Cisco has unquestionably become the best company in video surveillance ... for people to laugh at. What started out in 2006 with great hopes for industry domination by the company and even its security rivals has never come close to fruition.

Now, Cisco is making its strongest and, in our view, best decisions to reboot their approach to video surveillance and provide a real competitive foundation. In this report, we examine what went wrong and how they are substantially improving.

The Glorious Entrance

Cisco swept into the surveillance market in 2006 - 2007, spending ~$100 Million on two acquisitions, Broadware and Sypixx. Excitement and dread built, culminating in an ISC West 2007 keynote address from a Cisco executive, surprising considering Cisco's 0% market in surveillance at that time and for the rose petals that incumbent executives placed at the podium (note: Cisco's marketing share now is ~0.5% and the rose petals are an exaggeration).

Stumbling

It did not take long for Cisco video surveillance to start showing its flaws. Key mistakes included:

• Buying two companies and trying to munge merge the products together is very hard, especially when they had overlap (e.g., up until last year, Cisco supported two overlapping recorder lines).
• The Broadware acquisition was a serious mistake, both for its product and retained management. Originally Broadware was video distribution platform designed during the late 90s bubble, later awkwardly repositioned as a VMS.
• Cisco assumed IT convergence would sweep them to victory even if their products were not competitive for physical security management's needs.

The cracks really started to show in 2009, just two years later, when they ironically could not afford to exhibit at ISC West, a trade magazine editor called them 'The Lindsay Lohan of video surveillance', and their spokesmen admitted that Cisco targets dupes customers who will buy anything from them. In the midst of all this, Cisco as a whole continued to face major problems.

Falling Apart

Then, last year, in 2011, it seemed that Cisco video surveillance was on the verge of death. They discontinued a slew of products, many employees quit or were laid off and finally their long term GM, the former Broadware executive, left. By the end of 2011, their public strategy was essentially a retreat to the super high end of the market with a subset of their long term uncompetitive products.

Fixing Major Mistakes and New Products

Now, in 2012, they have a brand new leadership team for the physical security business unit, a brand new VMS codebase and a sensible strategy on how they can optimally integrate the network with surveillance systems.

The most important improvement was for their VMS, where they essentially abandoned the legacy Broadware offering, building a new VMS from the ground up. Cisco reports that ~70 engineers spent 2 years working on this. While they call the release VSM 7.0, implying that it is an upgrade to the earlier 6.0, it is actually a new platform requiring a migration for existing users and implementing new APIs. Whatever minor inconvenience this may cause in the short term, we believe the benefits of replacing a 15+ year old unsuccessful architecture is worth it.

Bucking the common practice of Windows based VMS software running on COTS PCs, the new Cisco VMS will only run on Cisco appliances and will be fully virtualized (see our post on Cisco VSM virtualization). While this increases cost and complexity for small systems, for larger ones that Cisco is targeting this could simplify managing and reduce operational problems.

Additionally, Cisco is maturing their integration of MediaNet into their surveillance offering, which also has the potential to reduce the cost and complexity of setting up and managing surveillance systems. While this requires a high end Cisco infrastructure, it offers an automated network management process nowhere else offered in surveillance.

The most disappointing Cisco release is their new 6000 series camera line, which is barely an improvement over their old line and, save for MediaNet support, is little different from dozens of no-name overseas manufacturer. Cisco indicated more new cameras releases in the near future and they will need it if they really expect to compete as the end to end solution they hope to market.

Going Forward

Despite Cisco's numerous mistakes in the surveillance market, they have always had the resources and skills to dominate. However, they have never had the right mindset, with way too much focus on the network and far little appreciation of domain specific problems. Changing their physec management team and re-doing their VSM are two really important steps in establishing a more solid foundation. They still have a long way to go but they have a far better shot at competing than ever before.