Cisco Pricing Undercut By $100M In Big Cal State University Network Project

Re:I knew cisco was expensive by tdelaney · 2012-10-27 09:03 · Score: 5, Informative

People who don't get competitive quotes but always buy Cisco because that's what they know.

Cisco what? by EmperorOfCanada · 2012-10-27 09:04 · Score: 5, Insightful

I have always felt that Cisco had the same sort of following as Novell. Senior IT people certified up the wazoo yet unable to explain to me why Cisco was so much better. The bits that leak out of big data people like Facebook and Google seem pretty lacking in the big names. I don't see gear from HP, IBM, Dell, Cisco, etc. What I do see is white boxish or custom gear that they seem perfectly happy with.

Just a guess but my bet is that much of the business that big old companies like Cisco come from single skill IT people combined with kick ass sales people. Salespeople who sell to upper management not to the non Cisco IT people who might fact check.

So good job to the people who didn't blow an extra $100 Million.

Re:Cisco what? by kqc7011 · 2012-10-27 09:29 · Score: 5, Insightful

Sometimes a company will place a extremely high bed because they really do not want the contract. But they have to bid to stay on the list for future proposals. And if they do get the bid all they have to do is sub it out to a lower bidder and keep the carry.

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Passionately Indifferent
Re:Cisco what? by bertok · 2012-10-27 10:38 · Score: 4, Interesting

Unable to explain to me why Cisco was so much better
There are some advantages to going "All Cisco", similar to the advantages of going "All Microsoft" or whatever:
- Huge pool of highly trained talent to pick from. Cisco certified people are easy to get, at both the low end and the high end.
- Good consistency in their products. Excluding their most exotic stuff and the cheapest consumer stuff, pretty much everything Cisco makes uses IOS or is IOS compatible to a degree that you can't tell the difference. You learn it once, and that's it, you know all their products.
- Complete product line. You can start with an entry level firewall and router, and upgrade to multi-terabit telco grade routers without ever having to throw out your knowledge or tools and start over. If it's a digital cable that you can plug into a router, Cisco almost certainly sells a module for it. If they don't, someone sells a compatible one.
From what I've seen, their competitors try to undercut them on price, often successfully, but then the IT department needs two or three vendors to meet all their networking needs. For example, Cisco sells blade-chassis IO modules (integrated switches), and even VMware vSphere "virtual switches"! If you have VMware on HP Blades (very common), then you either go Cisco, or live with the inconsistency. A lot of vendors will sell switches and routers, but not firewalls, VPN concentrators, WAN accelerators, or something. Suddenly, you need IT guys trained ina bunch of vendors' network equipment, you need three different management and monitoring tools, and your op-ex is through the roof. When you call support with a problem, the vendors will all point at each other, and meanwhile your links are down and your users are screaming at you.
On the other hand, $100M seems a bit much, even for Cisco. Sounds like they put a half-assed effort into the bid, and didn't pick the most cost-effective devices or just didn't give the right educational discount or something.

Facebook and Google seem pretty lacking in the big names
They're special, and aren't even remotely representative of a typical business. The way they build infrastructure has more in common with supercomputer design than business data centre design. For example, Google was using 100 Mbit switches when everyone else was starting the upgrade to 10 Gbit!
Re:Cisco what? by Revotron · 2012-10-27 13:02 · Score: 4, Insightful

It's not a typo. Google's entire data model is designed around "cheap and disposable" instead of "expensive and bleeding-edge." The general notion is that they can get 10 custom-built consumer-grade systems for the same price as one enterprise-grade server, and have more processing power and better uptime by distributing their workloads to avoid single points of failure.

That's why they use consumer-grade SATA hard drives. If one breaks, they let it sit there until their next walk-through. Meanwhile, the load is distributed onto a bunch of other similarly-inexpensive servers. You'd be surprised how long an el-cheapo hard drive can last when it never stops spinning.

I have a feeling if Google deployed 10GbE to each server, they'd probably double their hardware costs.
Re:Cisco what? by djlowe · 2012-10-27 14:28 · Score: 3, Insightful

Hi,

I'm going to get pounded for this post, but that's OK - this is a subject with which I am familiar, and I'd like to share my perspective nonetheless.

I have always felt that Cisco had the same sort of following as Novell. Senior IT people certified up the wazoo yet unable to explain to me why Cisco was so much better.
Your current "+5 Insightful" upmods notwithstanding, the fact that you need someone else to explain this to you tells me that, by your own admission, you don't have the knowledge required to make these decisions yourself. That alone makes me wonder why your post got upmodded... but, this is Slashdot in the 21st century, so what can you do, right?

If you had the requisite knowledge, I imagine that you'd be posting from that viewpoint, e.g. "I evaluated Cisco's offerings for my company, and after comparing them to other vendors, decided that they weren't worth the premium price for us." Or something similar, rather than stating: "I have always felt that"... this isn't something subject to feelings. IT/MIS is a technical profession, and cost/benefit analysis with regards to network and computer infrastructure is something that is done every day in the real world, though apparently not by you.

The bits that leak out of big data people like Facebook and Google seem pretty lacking in the big names. I don't see gear from HP, IBM, Dell, Cisco, etc. What I do see is white boxish or custom gear that they seem perfectly happy with.
What you don't appear to understand is that Googles and the Facebooks of the world are basically large enough to be OEMs (Original Equipment Manufacturers) in their own right, and have the money and technical resources to pursue that path, and so your attempt to apply their approach to this particular case is flawed. Certainly CSU is large, but they aren't "Google large", when it comes to network infrastructure and servers, and you'll note that they went with a name-brand vendor, rather than rolling their own solution, which makes your statement doubly inane.

Just a guess
You appear to be good at that.

but my bet
What bet? How much? What are the terms? I'm sorry to sound confrontational, but you do realize that such is a null statement? It costs you nothing to say, and there's no penalty if you're wrong. Why not replace it with something more honest, such as "I think that", or, better, in your case: "I believe that"?

much of the business that big old companies like Cisco come from single skill IT people combined with kick ass sales people.
Actually, much of Cisco's success, and sales, come from corporations with mission-critical networks, regardless of scale. They pay a premium for Cisco's hardware, and pay for SmartNet contracts, to ensure their network operations. This may not be worth it to you, but, I have to tell you, their support and logistics when it comes to SmartNet are amazing, and "4 hour parts on site"? The last time I opened a Cisco TAC case for a device so covered, I had a callback in 10 minutes from the person assigned to the case, parts dispatch was under an hour, and the longest delay was on our side: The person that was on-call to open the office (It was a Sunday) didn't answer her cell on the first try, and I left a message with the engineer's cell number, and called him back and gave him her number so he could call her directly to arrange to meet at the office. Once he got onsite, I emailed the backup copy of the router config to him, and he took care of the rest.

Total time was just over three hours, and the following Monday morning everyone came to work and the network was working.

THAT, in my opinion, is worth paying for, when needed, as it was in this case: That office is in Washington State and I'm in New York State.

Now, many companies don't need that, and that's fine. And, based just
Re:Cisco what? by HockeyPuck · 2012-10-27 19:51 · Score: 3, Interesting

Right. But you forgot to mention that they have developed on their own and implemented a very custom software stack.
Not every enterprise out there has the development staff that google does to create such a software layer to be able to commoditize the hardware layers.
Take any established company. Kaiser Medical, Caterpillar, JPMC... while they may have solid IT staffs, the company's core competency is not IT. It's Healthcare, Industrial Machinery or Financial Services. So for them paying for EMC storage or IBM mainframes or Cisco routers and switches is worth their time and money. So they can focus on their core business.

What was Belkin offering just curious by Anonymous Coward · 2012-10-27 09:04 · Score: 4, Funny

I bet Belkin could do the job for a cool 1 million. Of course it wouldn't work, but look at the savings.

I wanna see the final cost by hawguy · 2012-10-27 09:17 · Score: 4, Insightful

I wanna see the final cost after the project is done and everything is working.

$22M sounds low for a project this of this size, so I wonder if Lucent is planning to make up the difference with consulting fees.

Or maybe I'm just jaded from paying Cisco prices for so long... and also from seeing low-ball bids costing a lot more in the end.

Re:I wanna see the final cost by imikem · 2012-10-27 10:47 · Score: 5, Insightful

This. A disparity this size suggests there is more to the story. Cisco is expensive, yes, but Lucent isn't free. Hard to see how they intend to make money on the project.
What Cisco brings to the table is their support organization. If you spend as much time with networking as I do, responsible for upwards of fifty switches, multiple firewalls, IPS, wireless, etc., you learn to appreciate being able to open a case and get a knowledgeable person on the line inside of 15 minutes, and replacement hardware next day without jumping through hoops.
I've tried HP and Dell network hardware at various times, and came away unimpressed. Servers sure, but they should stick with that IMO. Haven't dealt with any Lucent gear since 2000 (some modem aggregator IIRC), so can't speak to them directly.

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Perscriptio in manibus tabellariorum est.

Re:And? by sribe · 2012-10-27 09:17 · Score: 4, Insightful

Cisco is like Oracle. They don't need to discount their prices.

Eh? Oracle discounts, heavily. You only pay "list" to Oracle if you're a small, unimportant customer. The big fish get up to something like 99% off when Oracleewants to lock out a competitor.

Re:I knew cisco was expensive by camperdave · 2012-10-27 09:21 · Score: 4, Insightful

but holy shit! how do they stay in business?

With luxurious profit margins. As the saying goes "A fool and his money... that's who you want to focus on."

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When our name is on the back of your car, we're behind you all the way!

Huawei by Art+Challenor · 2012-10-27 09:27 · Score: 4, Funny

What was the Huawei bid?

Re:Huawei by fa2k · 2012-10-27 22:39 · Score: 3, Funny

For some reason they said they would do it for free if the university started doing military research

Re:Cisco's plan... by fuzzyfuzzyfungus · 2012-10-27 09:30 · Score: 4, Funny

Only a fool would do an important networking job without monster cables. Do you know how much packet fidelity you can lose if stray RF gets into your fiber?

Re:I knew cisco was expensive by Joce640k · 2012-10-27 09:37 · Score: 3, Insightful

There's a lot of PHBs who find Cisco to be "reassuringly expensive".

A bit like Oracle, et al.

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No sig today...

Re:I knew cisco was expensive by WaywardGeek · 2012-10-27 09:46 · Score: 4, Interesting

I'm not sure that was a real quote from Cisco. It looks to me like they simply didn't want the business. In such cases, business file what are called f-you quotes, which are outrageously priced to take into account that the bidder may not currently have the capability to fill the contract, or that it would be defocusing. Priced high enough, they could sub-contract to HP, for example, and still make a lot of money.

That said, I went to our local office the other day and poked my head into the networking closet. I see the same cheap crummy wifi routers I put there before our little company got bought. Right next to them is a Cisco router worth maybe $10-20K. It's worth more than all the computers and related hardware in the office combined.

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Celebrate failure, and then learn from it - Nolan Bushnell

Re:I knew cisco was expensive by WillerZ · 2012-10-27 09:50 · Score: 4, Insightful

It's worth more than all the computers and related hardware in the office combined.

Debatable. It cost more than all the computers and related hardware in the office combined for sure.

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I guess today is a passable day to die.

Who wrote the offer? by garry_g · 2012-10-27 09:52 · Score: 4, Interesting

Wondering, was the offer directly from Cisco? Did the person who designed/selected the gear know what they were doing?
Just by selecting the wrong gear, prices between different Cisco gear can already differ by a factor of 2-3 ... e.g., we just had a project in which a company campus with something like 20 Gigabit switches (24/48 ports, access layer) and a core with 10G ability to feed to those as well as cover the DC with redundant 1G ports ... going with the usual suspect (6500) as core switch with line cards to supply up to 16 10G ports and 96 1G copper ports would have been more than twice the price than the alternative we chose, Nexus 5548 w/ two 2248 FEX chassis.
Also, instead of using overpriced (to say the least) Cisco SFP/SFP+ modules would have run the total bill up even more ... (total of 44 SFP+, 42 SFP, with original Cisco SFPs that would add up to around 50k€ - would have been a third of the whole project budget. Using OEM/compatible modules was around 5k€). Assuming a large quantity of fiber ports in such a project, the optics alone may quickly add up to the factor mentioned above ...

Re:I knew cisco was expensive by EmperorOfCanada · 2012-10-27 09:59 · Score: 4, Interesting

You mean features like storing data and dishing it back out; or nonsense features like CPLM5 certification?

Plus you are comparing corporate Oracle to Corporate SQL. For most people all Free and Open Source would be just peachy. Most people including facebook. I rarely see the really big big big sites doing anything with any of the Oracley Microsofty IBMy stuff. They usually take Open Source and then roll their own. Sort of shows that the route to success starts with open source and ends with modified open source.

Re:I knew cisco was expensive by swalve · 2012-10-27 10:03 · Score: 5, Interesting

It's very possible. If you read the RFPs for some government things, you'll find things that almost no vendor can possibly adhere to. If you are a top tier vendor like Cisco, you likely CAN meet the requirements, but not cheaply. So instead of trying to compete on price, you compete on being able to fulfill all of the requirements in the RFP. You take the gamble that the people analyzing the proposals will nix the cheaper ones as non-compliant, and you are the only bidder left. Or, that the agency will cancel the RFP and rewrite a new one with different or clarified requirements. Then everyone rebids with full knowledge of each others' pricing, and hopes for the best.

Re:Maybe raising taxes isn't the only solution. by NotSanguine · 2012-10-27 10:22 · Score: 5, Informative

America spends more per capita on its schools than any other nation in the world.

Actually, we rank fourth

And on a percentage of GDP basis>/a> The US ranks 37th, tied with Estonia.

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No, no, you're not thinking; you're just being logical. --Niels Bohr

Re:And? by Anonymous Coward · 2012-10-27 10:31 · Score: 3, Interesting

They're doing this because Mark Benioff is Larry Ellison's ex-protoge, and their relationship took a turn for the worse and now they're in a gigantic dick measuring contest. Goes something along the lines of this-

Benioff (Presents Steve Jobs Style) "We are the original cloud, there's 'no software' and it's all a 'social enterprise"
Larry (Presents Balmer Style) "We do cloud too, and we're Oracle, so fuck you".

What a bunch of wankers (worked on SFDC and Oracle)

Re:I knew cisco was expensive by erroneus · 2012-10-27 10:54 · Score: 3, Interesting

That's a fact. It moves data in a highly standardized way. Sure, there are some proprietary Cisco protocols here and there, but for the most part, it's all the same everywhere. Whatever Cisco does, anyone can do.

People somehow believe there's magic moving data over wires. There just isn't. And there's nothing special about Cisco's. Now, compare Cisco to Microsoft. Now *There* is some vendor lock-in. One thing depends on another thing and another thing and another. To move off of Microsoft is mind-numbingly ridiculous to imagine. But Cisco? Nah. You can replace this and that here and there and you'll be just fine. Sure, you might have to migrate away from the use of anything Cisco proprietary here and there, but for the most part? You can take your time and move bits and pieces here and there.

That doesn't quite count if you're talking about Cisco phones... that's kind of an all or nothing scenario there... within limits. One thing is certain though -- Cisco needs to be humbled.

Re:I knew cisco was expensive by erroneus · 2012-10-27 10:59 · Score: 5, Insightful

No. That's not true. It takes brain power. There's a wealth of information out there because pretty much, it has all been done before in one form or another.

It seems cheaper in the short run to buy something off the shelf and put it up. But when you keep paying for it over and over and over again, you might begin to realize that people are cheaper in the long run.

Besides that, do you think the likes of Google STARTED out with billions of dollars? How about Facebook and the others like them? They started with some pretty smart people which turned out to be a far better investment than paying for licensed off-the-shelf stuff.

Re:Maybe raising taxes isn't the only solution. by Impy+the+Impiuos+Imp · 2012-10-27 11:01 · Score: 5, Funny

Actually, Forth kind of sucks. I prefer LISP.

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(-1: Post disagrees with my already-settled worldview) is not a valid mod option.

Re:News: Cisco is overpriced by cbhacking · 2012-10-27 11:17 · Score: 4, Funny

More News:
The sky is blue

I live in Seattle, you insensitive clod!

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There's no place I could be, since I've found Serenity...

Re:I knew cisco was expensive by calmdude · 2012-10-27 11:42 · Score: 4, Informative

I'm not sure that was a real quote from Cisco. It looks to me like they simply didn't want the business.

Not really, looking at the spreadsheets, it's typical pricing for Cisco. Especially once they started quoting Nexus-backed infrastructure with OTV to stretch layer-2. You'd be surprised at how many people have been biting off on massive OTV and Nexus costs with no competitive analysis. Looks like Cal State just did an objective analysis without marketing hype, and kudos to them.

Re:I knew cisco was expensive by sa666_666 · 2012-10-27 12:18 · Score: 5, Informative

I have to completely agree with this. I've been involved with several large-scale RFPs, and this is exactly how it goes. The only thing I'd add is that like clockwork, any party that doesn't win threatens to sue someone. It happens every time. They must be teaching this in business school or something. I've never seen a more childish group of people.

Re:I knew cisco was expensive by Fjandr · 2012-10-27 13:06 · Score: 4, Informative

Just look at West Virginia's last big IT project and you'll see how Cisco stays in business.

Re:I knew cisco was expensive by uncqual · 2012-10-27 13:48 · Score: 4, Interesting

A similar situation also happens (although I have no idea if it happened in this case).

The "preferred" vendor "assists" in writing the RFP. They get it written so they can fulfill it economically while competitors can't. Sometimes this is done by specing features missing from competitor's product or insuring competitors have to spec higher end products to pick up one "required" feature that the "assisting" vendor just happens to include in a lower priced model.

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Why is there an "insightful" mod and why isn't it "-1"? If I wanted insight, I wouldn't be reading /.

exactly. by Anonymous Coward · 2012-10-27 13:57 · Score: 3, Insightful

You either pay for the brainpower upfront with pre-configured hardware/software, or make up the difference with smart (but expensive) people. The trick is which lasts longer, or is a better long-term investment.

I could employ a crappy IT admin who only knows windows, and pay him $40k and the enterprise Win suite and license seats for $20k total; or a decent linux admin at $60k and virtually unlimited server and seats running CentOS and Ubuntu for $0.

This is of course a very simplified way of seeing things. There are many more variables to consider, such as how competent is the end-user with computers?

Re:exactly. by Bacon+Bits · 2012-10-27 16:43 · Score: 5, Insightful

The real difference is that at the end of the year, with MS, you still have closed software being managed by a mediocre admin and are pretty much limited to what the vendor wrote in the software and what your admin can find on google.
With the second option, you've still spent $60k, but you started with a much higher level of base competence and things usually go up from there. At the end of the year you have many more options and much more flexibility in what you're capable of, IT wise and business wise, with that higher level of competence.
The logic of this argument is quite common here on Slashdot, and that logic always escapes me. Everybody seems to acknowledge that a talented Linux sysadmin costs more than a mediocre Windows sysadmin. What I fail to understand is why a business is only presented with those two options. In reality, a business cares about money first and foremost. And the cost of your salary is usually quite a bit more than the cost difference between Windows Server and Red Hat Server. The reality is that a business is going to choose between a talented Linux sysadmin and a talented Windows admin (because they're willing to pay for talent) or they're going to choose between a mediocre Linux admin and a mediocre Windows admin (because they're not).
Slashdot seems to think there's no such thing as a talented Windows administrator. That's complete and utter bullshit. The concepts of administering Linux are not significantly different than those for administering Windows. I would go so far as to say that if you're unable to secure and manage a Windows network, you shouldn't be a sysadmin at all on any operating system. Windows is easy to administer. You read and reference the Resource Kit, research and follow best practice, and you will be absolutely fine. Just like on Linux. If you cannot do these things as a sysadmin, please quit your job. You're making the rest of us look bad.
The argument is like saying, "well, the average COBOL programmer costs quite a bit more than the average C programmer... clearly we should go where the talent is and program in COBOL!"
I also find it completely baffling that Slashdot seems to think that because you go with Linux, the business software you're going to run will use open source, too. More than that, that just because you hired a talented sysadmin you also hired a talented software developer. In my experience, sysadmins make horrible software developers because they do not develop robust solutions that adhere to development best practice. You end up with buggy, badly performing, un-maintainable software that may or may not function correctly. Similarly, software developers make horrible sysadmins, because they constantly do things that make their system work and compromise the integrity of everything else. You end up buggy, badly performing, un-maintainable computer systems that may or may not function correctly. The mindsets required to properly do software development and system administration are entirely different, and to do anything well requires focus and dedication. I would not look for the same talent in the same person any more than I would look for a writer to also be an editor, or an actor to also be a musician. Yes, it can be done, but generally it is the exceptions that prove the rule. Once a person chooses one path, they seldom cross to the other again.

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The road to tyranny has always been paved with claims of necessity.

Re:I knew cisco was expensive by b4dc0d3r · 2012-10-27 16:17 · Score: 3, Informative

Because of idiots with a massive budget to spend or get cut. The contract was with Verizon, providing Cisco hardware. Someone wanted top-of-the-line, whether it was appropriate or not.

Five days later, state officials signed the $24 million contract with Verizon Network Integration to buy the Cisco routers.
Verizon delivered an additional 100 routers to the state for free. West Virginia officials never asked for the additional equipment -- valued at more than $2.26 million.
Verizon spokesman Keith Irland said the company simply responded to router specifications detailed in the state's bid posting.
"They specified the equipment they wanted," Irland said. "That's what they requested, that's what we bid on. We had the lowest price, and we won the bid for the equipment and related maintenance."
The Gazette-Mail contacted two Cisco sales agents last week, asking whether the 3945 series routers were appropriate for schools and libraries.
"The 3945 is our router solution for campus and large enterprises, so this is overkill for your network," a Cisco representative responded.
The sales agents recommended a smaller router -- with a list price of $487.

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Cisco Pricing Undercut By $100M In Big Cal State University Network Project

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