with the NELAS for 20-plus years that they should now be banking their profit centers on Cisco. That's a major challenge.
Incumbent on that challenge is another - reliability. Cisco has to prove it can match or better the NELAS at providing global voice infrastructures that are always up and always available, providing a dial tone that is always there when people pick up the phone.
Cisco and its service provider customers cannot afford another outage like the one a year ago involving AT&T's frame relay service and a Cisco switch.
Cisco acknowledges that packet telephony is still an immature technology.
"People are running stuff in parallel and will for a time until they believe it's as robust and as solid as their voice network," says Ian Pennell, director of marketing for Cisco's multiservice access business unit. "But people are not waiting for everything to be perfect before they start their transitions."