Jeetu Patel, Cisco Systems Inc.‘s president and chief product officer, told me before last week’s annual user event that it would be “the most consequential Cisco Live of the past decade and perhaps longer.”
There were a few reasons for Patel’s bullishness. The first is artificial intelligence. The core tenet of my research is that share shifts happen when markets transition, and Cisco’s ability to articulate its strategy now will allow it to rise when the AI tide does. If it’s crisp with its execution, it should benefit disproportionally. Cisco missed on cloud computing, but the company is laser-focused on AI and it’s not going to be left on the outside looking in.
Also, it has been just under a year since Patel became chief product officer, and it was time to unveil what the company has been working on. In my conversation with Patel, he indicated the payload of products would be the largest from Cisco in recent history. Last year Patel boldly stated, “Cisco would unrecognizable a year from now, in a positive way,” with respect to product, and it was critical the company demonstrate that this year.
True to his word, the company did roll out a massive number of new products across the board, from network equipment to Wi-Fi to security, but the product updates are a small part of the Cisco transformation story. Here are my top five takeaways from Cisco Live:
- The network is a core component of AI. Every event – vendor or industry – has had a strong focus on AI. However, much of the attention always goes back to the graphics processing unit and the role of processing. Equally important is the network, as something needs to connect the GPU systems and be the fabric that connects data to the AI systems. Early adopters leaned into InfiniBand as it has been a tried-and-true technology, but as the market appeal has broadened, so has the interest in Ethernet-based solutions. InfiniBand is here to stay, but the growth is capped with the growth in Ethernet. Now that Cisco has revamped its switching portfolio, which includes the data processing unit-enabled Smart Switches, it should be primed to catch the AI networking wave.
- Cisco growth is uncapped. Historically, one of Cisco’s growth challenges was the limitations on addressable market. It had the lion’s share of wide-area network, Wi-Fi, campus networking, VoIP and other markets. In ones where it was a challenger, such as unified communications and contact center, it either didn’t have a quality product or there was an existing dominant vendor – or both. Things have changed and, in a Q&A with the analysts, Patel made the statement that Cisco is “no longer TAM-constrained.” For years, I’ve stated security was the biggest needle-moving opportunity, but its products weren’t in a position to compete. With the release of XDR, AI Defense, Hypershield and a completely rebuilt line of firewalls, Cisco can more effectively target security buyers as well as its historical strength of networkers who were interested in security. AI networking is an emerging market that likely has a bigger TAM than any market Cisco currently plays in. Then there is Splunk, where Cisco has been fast to create many “Cisco + Splunk” stories enabling better cross-selling.
- Silicon One creates a competitive advantage. Most of the networking industry uses merchant silicon, primarily from Broadcom. Cisco had bucked this trend in favor of building its own network processor. The reason for this is that it enables the company to build silicon that is tailored to its needs, and this becomes critical in the AI era. At the event, I talked with Cameron Ferdinands, director of networking and data center engineering for Groq, and asked him why it chose Silicon One. “The 51.2TB chip gives them 512 100-Gig interfaces,” he said. “When we looked at who should be our switching and ASIC vendor, this and the speed at which Cisco is moving at won out as unique differentiators for Cisco Silicon One.”
Another proof point for the high-performance capabilities for Silicon One is the recent announcement where it is the only third-party processors to be used in Nvidia’s Spectrum-X switch. Looking ahead, it will be interesting to see if customers continue to embrace vendors that use Broadcom. It’s no secret that Broadcom has irked many VMware customers with massive price increases. Some businesses have begrudgingly accepted the price hikes, while others are actively moving off VMware. Some of these customers may choose not to purchase network infrastructure that uses Broadcom because of their dissatisfaction with the company. This could enable Cisco to take share back, particularly in the data center.
- CX transformation is aligned with product. One of the more notable executive appointments made by Chief Executive Chuck Robbins was naming Liz Centoni chief customer experience officer, moving the CX (services) organization under her. Centoni is a longtime Cisco vet and has run many product areas, including compute, the internet of things, and applications. Putting services under her was a curious move for Robbins since she’s best known as a product person, but she is proving to be the right leader for the group at this moment in time. Many of Cisco’s information technology peers, such as IBM and Hewlett Packard Enterprise, have services groups for services’ sake.
With Cisco, the CX group is in place to ensure customers are successful deploying Cisco technology. Because of this, having a product person run services makes sense because it creates better alignment between the two areas. Over the past year, Centoni has used AI to transform the group and solve what she calls “boring problems,” such as configuration errors and closing Technical Assistance Center calls. Historically, CX and product have worked to do what’s best for the customer, but each marched to its own beat, which created conflicting interests. With Centoni in charge of services and Patel heading product, the two can work together to ensure they are moving forward in lock step.
With all the new products, the biggest risk to Cisco is that customers and partners can’t absorb all the new technology and move at the speed products are being released. This is where services-product alignment becomes important as Centoni’s organizations can help customers understand how to use the large amount of innovation.
- Cisco has embraced multivendor. Over the years, Cisco has been accused of building closed, proprietary systems to “lock in” customers. This was true a decade ago, but recently, the company has embraced multivendor. One proof point for this is that collaboration rivals, Microsoft Teams and Zoom, can run natively on Cisco Collaboration endpoints. Also, at Cisco Live, the company talked about its support for Palo Alto Networks, CrowdStrike and Microsoft in its XDR solution. Supporting competitors is something Patel has hammered home even though it initially it made people at Cisco uncomfortable. I recall a conversation with him a couple of years ago when he mentioned, “If there is a vendor that was acting as a headwind, we need to figure out how to make it a tailwind. That’s good for the customer and good for us.” At Cisco Live, I talked with Joe Berger, vice president of digital experiences for World Wide Technology, one of Cisco’s biggest partners. “We appreciate Cisco’s openness to supporting multi-vendor environments — it’s a win for companies like ours,” he said. “Our customers increasingly expect integrated, best-of-breed solutions, and Cisco’s support makes it easier for us to deliver on those expectations.”
All this shows that the company delivered on Patel’s promised that the company would be “unrecognizable.” A massive set of new products, embracing openness, and a deep focus on AI have the company in the best position it has been in for decades. Cisco’s stock is at a 25-year high, and it seems the company is poised to use AI to accelerate its growth. The mood coming out of Cisco was positive, and for good reason but for Patel, Centoni and the rest of the executive team, this is where the work starts.
