A UCStrategies Farewell to the Cius

Transcript for A UCStrategies Farewell to the Cius

Michael Finneran: Good morning or good afternoon or good evening, wherever you happen to be. This is Michael Finneran and I am going to be hosting the UCStrategies podcast this week. The topic for which is the now late Cisco Cius. OJ Winge of Cisco last week announced that Cisco will no longer be investing in the Cius platform – their branded tablet – which was introduced back in June of 2010 at Cisco Live.

Of course, many of us thought they shouldn’t have gone into this to begin with, but they did make a good attempt. Basically they are a core hardware company and something like tablets – it’s hard to do well as a sideline, particularly in a market where now iPad still continues to dominate with an estimated 65 to 70% market share, and an even greater market share in the enterprise.

But Cisco did a nice job in terms of how they interface this with the unified communications manager so you can have a real-time voice or video connection going on while the Cius is in its base connected over the wired LAN, but then be able to pick it up, walk away, and the connection automatically transitions onto the wire LAN. So, for integration, they certainly seemed to have done a good job. But, Marty, I think you had a view as to how well they did on the marketing here.

Marty Parker: Well, I thought it was a brilliant piece of marketing. Cisco saw the need to bring the tablet to the forefront as an enterprise communication device. To some extent, I think they had a motivation to try to show an alternative to the personal computer, vis-à-vis head on head with Microsoft. They wanted to see that happen. By creating this product which as you say was well integrated, had a front and back camera which did not exist on the iPad at the time, had security layers for the enterprise, which didn’t exist on the Android platform at the time, had an enterprise application store concept, which of course is now showing up in other mobile device management software, but didn’t exist for the enterprise at the time. It was integrated into their management suite... All of those things made it a very attractive proof point for the enterprise that the tablet here, that it was a communication device that people would prefer, that it could be docked into a desk/telephone model – which they did with their docking station – and it created quite a buzz about new forms of communication in the UC space. So, with that, they captured attention, they captured share. Others had to follow them in that market space. So, they showed a leadership role, and then as the commercial devices – the consumer-oriented devices – filled in the gaps that I’ve mentioned with cameras and security and capacity and performance, Cisco doesn't have to do it anymore.

So, it may have been a very expensive marketing gambit, but I think it was well done. With that, Michael, back to you.

Michael Finneran: Thank you Marty. Good observations. Now Kevin Kieller, we were talking a little earlier about the potential for vertical markets here. How did you see the Cius shaping up?

Kevin Kieller: Well, thanks Michael. I really saw the Cius as a very strong vertical platform. I think what happened was I didn’t see the uptake by the application solution providers to adopt the platform. So, certainly when it was first introduced there were a number of press conferences, certainly some software producers in the medical vertical had talked about some interesting applications. But, the problem that I see is that Cisco really was providing a horizontal communication device – albeit even more expensive than a desk phone – but the vertical market applications where customers are really buying a solution and the solution provider is selecting the hardware – and we could have selected the Cius in some markets – those solutions never really materialized. And for the most part, when we’re talking about bring your own device, that’s exactly what it is. The emphasis is on the device component where people are bringing these devices into the organization, but they’re not really being expected to bring their own applications. And, with the Cius, that’s where I think they went wrong, despite Marty’s point. There was a good marketing execution. There just weren’t the solutions available on the platform. Back to you, Michael.

Michael Finneran: Thank you, Kevin. You think the solution provider is going to be providing an iPad-based solution rather than the Cius, it sounds like?

Kevin Kieller: Well, I think that there’s certainly some opportunities potentially for the Cius. They haven’t, I guess, officially discontinued it. But, I certainly think that with the new versions of the iPad with the forward-facing camera – I think what we’re seeing is the momentum has now shifted where people are figuring out how do they shore up the gaps in the iPad piece of hardware through software or add-on peripherals. And, maybe, almost two years ago now, there was an opportunity if Cisco had courted the channel a little more strongly, that those applications may have come out on the Cius platform.

Michael Finneran: I am afraid they are still on Android 2.2. Without support for 4.0 – which includes one device encryption and like – I don’t think we’re going to see it if they’re no longer investing. But Blair, you had some observations about how this stacks up against the Avaya Desktop Video Device (ADVD).

Blair Pleasant: Yes, thanks Michael. The obvious question that everyone was asking when Cisco made the announcement about Cius is, is Avaya going to make a similar announcement about its ADVD tablet, which is different from the Cius, but it’s again a purpose-built device made for communications and collaboration that can compete with the tablet, in a way.

The whole idea is now that we have these iPads and Android devices, do we really need this separate purpose-built device? Avaya is saying they are sticking to their ADVD and they’re going to continue supporting and building them. But I have a feeling we’re going to hear an announcement…this is not coming from Avaya, certainly. They’re adamant they’re still supporting the ADVD. But I wouldn’t be surprised if in a month or so we hear that Avaya is doing the same thing that Cisco did, and that’s pulling support from its own purpose-built device and just supporting the public tablets.

Avaya has done a really good job, just like Cisco, of porting its applications to Android devices and to the iPad. So, there’s really not as much reason to have these specific devices. Similar to Cisco, when Avaya first came out with their Flare experience, tablets were just kind of coming on board and the iPad didn’t hit its peak the way it has now. So, it really needed this separate device to show the Flare capabilities.

Flare is great. It’s got a really wonderful user interface. Avaya needed this… its own device to really showcase the user interface. But again, similar to Cisco, now that it can do all of these capabilities on an iPad or an Android devices – some of the capabilities – once it becomes clear that the same capabilities are going to be available on the BYOD devices, there’s really going to be no need for the ADVD. So, I expect Avaya is going to be doing the similar thing as Cisco.

And, I have to say with Cisco I am a little disappointed – not surprised, but disappointed. There really were some great applications. We were just talking about vertical applications. There were some great applications that I had seen demoed at some Cisco events aimed at healthcare and other areas. The Cius really was a great device, but just (at) the wrong time I guess. I am sorry to see it go, but that’s what is happening in the new BYOD era. Michael, back to you.

Michael Finneran: I know Don Van Doren had some thoughts on the BYOD front.

Don Van Doren: Thanks, Michael. Yeah, a couple of things. I think clearly from Cisco’s prospective, I’m sure that they wanted a device to sort of augment the declining sales of desksets and the great profit margins that those things have delivered for years. In their dreams, I imagine they thought they could sell one to every worker in the enterprise. Of course, at $2,000 a piece or even $1,200 a piece – or wherever that number would finally wind up being – that would be a nice augmentation.

I think overall, Marty made the point that they did a great job to market this concept and really start an innovative trend and a lot of other companies thinking about what the impact of this was. But I guess from my prospective, my feeling is where they missed the boat is that they didn’t do good marketing to show how this device can become the endpoint engine that really delivers a number of transformative unified communications capabilities and applications.

I mean, think about it. If Cius were deployed throughout a company, it could have been a very unifying way to have a great number of collaborative applications deployed, where everyone has access to similar devices, there isn’t the sort of interoperability issues that we continue to struggle with in this industry. So, it’s a great concept. The challenge is that they just never really made it happen. Cisco didn’t get that message across.

Then, back to the way you introduced this, Michael, I think the whole BYOD movement came along and really unseated these plans. Because again, people were used to their own interfaces that they learned at home through the consumer products and now the thought of learning yet another one and trying to integrate that one into their work day just wasn’t something that was going to fly very well. Back to you, Michael.

Michael Finneran: Thank you, Don. I am really interested to see if the IP-PBX and UC manufacturers are going to be able to develop on the iPad platform the same type of tight integration that we saw from Cisco with the Cius. I know Jon Arnold, you were thinking on the BYOD front as well.

Jon Arnold: Yes, thanks Michael, and certainly tapping into what Don was saying, the bottom line is that the BYOD trend is too big of a stream to try to swim up against. Even though Cisco really was ahead of the market on some fronts here, the whole concept of an enterprise tablet is going to be really difficult to sell.

I think that one of the very first things I kind of noted on when writing about this stuff was that the Cius, unlike just about everything else out there except maybe the Flare, was not a product marketed for end-users. It was marketed entirely at IT. These are the buyers for the Cius, not the end users. That’s completely opposite to how the tablet market is unfolding now with the iPad. For an enterprise decision-making angle, certainly they’d much rather see employees lay out the money to buy these things than have IT shoulder another five, six, seven, eight hundred bucks per user to get that perfect end-to-end experience.

But, if you took cost out of the equation – building on what Don was saying – when you have that total end-to-end environment, that’s exactly what IT wants, when you have those interop issues going away and you have a completely closed, controlled environment. It’s great for an all-Cisco world, but it’s not an all-Cisco world out there. That, I think, is the difficulty.

So, within that Cisco environment – to what Blair said – being a bit disappointed they cut bait so quick... If they hung around a little longer, maybe thought for a way to reposition this product for those true all-Cisco shops that really want that end-to-end controlled experience, I think the Cius could be a really great way to protect that business. And, if anything, they should just give the endpoints away and let them use that and that ensures the legacy for the Cisco networking gear to stay intact. I think that would be a better way for them to go than try to make money selling it.

We saw what they did with Flip. They exited that market very quickly even though they paid a lot of money to get in the game. And, bottom line is, I think – IP phones aside – they really are not very successful as an endpoint vender and I think they’ve really just come to terms with that.

Another bigger picture thing too, of course, is that with their latest quarterly reporting, their high end tele-presense growth is slowing. They’re just running into the natural realities of that market evolving and maturing a bit with all the lower end and desktop alternatives available. Those six-figure room-based systems are getting harder to sell. And, I think that when you look at those kinds of trends, they’ve got to keep growth going. They’re not going to get the growth in Cius. Nothing is going to unseat the iPad. And, they really have to be smarter about it.

I think this is a bit of a knee jerk, along with what Blair is saying. I think they could have just maybe quietly put it aside instead of just jumping out like they did with Flip, which that was not a natural fit for their business. But the Cius, I think, still has potential value – coming back to Kevin’s points about the vertical applications – I think this could be a great way to lock in customers in really high value environments.

So, I’ll pass it back to you Michael. I know a few other people want to hop on here.

Michael Finneran: Great Jon. Thank you very much. Some interesting observations there. Now, Russell Bennett, you are also looking at the Cius in the context of the desk phone environment.

Russell Bennett: Yes, thanks. I agree with Marty and Don and several of the other speakers. The Cius was a fine idea. It might have been a little bit of legacy strategic thinking in terms of Cisco thinking that they had to own a desktop device. But, they came out with an idea to replace it with something that was better. However, the failing I think, was mainly in the execution. It was a clumsy device. It only worked in the building. If they could have made a mobile phone…if it could have been an iPhone equivalent or have the great developer network that people have already mentioned that you need to support the vertically integrated apps... then it could have worked, but none of those things worked.

I think when Amazon brought out the Flare at $200, that just showed that you can actually bring to market a tablet device at an affordable price. But I don’t think Cisco really geared up to support that kind of price either in their business plan or maybe in their architecture design. So the whole thing fell down, I think, on execution. It’s a good idea for them to cut it. As has already been mentioned, Cisco has a history of cutting things that aren’t working, a that’s always a good thing.

I think that they should focus now on the user experience and unified communications rather than the devices. Back to you.

Michael Finneran: Thanks Russell. Of course Mr. Zuckerberg and Facebook are reportedly now also looking at the potential of some sort of a mobile device. We’ll see if they fall for this. But Dave Michaels has joined us as well. Dave, you wanted to weigh in on this?

Dave Michels: Hi, thanks, Michael. You know, at Enterprise Connect, I noticed that Cisco was pretty proud of their BYOD effort. They were wearing t-shirts that said BYOD. And I walked in their booth and they gave me a demonstration of how they can do conferencing on the iPad. I asked about the Cius, and they said they could also do conferencing on the Cius, but they had trouble finding one to demonstrate that. I guess that was a telltale sign, just a few months ago, that the iPad had replaced the Cius as their primary platform.

It is a little disappointing, I think, and it is no fault of Cisco. I think that I am a little disappointed in the market. And of course, the market is always right, but I am afraid that the BYOD trend is wrong. I didn't used to think that. And I'm also concerned that the consumer class device doesn't make a lot of sense. The problem with the trend is simply that corporations and enterprises are responsible for the information that they have, and which often must be kept confidential. It could be client/attorney; it could be patient/doctor. It could be unreleased products. It could be customer information. All kinds of this information is confidential, and putting it onto employee-owned consumer class devices is a problem. There are a couple of ways to solve this. One is with software solutions that control or manage this information. Another solution is to use thin client solutions, neither of which are built into the iPad. And I think that is what makes it the wrong device.

The issue with the consumer class device is that it is a device that people are using for personal use, consumer uses; everything from picture taking to game playing, lots of activities and lots of applications. And Apple doesn’t' make it easy to understand what the rights are of these applications, or let me rephrase that – what these applications can access. There is a lot of information on these devices, and they are leaky devices. They know who your friends are. They know where you are. They know what you are talking about in your e-mails. And people install applications without reading terms of service agreements, and without understanding what applications can access what information. And that doesn't make it a business-class enterprise device.

So I am sorry to see the Cius go. I am sorry to see the market favoring the consumer-class device for business, but that is pretty much the way it is right now. And the Cius and the Avaya Desktop Video Device, they filled some of those holes. They offered wired conventions. They offered encryption. They did a number of enterprise capabilities, but the market just wasn't ready to adopt them yet, or accept them yet. And I think that leaves a hole in the market. And I am curious and concerned about how that hole gets filled and if the enterprises will embrace BYOD long term and if so, how? Will they address some of the issues that are popping up now? It is sad but understandable that Cisco had to do what they did, if the product wasn’t selling. They may have been a little bit ahead of their time. And I am curious to see where it all ends up. Thank you.

Michael Finneran: Thanks, Dave. Art Rosenberg, you had some observations and thoughts on this front.

Art Rosenberg: Yes, I was planning to write something about it because it’s another reflection of the consumerization, if you will, that’s being brought on by BYOD and that opens the door to the applications, not just for the internal employees or the business contacts internally, but it opens the door to the consumers, the customers, and the impact on what I call the UC contact center. Although it’s more than just contact with people, it’s going to be access to information and self-service applications.

So, the device that it represents is a mobile device – it can be used for anything. The question is, what is the enterprise going to be responsible for? It’s not for the devices anymore as much as for the content, for the applications. They will have to separate those applications that they want for their internal people as well as those applications that they want their customers to access.

So, that door is being opened and it’s not something you lock up in an office environment. They missed the boat because they aimed wrong. What can I tell you?

Michael Finneran: Good observation, Art. Now, also Phil Edholm, I’ve heard him speak extensively on tablet devices and the size characteristics and the like. Phil, how do you view Cisco’s move with the Cius?

Phil Edholm: Thanks, Michael. I think it is a great opportunity to reflect on the changes that have happened in the last two years. It is very interesting, if you go back two years ago when products like Cius and ADVD were coming out, or were actually probably being built in the companies that were designing them; the iPad wasn't on the market. We hadn't gone through, you know, the Kindle Fire and all of these other components. So I think it looked like an interesting way to maintain a position on the desktop. And obviously, that’s been a concern in the voice communication space for years, what's going to happen on the desktop? Is it going to become a mobile phone world? Is it going to become a PC world? Now, is it going to become a table world? I think what you're seeing today is actually a recognition of, I would say, three separate things. And I think each of them are probably very important for all of the users and potential customers of companies to think about.

The first is, as your comment reflected, Cius was dead from the start. It was death in the middle. The reality is when you look at the size of the device, it defines two things. The size of the device defines whether you can put it in your pocket or you have to carry it in your hand. A pocketable device is small, the size of a smartphone. Anything larger than that, you have to carry. Conversely, the size of the screen is defined by the device. So a small device that you can put in your pocket is limited to a three- to four-inch screen. But a carryable device can have a nine- to 10-inch screen, much like you have in the iPad.

The Cius was in the middle, with a seven-inch screen. It was neither small enough to fit in your pocket, nor large enough to do meaningful work. Realizing it was designed to fit into a phone base, probably drove a lot of that decision-making. But it was unfortunate, a poor design from the outset. An interesting comment that Steve Jobs made. He was asked about whether he would do a seven-inch iPad, and he said “never.” He said a seven-inch device was, in fact, death in the middle. And so the reality is, Steve Jobs agreed. He said it was dead on arrival, that type of device. So you see those devices being effective for reading, text, for gaming. But in a business construct, something you have to carry needs to be large enough to do meaningful work.

The second thing that really, I think, has been reflected on by a number of folks here is, does the tablet and the whole BYOD movement begin to signal the end of desktop phone devices? I think we will see desktop phone devices. The really interesting question there about going forward, because all of the effort of the companies is now being put on putting their best experience literally on that device. The best experience you are going to get with every UC product in the next year is going to be on a tablet device. And since they are probably coming, like Cisco are not making tablets, and obviously Avaya is not talking about a next generation AVDV, the real focus is going to be on giving that great tablet experience.

And that brings me to my third point, which is I think the advent of the tablet base is something we are going to see in the industry. We have seen some discussion about it. ShoreTel had a slide at one of their meetings, showing a ShoreTel base. We have seen some third party bases. But I think we are going to see a real adoption of outside glass, the outside glass, outside screens on the desktop instead of buying them directly from the vendor.

So I think this really is a reflection of the way of the future, and something we all need to take into account as we plan our investments and our directions, and very much our vendors for the future. Thanks, Michael, and back to you.

Michael Finneran: Very interesting. Now, does anyone else on the UCStrategies team want to weigh in on this?

Marty Parker: I’ll circle back, Michael, again just to say that Cisco, I think, may have had an opportunity from this to think hard about their strategy of partnering versus going on their own. Their ability to acquire companies at will due to their cash trove and their methods of integration of new companies into their business has tended to lead them towards doing it themselves. And, these days, I think the partner ecosystem may have more flexibility and resilience.

When the Cius first came out I wrote an article that asked, What they were thinking?, because this looked like a great partner opportunity. Even after the marketing value of it, it still looked like a great partnering opportunity, which is what they’re doing now with the iPad and the Android producers. But I think there may be a lesson for them to think about this in many other dimensions.

The closed Cisco community is an interesting approach, and many of our enterprise customers see it with both admiration and trepidation. Trepidation being once you’re inside that Cisco camp you have few choices. That’s what the Cius represented. Customers didn’t buy that few choices approach and went BYOD instead. So, the question is: What else is there? Bring your own video?  Bring your own session boarder controller? Bring your own internet backbone- Ethernet backbone? What’s going to be the next place where customers say “well, I don’t have to buy just the brand... I can buy the functionality and plug and play.”

So, I think there’s an interesting question they can ask in reflection on this move.

Michael Finneran: Good points, Marty. I tend to agree with you. Something as specialized as a tablet, and certainly the emotional appeal people always seem to have for their mobile devices. This is something that’s going to be a bring your own something. Of course now, I’m looking at the challenge they’re all going to be facing, both Cisco and their competitors with regard to we know the tablets are coming. How are we going to be able to work them into the UC and IP PBX  environments to deliver that same sort of compelling user experience that consumers have come to expect on their mobile devices?

Well, I’d like to thank all of the UCStrategies team for their contributions today. Thank you all for listening in and we’ll be talking to you again next week. Take care.