Vyatta customers typically opt to use software-based routing technology on commodity x86 hardware. Herrell claims that the resulting price/performance ratio is far and above the price performance of Cisco's hardware routers in the vast majority of cases.
Give customers a choice of open source and commercial software
In light of Cisco's internal experience with open source and the lessons learned by traditional software vendors faced with open source entrants, the most effective response from Cisco would be to promote its own open source offering -- that is, fight open soure with open source.
Cisco's contributions to Linux and other open source projects are well documented and marketed. As such, it's not as if Cisco doesn't have the internal skills or executive support to promote an open source offering to customers. Plus, Cisco can learn from IBM and Oracle, among other large IT vendors, that have been able to balance a portfolio of open source and commercial products.
Cisco's first inclination may be to lower price points or introduce a lower-featured version of its router product line to compete with open source offerings. Such an initial response to open source alternatives is natural: Vendors typically don't want to open-source an existing closed source product without significant competitive pressure to do so. And sometimes even not then. Instead, vendors introduce a new open source offering, either through an acquisition or in the form of a new, internally developed project meant to be open source from the beginning.
Consider how Oracle and Microsoft initially responded to the threat of MySQL: by offering closed source "express" or "community" versions of their commercial products for a low cost or no charge. Next, consider the unique and complete story that Oracle now has with both MySQL and Oracle DB in its product portfolio. Few could argue that Oracle's database revenue has fallen off a cliff since acquiring MySQL. Next, consider the application server market, where the two revenue share leaders, IBM and Oracle, both offer open source and commercial products.
Cisco needs to give customers the choice of open source or commercial router offerings; the open source version would be stand-alone software, and the commercial version an integrated hardware and software stack. Being able to address the needs of customers, big and small, with varying degrees of affiliation to open source or commercial products demonstrates an understanding that customers differ and want choice.
IT decision makers: Plan for an acquisition
It's clear that IT decision makers searching for options to reduce networking infrastructure costs should consider open source products such as those from Vyatta.
Furthermore, buyers choosing an open source network routing provider should plan for a scenario in which the vendor is acquired by the likes of Cisco. Considering Cisco's history of acquisitions, it's prudent to expect Cisco to address open source competition in a core product area like its router business. Don't be surprised if Cisco does so in a similar fashion as other large IT vendors: through an acquisition.
This article, "Open source could alieviate Cisco's growth woes," was originally published at InfoWorld.com. Read more of Rodrigues et al.'s Open Sources blog and follow the latest developments in open source at InfoWorld.com.