In my experience over 90% large Australian IT shops use Cisco networking equipment, yet if the future is cloud this spells doom for existing Cisco business model as cloud providers do not use expensive networking equipment, they use low-cost original device from manufacturer like Quanta or Wiwynn. Most of the networking equipment uses automated software defined networking where the networking equipment has APIs.
Facebook's Open Compute Switches + Software-Defined networking give blueprints how to do low cost networking....tough to compete when margins are less than 10% and huge overheads in a company like Cisco.
The traditional IT vendors need to adapt to low cost cloud or face huge revenue losses.
Update 9/12/2013 - Example of Qanta T3048-LY2 L2/L3 switch:
http://www.quantaqct.com/en/01_product/02_detail.php?mid=30&sid=114&id=116&qs=97
http://www.intel.com/content/dam/www/public/us/en/documents/product-briefs/onp-switch-reference-design-product-brief.pdf
http://www.colfaxdirect.com/store/pc/viewPrd.asp?idproduct=1649&idcategory=7
Update 13/2/2014:
http://www.zdnet.com/ciscos-q2-mixed-as-revenue-slides-eps-exceeds-target-7000026258/
The networking giant reported a net income of $1.4 billion, or 27 cents per share. Non-GAAP earnings were 47 cents per share on a revenue of $11.2 billion, both figures down by nearly eight percent year-over-year. CEO John Chambers reflected on the quarter in prepared remarks:
“We delivered the results we expected this quarter. I'm pleased with the progress we've made managing through the technology transitions of cloud, mobile, security and video.“
http://www.zerohedge.com/news/2014-02-12/ciscos-disastrous-new-normal
Back in November, when Cisco reported that instead of a 4% increase in revenues it would have an 8-10% collapse in sales (thank you NSA and Edward Snowden) we penned "Something Is Very Wrong With This Picture." And for those who hadn't seen the chart, we urge you to click on the hyperlink. Moments ago CSCO reported earnings, which just barely beat the already sharply downward revised estimates, but more importantly it provided guidance on what to expected in the next quarter. Well, instead of reporting it, here is a chart of how the Company's guidance looks now and relative to what Goldman was expecting CSCO would sell as recently as November. We like to call the new trendline: Cisco's disastrous new normal.
Update 19/5/2014:
The Chief Executive of Cisco, John Chambers, has sent a letter to US President Barack Obama saying that NSA’s surveillance might lead to a total collapse of trust in US technology.
Update 22/5/2014:
Cisco networking equipment is commodity, no longer high profit margin product like it used to be. Cisco CEO Chambers claims: 'Infrastructure is commodity':
Update 19/06/2014:
Details of Facebook's open source TOR switch:
http://gigaom.com/2014/06/18/facebook-has-built-its-own-switch-and-it-looks-a-lot-like-a-server/
Update 12/2/15:
Details of Facebook's open source 6pac switch:
http://www.theregister.co.uk/2015/02/11/facebook_gives_ethernet_switch_vendors_a_6pack_wedgie/
https://code.facebook.com/posts/717010588413497/introducing-6-pack-the-first-open-hardware-modular-switch/
Update 30/3/2015:
http://www.bbc.com/news/technology-31640539
The ripple effects of the 2013 NSA spying uproar, as well as China's broader interest in promoting local tech firms relative to foreign suppliers. Bloomberg reported in December the Chinese government is "aiming to purge most foreign technology from banks, the military, state-owned enterprises and key government agencies by 2020."
As of 2012, Cisco had 60 products on a Chinese government list of products approved for purchase by state entities. As of late 2014, it had none, according to Reuters' analysis of government data.
Update 1/8/2015, John Chambers resigns after two decades as Cisco, Chuck Robbins new CEO:
The rise of cloud computing, when companies rent out their data centers to others, is creating a huge challenge for Cisco. The more that businesses use cloud services from Amazon, Microsoft, and Google, the less likely it is that they’ll buy Cisco’s gear. Many analysts say this rental system, which lets companies avoid the headaches of operating their own data centers, will become the norm in the near future. If so, Cisco risks losing a big chunk of its business.
http://www.theregister.co.uk/2015/02/11/facebook_gives_ethernet_switch_vendors_a_6pack_wedgie/
https://code.facebook.com/posts/717010588413497/introducing-6-pack-the-first-open-hardware-modular-switch/
Update 30/3/2015:
http://www.bbc.com/news/technology-31640539
The ripple effects of the 2013 NSA spying uproar, as well as China's broader interest in promoting local tech firms relative to foreign suppliers. Bloomberg reported in December the Chinese government is "aiming to purge most foreign technology from banks, the military, state-owned enterprises and key government agencies by 2020."
As of 2012, Cisco had 60 products on a Chinese government list of products approved for purchase by state entities. As of late 2014, it had none, according to Reuters' analysis of government data.
Update 1/8/2015, John Chambers resigns after two decades as Cisco, Chuck Robbins new CEO:
The rise of cloud computing, when companies rent out their data centers to others, is creating a huge challenge for Cisco. The more that businesses use cloud services from Amazon, Microsoft, and Google, the less likely it is that they’ll buy Cisco’s gear. Many analysts say this rental system, which lets companies avoid the headaches of operating their own data centers, will become the norm in the near future. If so, Cisco risks losing a big chunk of its business.
At the same time, a wave of startups have emerged that are focused on what’s known as software-defined networking. The sales pitch is that this technology lets companies install customized software into cheaper commodity servers instead of buying fancier and more expensive versions from Cisco.
From John Chambers last keynote it is clear that he knows disruption is coming:
From John Chambers last keynote it is clear that he knows disruption is coming:
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