Can Cisco CEO cross the SDN chasm?
Momentum gained last quarter in Cisco’s core business lines, including switching and NGN routing, spurred overall revenue growth of 5.1 percent, year-to-year. Cisco’s notes 2,655 customers have adopted its Nexus 9000 switches, up 56 percent since last quarter. Additionally, the company now counts 580 customers for its Application Centric Infrastructure Controller (APIC). Routing sales benefitted from increased traction from its CRS-X and NCS routers.
While Cisco’s product strategy will produce positive results in the short term, increased adoption of SDN and to a lesser extent white-box switching, threaten to upend long-term product growth. Cisco will attempt to counter the anticipated effects of SDN by driving growth from its own SDN narrative and comprehensive Application Centric Infrastructure (ACI) offering. In April, Cisco noted it will take part in Verizon’s SDN plans along with several other vendors.
Chuck Robbins will succeed John Chambers as Cisco’s next CEO
Following a 16-month selection process, in May Cisco’s board announced SVP of Worldwide Field Operations Chuck Robbins would succeed John Chambers as CEO effective July 26, 2015. Robbins immediately inherits the challenging task of overseeing a company in transition from a hardware company to an IT solution provider.
By promoting from within, Cisco appoints a leader with a deep understanding of the company’s roots and value proposition as well as strong relationships with Cisco’s large collection of channel partners, where the company conducts a majority of its business. While TBR believes Robbins appointment is surprising, it is a low-risk move that enables Cisco to stabilize its leadership team quickly with a company veteran. Robbins has been with Cisco since 1997.
Cisco likely chose Robbins due to his track record of managing channel partners and his role in strategic acquisitions. While serving as head of Cisco’s channel efforts in the U.S. and Canada Robbins is credited with growing revenues from the region to $40 billion annually. Also, Robbins was a key sponsor for Cisco’s Sourcefire and Meraki acquisitions, both of which are proving to be key drivers of its security and wireless businesses.
However, Robbins initial remarks following the announcement were highlighted by his assertion he plans to run Cisco with a higher level of “operational vigor” than his predecessor. The remarks are likely meant to assuage Robbins’ appointees, however, he risks alienating Cisco’s workforce prior to assuming his duties in July.
Cisco’s wireless LAN business now faces a more formidable competitor in HP due to its acquisition of Aruba
In March HP announced plans to acquire Aruba Networks, the number two vendor behind Cisco in WLAN product market share. Cisco will continue to lead the enterprise WLAN market, however, Aruba’s traction with key customers in higher education, healthcare, aviation and other enterprise verticals will enable HP to cast a wider net when pursuing WLAN product contracts.
HP will leverage its global channel to introduce Aruba’s products to a more diverse set of markets and challenge Cisco in regions it can now compete more effectively not just on price, but with Aruba’s 802.11ac and cloud-managed Wi-Fi products.
Michael Sullivan-Trainor, telecom executive analyst and Patrick Filkins, telecom research analyst at Technology Business Research