The tech press today is full of stories about Cisco's new product, code-named HFR for "Huge Fast Router." It is not just a hardware upgrade. Also involved is new software to replace the Internet Operating System that has powered the company for its 20-year existence, but which has grown to include an unwieldy 15 million lines of add-ons and patches.

The announcement prompts several thoughts.

One concerns the malleability of industrial categories. Cisco is regarded as a hardware company, but today's stories seem to invert that, saying its real role in adding value to the world is as a software provider, sort of the Microsoft or the IBM of the Internet. The lines between hardware, software, and services are getting blurrier all the time.

A second thought is something frequently voiced by Ray Gifford, head of PFF: You can talk all you want about how information "wants to be free," and the Internet wants to be open, but the underlying network layer is darned expensive. High-end routers cost up to $500K, and Cisco's 65% market share produces revenue of about $19B per year, which is a lot of routers. The whole enterprise rides on the willingness of telecom investors to keep committing major resources. So Congress and the FCC really need to stop play Lucy-and-the-football to the telecom companies' Charlie Brown, and get the system deregulated, or we may see just how free information is without the equipment needed to send it to its proper destination.

CORRECTION: Only about 40% of Cisco's revenue comes from routers - but that is still a lot of investment.

posted by James DeLong @ 2:35 PM | General

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