Cisco-OpenDNS May Upset Networking Ecosystem

What are we to make of the Cisco deal to purchase OpenDNS? Reactions have been many and varied, but they seem to focus primarily around Cisco's play in the Internet of Things space. What's interesting is that OpenDNS is being folded into the security business unit, rather than advanced services or even technical services. Why is this interesting? Because it seems to indicate a future direction for Cisco.

The direction? That services is where Cisco thinks the money is. And not just any services, but cloud-based services that have some sort of unique information content. OpenDNS has a very wide window into the Internet -- in fact, into the world at large. As an operator of a widely trusted recursive DNS service (OpenDNS doesn't own any root or authoritative servers at this point), the company sees a large share of the DNS queries generated by individual computers.

This information is an extremely valuable source of security knowledge, as most attacks of any kind will vector through DNS. In fact, DNS is one of the sources of intelligence Verisign uses to build its very well respected reports about current threats in the Internet.

The value in IoT lies in connecting services and hardware. The hardware might be interesting, and the information gathering capabilities may make the "information-as-a-service" folks salivate. But the services are what the average person on the street really wants.

A focus on services falls in line with my conversations with a number of folks at Cisco recently. ACI-as-a-service is being packaged as a solution, and the company is partnering with a number of cloud providers to resell their services as Cisco-labeled products. These point toward Cisco selling services rather than products.

What does this mean for the Cisco ecosystem? There are two points worth considering. First, there is a danger to Cisco partners. As Cisco starts offering a wider range of services directly, it also competes with its own partners. This might not be such a big deal if Cisco didn't take such a strong stand on its competitors. But it takes only a small "transgression" for a vendor to land on the Cisco competitor list, effectively banned from much of the Cisco ecosystem. How the partner program will work with the expanding line of Cisco services paired with Cisco's view of competitors is an area to watch. Second, Verisign, along with many other cloud providers in the domain name line of work, will probably move into the competitor column for Cisco.

What does this mean for the larger networking world? Again, there are two points worth considering. First, services are great, but content is where the money is -- whether it's selling customer data to third parties, selling Taylor Swift songs on a new streaming service, or selling security and convenience services based on aggregated DNS information. Information is the tie-wrap that binds the technology business together.

Second, large network hardware companies have purchased services companies before, but in the more traditional sense, as in consulting services. Cisco's acquisition of OpenDNS is a different sort of acquisition, something that might set a new direction in the networking world. A key question to think about: What would the networking world look like if every vendor also ran a complete set of services? Would we still even have a hardware and software market as we know it today?

I can't predict the outcome, but these are certainly interesting times.