As a 13 year Cisco veteran, John McCool, senior vice president and General Manager of Cisco's Data Center Switching and Services Group, has seen a boatload of change. He is responsible for the strategy, engineering and marketing of Cisco's family of enterprise Ethernet switching solutions, including the Catalyst series, the Nexus data centre switches and the MDS storage area network line. Network World Editor in Chief John Dix and Managing Editor Jim Duffy recently got McCool on the phone to find out what he sees coming down the pike.

You face renewed competition on many fronts and the core technologies continue to evolve. How do you see the market changing?

It has always been a highly competitive market, and we have tried to set the pace through innovation focused on convergence of solutions over IP and the development of services on top of that. That strategy has not wavered at all. For example, we integrated layer 3 technologies with layer 2 and showed the value to the marketplace. And we showed how we could integrate TDM networks with voice over IP and led in that architectural innovation.

What has changed are the frontiers. There is the convergence of compute and storage transport over IP. There is the focus on the integration of wired and wireless technologies over switching fabrics, and the integration of security that comes with that. So, there are constantly new ways to apply innovation.

HP and 3Com have stepped up their competitive efforts, both of them pushing a value story, and Juniper is making more noise in the data center, what kind of market pressure is all of this putting on you guys?

We've seen competitors ebb and flow in terms of their focus on this marketplace. Certainly we see a lot of competition that is strictly focused on price, and while that is one important part of competition, I would submit that value has a lot to do with your ability to simplify customer operations.

Look at the longevity of our 6500. We have had multiple product transitions within that platform. Customers running large networks have all three generations of that product and have a consistent set of operations across them, have the ability to integrate services, and that brings tremendous value.

How sensitive are customers to pricing, particularly in this economic environment?

Companies crunched for capital begin to look at near term cap-ex and sometimes lose focus on long term op-ex. We've seen more focus in the low end of our product lines, the Nexus 2000 and the Nexus 4000, but as things start to pick up we begin to see more of the normal pattern, where people are looking at the network broadly and looking at integrated systems that are going to drive their productivity and growth.

If you look what we did with our Unified Computing System (UCS) and Nexus, we placed a big bet about four years ago that virtualisation was going to be a very significant market transition and I think we called it right. It would have been easy to just continue the evolution of our 6500 family, but we felt strongly that we needed to look at how compute evolves to deal with virtualisation, and how the network fabric and compute become very integral.

Now we're seeing customers looking at Nexus as a way to scale virtual machines beyond the single server. They are starting to think, how can I scale this to a rack of servers, to multiple racks of servers, and ultimately, move virtual machines from data centre to data centre. Our own internal IT group is thinking about this technology as a way to migrate applications across a broad infrastructure – network, compute, storage – so they can take equipment out of operation without scheduling maintenance. That is huge win.

The networks have to be designed to deal with virtual machine mobility in a fundamental way. So, how does my network policy migrate with those virtual machines? That is an architectural challenge that we have taken up with our Nexus 1000V. It can move with the virtual machine. All the [access control lists] and control points that our network administrators have come to trust in their physical designs now can be applied at the virtual machine level.

But you have to think about how services connect to these virtual machines. We are just starting to see the first wave of this, but I think this is going to be a huge trend for the next three to five years.

You mentioned UCS. Give us the elevator pitch, why should Cisco be one of my compute suppliers?

A lot of people scratched their heads and looked at this as yet another entry into the blade market. But I come back to virtualisation being a very fundamental shift. We think the existing blade market did a nice job on what I would call mechanical innovations. Improving power, improving cooling, reducing cabling, etc. But there was an opportunity to take that a step further.

As you see the explosion of multi-core processors, the only way to take advantage of them effectively, without writing a lot of applications, is through virtualisation. But the challenge becomes, what is the architecture of the I/O, the connection of those virtual machines on those servers to the network? That is basically a network problem and where we have provided some foundational innovation. The investment we made on Fibre Channel over Ethernet to converge the fabric with an industry standard approach, that was a key component of UCS. So, it fits into this entire network-based data centre architecture that we have come up with.

Isn't it harder for you to enter computing than it is for the big computing guys to add networking?

It really depends on where you think the puck is going and if there is an innovation vector involved. If you believe that computing is Intel-based, commodity, white label things, you even question the value existing vendors bring. And maybe part of the market does go that direction. But if you look at what happened with blades in the last three to five years, people began to innovate in terms of the system architecture and, while we think that was a step in the right direction, we don't think they went far enough.

We believe you can design systems and products that work better together, that are based on industry standards, that provide value to the customer and diminish the total cost of ownership, diminish the need for integration services at the product level, and allow the customer to spend service money on services that help integrate those products and systems into business processes. They don't want to spend time and money just integrating 20 blades. They expect that to work out of the box. So that is the opportunity for Cisco.