Social Cisco: Networking to Social Networking

Social Cisco: Networking to Social Networking Sunil Sharma April 18, 2007

E-Commerce

Is Cisco cool? Om Malik of Gigaom.com thinks not, and adds that social networks thrive when they are cool. But Cisco’s target client-base--cable operators and telecom--are the antithesis of cool. So why is Cisco entering the social networks space? And why is it not doing so by creating a space on MySpace, but by buying a set of companies and building its own estate?

The king of acquisitions--Cisco has acquired 117 companies since 1993 including 69 since 2000--is on another buying spree. This time it is related to social networking technologies. First, it bought Five Across, Inc., a vendor of social networking marketplace, on February 8, 2007. Now it plans to buy (as reported by the New York Times) Tribe.net, a social networking site, which at one time declined the opportunity to create a separate network for Bono’s antipoverty campaign, One.org. Bono eventually went with Yahoo! and Tribe.net remained focused on building a destination site like MySpace and Friendster, and almost ran out of money.

These two acquisitions are part of Cisco’s shift toward becoming a consumer-oriented company, as Dan Scheinman, the head of Media Solutions Group at Cisco told the New York Times, “Part of our job is to form a relationship with media companies and deliver technologies and services to them, so consumers can consume what they want online.”

Though the purchase of social networking technologies by the top maker of networking equipment for telecommunications providers may look unusual to many, Cisco believes it has a well-founded rationale as it welcomes Web visitors to a “human network.”

The human network, as envisioned by Cisco, is a place where we’re all connected. It includes remote villages, mashes Web applications together and facilitates collaborative sites, sharing of network stories, hearing of podcasts and watching of videos. Viewed through the prism of human network, Cisco’s new move toward social networking seems plausible. But then there are doubters like Marc Andreessen--co-founder of Netscape and Ning, a Palo Alto-based social networking company--who told the New York Times, “The idea that Cisco is going to be a force in social networking is about as plausible as Ning being a force in optical switches.”

Un-Fathomed Potential of Social Networks
The term social networking was coined by J. A. Barnes of the London School of Economics in a 1954 paper, “Class and Committees in a Norwegian Island Parish”. In a 1987 Current Contents article, Barnes--when he was with the Research School of Social Sciences at the AustralianNationalUniversity--wrote about his paper:

“I spent 1952 and part of 1953 in western Norway, carrying out what I initially perceived as a ‘community study’. I soon discovered that although the people I worked with had the cultural values of a ‘community’, their social structure was quite unlike the paradigmatic gemeinschaft. Their social world had an abundance of formal organizations, but most individuals appeared to make decisions with reference to personal contacts that often cut across organizational boundaries. I tried to capture this configuration with the label ‘network’ and applied it to the class system, one of the foci of my inquiries.”

Barnes categorized the social relations that he had seen in Bremnes, Norway, into three categories: relatively stable formal organizations serving many different purposes, unstable associations engaged in fishing and interpersonal links that combine to form a social network and on which perceptions of class are based.

It is, perhaps, the third category of Barnes’ Social Networks that has been seeing another application in the recent years with the emergence of a set of Web applications helping to connect friends, business partners or other individuals. The initial online social networks targeted young consumers, but since then they have expanded to include the corporate environment, too. The businesses are using social networks as a means to connect employees. The networks are also acting as customer relationship tools and as a platform for advertisements.

The social networks-based businesses are also attracting huge price tags: Google bought YouTube for $1.6 billion, and MySpace went for $580 to NewsCorp. However, how these businesses will generate revenue to justify their valuation is not crystal clear. Everybody agrees with the potential of social networking, but not with the path needed to travel to monetize that promise. This is an area where the creative minds at companies like Cisco are working.

Since it bought YouTube, Google has been trying to come up with a formula to convert the acquisition into a money-making venture. It recently announced a big tie-up with BBC, but it also lost another big deal when Viacom decided to set up its own online-video ventures. Despite dominating the market and having more than 1,000 partnerships with companies to provide video on its site, Google has not really fully figured out a surefire way to generate a huge amount of revenue using social networking technologies. YouTube streams more that 100 million video a day, but it still leaves a big potential for other companies like Cisco to develop their own offerings.

Cisco formed a Media and Entertainment solutions group, which aims to provide an infrastructure platform for media-content companies. In a press release, Scheinman said, "Cisco believes the network is the platform for organizations to connect with their constituents and for individuals to connect with each other."

The internet has changed the way media content is distributed. There is a shift from centralized distribution to on-demand distribution. Cisco wants to capitalize on this shift through the acquisition of social networking companies. Only time will tell if it will be successful.

Sunil is the CEO of Cerebral Works, a sales and marketing company that implements marketing communications and custom publishing solutions that help clients acquire new business and enhance relationships with stakeholders. An avid mountain climber and runner, Sunil has climbed Mt.Kilimanjaro and various peaks in Himalayas and finished the Detroit marathon. He holds an MBA degree from the University of Michigan, Ann Arbor, and a BS in Electronics and an MS in Mathematics from the BITS, Pilani, India. Voice: (703) 713-1425; Email: sunil2@cerebralworks.com.