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Ferrari versus Corvette - Which would you Choose?
Doug Gourlay of Cisco recently responded to my post on "Merchant "silicon by putting a post on the Cisco site on his blog. Thanks to Brad Reese for pointing out the reply on his blog on the NetworkWorld site. While Brad felt Doug's response was a "stinging rebuke", I believe that most will agree with me that it was a lame and poorly thought through analogy. While I replied on Brad's site, I thought it would be appropriate to respond here as well........as Doug was really responding to my assertion that using proprietary silicon for packet processing is antiquated and the future is building value while leveraging the power of "merchant" silicon.
In Doug's post he attempts to use an analogy to justify using proprietary silicon in Cisco products:
"Maybe an analogy will help. If a switch is like a car then the switching silicon would be most analogous to the engine and/or transmission. i.e. the core of the car and a major point of competitive advantage and differentiation. Do major automobile manufacturers outsource engine design and development to other firms? Of course not, they design and build their engines. Do manufacturers of more consumer goods like lawn mowers outsource their engines? Absolutely, they go to specialized engine manufacturers because the core value of what they offer is either a certain price point, or the value is not tied to the engine.
So the question then - is do you want to ride to work or school in a car, or on a lawnmower? I know one would get me laughed at if I was in school, the other... not so much 
Applying it back to switching, I'd rather control my own destiny and align the core value creation in the silicon with the hardware and then with the software and continue to drive innovation at every tier and not saddle up on my Toro in my enterprise. (no offense to the manufacturer of lawn mowers, I am a good customer of yours too :)"
If it were only so simple to make decisions in life, but the Ferrari comes with Ferrari pricing and maintenance costs. And it sure does a lousy job of cutting the grass!!
I guess I hit a nerve with my comments in my blog. While I agree with Doug that Cisco pricing is Ferrari like, the performance numbers of their products generally do not bear out a value proposition that justifies the product pricing. Witness the Tolly tests that indicate that most times the Nortel products are faster and Gartner identifying Nortel as a "Visionary" in networking in the 2007 Magic Quadrant Analysis. In fact, Cisco products typically cost 2 times other “merchant” offers in the Ethernet space, a fact borne out by recent
Like Doug, I like analogies to illustrate a point, but I believe they should be at least vaguely believable. The analogy Doug has chosen is flawed and almost laughably absurd. Who would ever consider a buying decision that was a choice between a Ferrari and a lawnmower? However, if Doug wants to use an automotive analogy, let’s use one that is closer to reality; the choice between a Ferrari F430 and a Chevrolet Corvette (we will use the standard model Corvette in keeping with Doug’s analogy of “merchant” engines, not the higher performance Z06). Both are very similar, (kind of like Ethernet switches), each being a 2 seat car with a V8 engine and designed for performance over people or luggage hauling. And they follow Doug’s analogy, in that the Corvette is based on a broad range of “merchant” parts from the General Motors inventory, while the Ferrari is highly optimized with virtually every part factory built in
In fact, Road and Track just compared these two in their January 2008 issue, so we can use some real facts in this analogy for a change. While the review decides for general use it is a toss-up between the two (in the review, two editors out of four choose each of these cars as their favorite), the F430 does have a 12% advantage in acceleration, a 2.8% better slalom time and a 1% better skid pad grip level. So, if we grant the F430 a 5% overall performance improvement at the limits of use (none of which can be achieved on public roads or in normal networks), the F430 must be a better buying decision, right? However, the F430 costs about 4x the Corvette (slightly higher pricing differentials to those in networking). And the Ferrari gets 25% less fuel economy (again similar to the networking world), in a world where fuel economy is critical. And the costs to maintain Ferraris are legendary ($3,000 tune-ups and $8,000 clutches every 10K miles). So then, the choice is simple; 95% percent of the performance for 25% of the price and operating costs that are 25-50% less. Does the Ferrari look good now? By the way, the Corvette Z06 gets 98% plus of the Ferrari performance for one third the price and the new Z01 will be faster for less than half the price. I guess Doug would call these cars derivative due to their “merchant” roots in GM and the base Corvette.
In the end, people who buy a Ferrari do it for two reasons; they have so much money that the cost/performance trade-offs do not matter to them or they buy their cars so others will judge them by what they drive. I guess buying Cisco is similar, either you like to waste money or you buy on brand only. Comparison shopping yields different answers, as reflected by Gartner in their recent advisory to evaluate alternatives in the networking world.
I do not drive a Ferrari, do you?
