Cisco is producing tailored solutions for each industry it serves, positioning itself as a leader in the Internet of Things space.
Cisco Systems is today a world leader in network servers and networking equipment, and last week the San Jose, California-based company unveiled a global strategy to position itself firmly in the booming cross-disciplinary field known loosely as the Internet of Things (IoT). Cisco has set up a business unit to focus on the development of connected products and services in collaboration with firms that manufacture hardware. Cisco is thus following in the footsteps of other US giants such as GE, with its Industrial Internet program. While microprocessor chip maker Intel estimates that 85% of the data used by the IoT is already generated inside the respective businesses, Cisco is now going beyond connectivity to offer hardware products custom-designed for each industry and developed through various partnerships.
Business unit to focus on collaboration
Cisco is actually recycling a strategy which has already been successful in other flagship areas of the company. The creation of the new business unit dedicated to the IoT is intended to develop software embedded in specialized hardware, which will command high margins. There will be an emphasis on partnerships, with other players building out integrated offerings and service arms. Continuing along the same lines, Cisco is actively pursuing a policy of acquiring pioneer startups in the IoT space. For close to $1 billion the company recently purchased Meraki, a company set up to provide products for large-scale, distributed wired and wireless networks on university campuses, in hospitals, hotels, and so on.
Close tailoring to each industry’s specifics
The company is developing ‘turnkey’ solutions tailored to the very specific needs of different industries. Under this strategy, the technical modifications required may be rather small, but nevertheless help to unlock the full potential of the Internet of Things. For example, one highly specific challenge to connectivity presented by the railroad industry is the metal dust generated by friction between the tracks and train brakes. Floating in the air near electronic circuits, this dust can affect the functioning of smart sensors and may lead to accidents. To solve this problem, Cisco has teamed up with another manufacturer to make ultra-resistant plastic cases that prevent the metal dust shorting circuit boards. Cisco is pursuing similar logic in a number of other sectors, identifying the needs and processes which are specific to each industry and providing a solution which combines top-quality software embedded in specially-designed hardware. Another example of this is oil platforms. An oil rig generates huge streams of useful data, but the connectivity needed to send the data onshore from the middle of the ocean is very expensive. Cisco’s idea is therefore to make use of an optimized mesh network that enables the data to be kept on the platform. In short, although today a mere 4% of all industrial tools can be regarded as part of the Internet of Things, what Cisco is looking to do long-term is transform every non-smart physical object into a connected service.