Cisco wants hyperscale cloud providers to buy its networking products and sees 400Gb Ethernet as its golden opportunity. Meanwhile, these same cloud companies are looking to encroach on Cisco’s traditional stronghold — enterprise data centers — with hybrid cloud products and even on-premises hardware like Amazon Web Services (AWS) Outposts, which will be available later this year.
But that may provide a networking opportunity for Cisco, said CEO Chuck Robbins, speaking today at the Goldman Sachs Technology and Internet Conference. Robbins said he didn’t want to imply that an AWS Outposts deal was in the works. But he added that AWS Outposts with Cisco networking was “certainly conceivable, but they [AWS] would have to want that and we’d have to work with them.”
“Each of the cloud providers is trying to build a simple on-ramp for those customers who want to have their applications run in their private data center as they run in Amazon, for example,” Robbins said. “There’s an opportunity for us to provide technology that fits into that. [AWS CEO] Andy Jassy and I have a really good relationship. We’ve been talking about what can we do together as companies. They realize it’s not a public cloud-only world.”
It also has 400GbE switches that target hyperscalers, and in December bought silicon photonics company Luxtera to integrate its technology into its 400GbE portfolio. As cloud providers look to use 400GbE in their data centers, which Robbins said will likely occur later this year and into 2020, “it’s one of those moments in time where we have that opportunity and we have to execute on it.”
Robbins’ talk at the Goldman Sachs Technology conference happened a day after Cisco reported its second quarter fiscal 2019 earnings. The company saw overall revenue increase while its service provider revenue dropped 1 percent year over year. “Don’t read a trend into this yet,” Robbins said at the investor conference.
Cisco Q2 Earnings
Cisco’s overall revenue grew 7 percent year over year to $12.4 billion. Non-GAAP net income was $3.1 billion, up 6 percent. Switches, routers, and other infrastructure platforms grew 6 percent year over year to $7.128 billion. Router products on their own declined, however, due to a drop in service provider sales.
The company’s other sectors also grew revenue in the second quarter, with security jumping 18 percent, to $658 million. Applications, which includes AppDynamics and WebEx, increased 24 percent to $1.465 billion.
Cisco’s public sector saw the strongest industry growth at 18 percent, while its enterprise business increased 11 percent.
On a call with investors, Robbins said he expects the company’s enterprise growth to continue, driven by SD-WAN and its ACI and HyperFlex anywhere initiative announced last month. With this move Cisco extended its SDN technology, called ACI, into AWS and Microsoft Azure public clouds, and extended its hyperconverged infrastructure product, HyperFlex, into branch offices and edge locations.
Robbins also said the $660 million Luxtera acquisition will boost its service provider, large enterprise, and hyperscale business. This purchase allows Cisco to build its own custom integrated optics capabilities targeting these three sectors.