How Cisco is trying to cash in on the Internet of Things

June 29, 2015, 9:19 PM UTC
Cisco CEO John Chambers Gives Keynote Address At Cisco Live
Cisco CEO John Chambers during the Cisco Live! conference in May 2014.
Photo: Justin Sullivan—Getty Images

Cisco Systems sees big money in the emerging Internet of Things market, $19 trillion in fact, and on Monday it rolled out a number of initiatives intended to help the networking giant capitalize on it.

The Internet of Things generally refers to household appliances like coffee makers that are connected online so users can control them remotely and get better use out of them based on the data they collect. For businesses, the Internet of Things is about equipping big machines like assembly lines and jet engines with Internet-ready sensors to make their operations run more smoothly and efficiently.

Cisco’s new Internet of Things-friendly system, which the company has detailed for the first time, is essentially inter-related software that will help companies and cities set up the necessary infrastructure like cameras, switches, and routers to manage the data flowing between their connected equipment.

The company has sold similar individual products before, like a service for connected trains, but this latest lineup seems to lump a lot of those products together into one package. It’s sort of like an Internet of Things starter kit, with all the products and associated software being Cisco-approved.

The San Jose company has been busy expanding into the Internet of Things market and, just last year, introduced some investment funds worth a combined $250 million to fund startups focused on the Internet of Things for businesses.

Cisco (CSCO) isn’t the only big tech company trying to target the Internet of Things sector and governments hoping to upgrade city infrastructure with Internet-connected infrastructure. IBM (IBM) has been pushing a Smarter Cities initiative as has Oracle (ORCL), with its Smart City platform. Each of these company’s products seem to be proprietary, which would mean that sharing data between different vendors’ devices and services in the case of a connected city would be difficult to do. Cisco, however, claims that its support of open APIs—which basically act as software inter-linkers that can connect different software languages, data, and services together—and compatibility with the open-source Linux operating system lets its new platform “be consumed by apps and platforms that work with 3rd party analytics,” wrote a Cisco spokesperson in an email to Fortune.

“We do feel that our open network platform approach provides the ‘glue’ that will enable many of these players and systems to come together to develop new ways of delivering services to citizens,” wrote the Cisco spokesperson.

Hewlett Packard (HPQ) also has been busy trying to get into the Internet of Things space while challenging Cisco’s bread-and-butter networking business. HP bought out networking vendor Aruba Networks in March for $3 billion, and according to a Bloomberg report, will be using Aruba’s networking software to build products that can compete with Cisco in hardware like routers and switches.

While Cisco is clearly aiming for its new Internet of Things system to lift hardware sales, the company also stands to benefit from selling consulting services to businesses and governments. The company can make money selling products, but it can also get repeat customers and prevent clients from using competing products by providing consulting that guides companies as they upgrade their infrastructure.

Story updated with comments from Cisco

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