Cisco CEO Chambers: Retirement Decision 3 Years in the Making
The network virtualization trend also has given rise to new competitors, most notably VMware and its NSX SDN platform. Cisco has responded with its Application Centric Infrastructure (ACI), which offers a combination of hardware and software designed to enable the best application performance. Chambers noted in February that revenues for the Nexus 3000 and 9000 switches—the foundation for ACI—increased 350 percent in the last quarter of 2014, while the number of customers for the Nexus 9000 switches and ACI jumped from 580 earlier last year to 1,700 in the final months. In addition, the number of customers of the Application Policy Infrastructure Controller (APIC) grew past 300 since the technology was released in July 2014. ZK's Kerravala said Cisco is a stronger position now than it was a few years ago, and that the company has done a good job responding to the threat of SDN and white boxes. The changes in business toward cloud and mobility also work in Cisco's favor. "The market in a lot of ways is coming to them," he said. "It is becoming more and more network-centric."One of the advantages Robbins will have is that he is familiar with Cisco's operations in a wide range of areas, not only technology but also sales and the channel. Chambers noted that 80 percent of the company's sales come through the channel, and Kerravala said one of Cisco's ongoing challenges is helping partners that have spent years selling boxes become comfortable with selling cloud- and services-led solutions. The analyst said it appears that since Chambers and other executives began talking about the cloud and services, partners are embracing the idea. Kerravala said that partners at a recent Cisco conference seem more at ease about the changes, now that Cisco officials seem to have made the right predictions. In his brief comments during the conference call, Robbins, 49, said he will spend much of the next 90 days talking and listening to customers, partners and employees. However, he said he is confident in the company's strategy. "When Cisco gets into execution mode, we can be pretty unbeatable," he said. For his part, Chambers said he will stay involved with the company, though he also wants to spend more time with his family, including his four grandchildren, and continue his philanthropy work. A staunch Republican, he also said in response to a question: "I will probably support people in political office, but I probably will not get involved myself."
Current Analysis' Fratto also said that SDN isn't a challenge only for Cisco, but for the entire market, as both vendors and customers continue to figure out how best to handle the technology. Cisco has gotten a good start with ACI, and it has only penetrated a fraction of the company's install base. There's a lot of room for the company to grow, he said.