Cisco also markets many other types of software for collaboration applications, for example, and for network and security management. Some of the applications are charged on an annual license basis, similar to the way a typical software company charges.

Chambers said Cisco lumps software into maintenance costs, which causes confusion, and argued that Cisco should show customers more precisely what they are paying for. "There will be some elements of our software strategy that will be bundled forever," he added. "There will be others that will evolve out and will allow customers to choose what they want or don't want."

He also said it is ironic that while half of Cisco's engineers design software, the company sells software as if it were hardware. "All the major software companies in the world charge major amounts for upgrades and regular things and customers don't even blink about that in terms of the upgrades," he said.

Kerravala contended that Cisco should charge separately for software, arguing that Cisco is "leaving money on the table." For some customers who have not carefully monitored software upgrades with IOS and are behind on upgrades, overall costs could go up. But at some large Cisco shops, costs could drop, he said.

Kerravala said one of his former employers paid for the most expensive annual services plan when it might not have needed to, in hopes of keeping up with all kinds of patches and upgrades to software as well as to have a quick response for a repair. In that case, the customer might not need so many services and could lower its costs by paying for software upgrades only. Kerravala said he could not comment on what the company is planning to do, but said Cisco had hired a pricing expert a year ago to help develop a software pricing strategy.