From keynote sessions to general discussions, artificial intelligence (AI) was omnipresent at the Cisco Live 2024. Mauricio Sanchez, senior research director at Dell’Oro, highlighted this overwhelming focus on AI, noting that “it’s like you couldn't turn around and not run into someone saying AI,” which left him wondering about the major hardware and networking updates and innovations.

Sanchez provided a quantitative insight into the AI emphasis: during the general sessions, the term “AI” was mentioned between 25 to 35 times per presentation, with a peak instance where it was said about 76 times in a single 40-minute session.

“I think the core theme of this show is that they really tried to convince everyone that: hey, we got a handle on AI and we're infusing AI across everything that we do. It's touching every facet of Cisco,” he told SDxCentral.

One of the most notable announcements at this year’s event was Cisco's $1 billion global AI investment fund. The company is investing in software and infrastructure startups that build upon Cisco’s strategy to connect and protect the AI era, including generative AI companies such as Cohere, Mistral AI and Scale AI.

However, compared to billions of dollars of AI investments by sovereign funds, this $1 billion investment from Cisco was “not very interesting news,” Sanchez said.

“It's an acknowledgment that good ideas don't always happen inside of Cisco,” he said, “Sometimes it's the startup community, and especially in new technology areas that are outside the wheelhouse for Cisco organically, that's the way to bring in and it makes sure that the market doesn't leave them behind.”

Cisco also claims it has made over 20 AI-focused acquisitions and investments over the past few years, including Splunk.

Among the announcements at Cisco Live 2024, about half were AI-related, 30% focused on security and the rest 20% was about observability and digital experience management, Sanchez noted. “It's ironic that very little was about networking, about hardware.”

For the networking news, the standout was the Nexus HyperFabric AI clusters. Co-developed with Nvidia, the solution aims to simplify the AI infrastructure deployment and management for enterprises using Ethernet networks.

“Cisco’s Nexus HyperFabric AI clusters was really the only marquee hardware announcement,” Sanchez pointed out, adding other hardware updates, including the ongoing efforts to unify management between Catalyst and Meraki product lines, were smaller announcements that did not feature in the keynotes. “It didn't elevate to the Chuck [Robbins] level.”

However, Cisco's core identity as a networking company remains intact. Chair and CEO Chuck Robbins noted the number one thing its customers ask is that they want Cisco to be a great networking company. Sanchez said, one of the steps in satisfying that demand is at the forefront of embracing AI when it comes to networking.

When asked about takeaways from the event, he said “I think I walked away with a better perception of security, I came out with the same perception about the networking.”

“I think the networking side I would like to see more innovation in so far to how they're going to respond to the multicloud networking phenomenon or to the WAN-as-a-service phenomenon,” Sanchez said.

Traditionally known for its hardware networking solutions, Cisco's pivot toward software and AI suggests a strategic shift to tap into more high-growth markets like security and observability.

“Networking right now is saturated. There are only so many more switches and wireless routers [organizations can buy]. So I think Cisco is looking to expand their served available market by being able to get to these close adjacencies,” he said.

However, Sanchez argues the direct monetization of AI is not well understood. “I think we're in the early stages of understanding the direct impact on the revenue profiles, but I think everyone is in full agreement that you’ve got to do this.”

Vendors like Cisco feel the need to incorporate AI to enhance their solutions, Without AI integration, they risk losing customers to competitors with better solutions.

“There's only so many AI clusters people will ever buy, and while it may be a multi-billion market or 10s of billion, it's not going to be the sole source or the majority source of Cisco's revenue,” he said. “So that then leaves AI more so as a midterm to future table stakes, that if you don't have it, the customers may say, ‘Well, I'm gonna go to someone who does offer it because their solution is just much better.’”