Cisco confirmed big CCIE rumor this week that the RTP lab was going to be moved to Richardson, TX.

The language Cisco used is pretty neutral. San Jose and RTP are being shut down as full time lab locations and everyone is moving to Richardson. We knew about this thanks to the detective work of Jeff Fry, who managed to figure this out over a week ago. Now that we know what is happening, why is it coming to pass?

They Don’t Build Them Like They Used To

Real estate is expensive. Anyone that’s ever bought a house will tell you that. Now, imagine that on a commercial scale. Many companies will get the minimum amount of building that they need to get by. Sometimes they’re bursting at the seams before they upgrade to a new facility.

Other companies are big about having lots of area. These are the companies that have giant campuses. Companies like Cisco, Dell EMC, Intel, and NetApp have multiple buildings spread across a wide area. It makes sense to do this when you’re a large company that needs the room to spread out. In Cisco’s case, each business unit had their own real estate. Wireless was in one building. Firewalls in another. Each part of the company had their own area to play in.

Cisco was a real estate maven for a while. They built out in anticipation of business. There was a story years ago of a buried concrete slab foundation in Richardson that was just waiting for the next big Cisco product to be developed so they could clear away the dirt and start construction. But, why not just build the building and be done with it?

Remember how I said that real estate is expensive? That expense doesn’t come completely from purchases. It comes from operations. You need to have utilities for the building. You need to have services for the building. You need to pay taxes on the building. And those things happen all the time. Even if you never have anyone in the building the electricity is still running. That’s one of the reasons why Cisco shuts down their offices between Christmas and New Year’s every year. And the taxes are still due. Hence the reason why the foundation in Richardson was buried.

Real estate is also not an infinite resource. Anyone that’s been to Silicon Valley knows that. They’re running out of room in the South Bay. And building the new 49ers stadium on the corner of Tasman Drive and Great America Parkway didn’t help either. Sports teams are as hungry for real estate as tech companies. The support structures that cropped up for the stadium ended up buying the Letter Buildings from Cisco, which is why the lab was moved from Building C to Building L years ago.

Home Is Where The Work Is

The other shifting demographic is that more workers are remote in today’s environment. A combination of factors have led people to be just as productive from their home office as their open-plan cubicle. Increased collaboration software coupled with changing job requirements means that people don’t have to go to their desk every day to be productive.

This is especially true now that companies like Cisco are putting more of a focus on software instead of hardware. In the good old days of hardware dominance you needed to go into the office to work on your chipset diagrams. You needed your desktop CAD program to draw the silicon traces on a switch. And you needed to visit the assembly lines and warehouses to see that everything was in order.

Today? It’s all code. Everything is written in an IDE and stored on a powerful laptop. You can work from anywhere. A green space outside your office window. A coffee shop. Your living room. The possibilities are endless. But that also means that you don’t need a permanent office desk. And if you don’t need a desk that means your company doesn’t need to pay for you to have one.

Now, instead of bustling buildings full of people working in their shared offices there are acres of empty open-plan cubicle farms lying fallow. People would rather work from Starbucks than go to the office. People would rather work in their pajamas than toil away in a cube. And so companies like Cisco are paying taxes and utilities for open spaces that don’t have anyone while the offices around the perimeter are filled with managers that are leading people that they don’t see.

CCIE Real Estate

But what does this all mean for the lab? Well, Cisco needs to downsize their big buildings in high-value real estate markets. They’re selling off buildings in San Jose as fast as the NFL will buy them. They are downsizing the workforce in RTP as well. The first hint of the CCIE move was David Blair trying to find a new job. As real estate becomes more and more costly to obtain, Cisco is going to need to expand in less expensive markets. The Dallas/Fort Worth (DFW) area is still one of the cheapest in the country.

DFW is also right in the middle of the country. It’s pretty much the same distance from everything. So people that don’t want to schedule a mobile lab can fly to Richardson and take the test there. RTP and San Jose are being transitioned to mobile lab facilities, which means people that live close to those areas can still take the test, just not on the schedule they may like. This allows Cisco to free up the space in those buildings for other purposes and consolidate their workforce down to areas that require less maintenance. They can also sell off unneeded buildings to other companies and take the profits for reinvestment in other places. Cutting costs and making money is what real estate is all about, even if you aren’t a real estate developer.

Tom’s Take

I’m sad to see the labs moving out of RTP and San Jose. Cisco has said they are going to frame the famous Wall of Pain in RTP as a tribute to the lab takers there. I have some fond memories of San Jose as well, but even those memories are from a building that Cisco doesn’t own any longer. The new reality of a software defined Cisco is that there isn’t as much of a need for real estate any more. People want to work remotely and not live in a cube farm. And when people don’t want an office, you don’t need to keep paying for them to have one. Cisco won’t be shutting everything down any time soon, but the CCIE labs are just the first part of a bigger strategy.

Editor’s Note: An earlier version of this post accidentally referred to David Mallory instead of David Blair. This error has been corrected.