Can Cisco Afford to Lose This Top Talent?

Software-defined networking, or SDN, may sound like an egghead niche, relevant only to the biggest geek on the block. It's certainly not investable information, right? I mean, there's no reason why market watchers would care how data packets are routed through high-speed networks.

But then you'd be very wrong.

As it turns out, proper SDN routing is becoming a must for modern data centers. More specifically, the practice makes existing networks far more efficient and caters to the needs of virtual machines and cloud computing clusters like no pure hardware solution ever could. SDN platforms move much of the decision making involved in network management off of single-purpose routers and onto more flexible and intelligent server systems.

Moreover, this is actually very hard to do. Online giant Google (Nasdaq: GOOG  ) builds its own servers and invents entire software concepts as needed, but decided to go with the established OpenFlow platform when it needed an SDN solution.

Big G was already "working on an inferior way of doing software-defined networking," according to Google's infrastructure boss, Urs Hoelzle. When one of the world's most innovative and resourceful companies decides it can't do SDN right, you know it's a tough nut to crack. Google's entire internal network now runs on OpenFlow, and Hoelzle claims that he's getting double or triple the performance out of his existing infrastructure this way.

That's why it's a big deal when Brocade Communications Systems (Nasdaq: BRCD  ) snags a top SDN architect from networking giant Cisco Systems (Nasdaq: CSCO  ) . David Meyer holds many industry badges of honor, and was named a Distinguished Engineer at Cisco. Colleagues call him "the lead smart guy on our OpenFlow efforts." Now he's the chief technology officer at Brocade's service provider division, where his SDN skills will come in handy.

Snagging some of Cisco's top SDN brains is a big coup for smaller rival Brocade, which hopes to become a leader in this emerging field. It's not a fatal blow to Cisco, whose bench runs very deep. But it's bad news for the networking veteran nevertheless -- another tiny eddy in a larger brain drain that could sap Cisco of competitive muscle.

Cisco can't afford to let smaller companies take the lead in the SDN revolution. The company faces enough challenges in rebuilding its fading stature in the networking industry, and really doesn't need to miss out on a game-changing market shift.

Once a high-flying tech darling, Cisco is now on the radar of value-oriented dividend lovers. Get the low down on the routing juggernaut in our premium report. Our report also has you covered with a full year of free analyst updates to keep you informed as the story changes, so click here now to read more.

Fool contributor Anders Bylund owns shares of Google. Check out Anders' bio and holdings, or follow him on Twitter and Google+. The Motley Fool owns shares of Google. Motley Fool newsletter services recommend Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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