Cisco Profits Driven by Data Center

Cisco CEO John Chambers speaking at a recent event.

Cisco Systems beat analyst estimates last week thanks to its work in the data center, with company profits growing a hefty 56 percent. Overall revenues were flat, however.

In all, Cisco reported net income of $1.9 billion on revenues of $11.7 billion. Its data center business enjoyed strong growth, with revenues up 87 percent compared to a year ago; the company’s more traditional routing and switch businesses remained flat, while the videoconferencing portion of the company reported a drop in revenue.

Although the data center business reported exceptional growth, Cisco executives were unable to offer an exact size for the business. According to Frank Calderoni, the company’s chief financial officer, Cisco reported a $1.6 billion run rate for its Unified Computing System segment; he added that Cisco is second in that segment within North America and third worldwide.

On several occasions during the company’s earnings call, Chambers was asked to address how Cisco would respond to Nicera, the software-defined networking company that was acquired by VMware. Chambers responded by saying that Cisco has been in the SDN market since 2009, when the company launched the Nexus 1000V, its first virtualized switch.

“Well, when you really think about SDN, I want to be very candid,” Chambers said. “We think the future is going to be hardware and software combined. We think when you have knowledge of the network, and are able to know what’s going on in the network, you can program to it. You can get dramatically better flexibility, et cetera.”

Cisco may still buy Insieme, its spin-in which is working on its own SDN technology. According to GigaOM, potential SDN rival PlumGrid plucked Cisco networking guru Lele Nardin to lead its engineering team.

Robert Lloyd, senior vice president of worldwide operations, also noted that under the Cisco One system, developers would be given programmatic access to its operating systems. “I think it’s going to have big impact on the value the customers can subscribe through our data center portfolio, and it’s something that we plan on leveraging going forward,” he said.

Lloyd added that, of the top three use cases for Cisco products in the data center, customers building private clouds had the most significant revenue impact. The second-most-popular use case is cloud service providers who are looking at provisioning and managing, with the third-most-popular outlet “massively scalable data centers.”

 

Image: matthi/Shutterstock.com

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