Cisco is just over a year into a corporate restructuring that shifted some focus away from its core networking operations toward a bigger focus on emerging cybersecurity, AI, and cloud opportunities, but its most recent earnings and rival moves have shown networking itself remains a hot topic.

Cisco’s networking business posted a 15% year-over-year increase in sales for its most recent fiscal quarter, which management attributed to a strong campus refresh cycle and – to its refocus – continued strong AI demand. Chuck Robbins explained that the networking growth was spread across “hyperscale infrastructure, enterprise routing, campus switching, wireless industrial IoT, and servers.”

“Within our campus networking portfolio, we are seeing very strong demand for switching, routing, and wireless products, indicating that enterprise customers are investing in the connectivity needed for AI deployments,” Robbins said during the vendor's recent earnings call.

Cisco’s Acacia division also continued to see strong demand for its coherent pluggable optic offerings, with Robbins noting that “all hyperscalers are now customers of these products.” This has provided Cisco with participation both inside and outside of the data center.

“We're blessed to have great solutions in both inside the data center and then outside the data center, DCi (data center infrastructure) scale across,” Robbins said. “I think we'll continue to innovate there. … We now are selling our pluggable optics to all of the hyperscalers, all the major hyperscalers, and I think that we'll continue to see great opportunities across both of those. … It's a really large market that is meaningful, even on par with sort of the switching side of it, so we're pleased to be [on] both sides of it.”

Robbins also noted that the current refresh cycle has been focused around interest in Wi-Fi 7 equipment, but that security and AI have also bolstered growth. Cisco furthered its push around these areas with the launch of its Unified Edge system that combines compute, networking, storage, and security in a single platform designed to run AI inferencing closer to where data is generated.

“The other two things that I think are driving it are AI preparation and this belief that security does ultimately have to be in the network, and we're the only ones who have both security and networking,” Robbins claimed of its efforts during the earnings call. “You've seen some of our competitors announce partnerships with security vendors, and those are hard to pull off. … It's hard to get the level of integration you're going to need to have when you don't own each of the technologies. So we feel like we're well-positioned there.”

Heated networking rivalries

Others aren’t so sure. Despite Cisco’s robust growth and expectations, analysts did note a hint of competitive concerns.

“We believe persistent competition across its core networking and security portfolios is likely to challenge Cisco’s ability to sustain current levels of growth,” analyst firm William Blair noted in a post-earnings report.

Dell’Oro Group research director Siân Morgan pointed to Cisco also being aggressive in pricing its latest gear.

“Cisco has kept its average Wi-Fi 7 AP price significantly below the price of Wi-Fi 6E when it was first introduced,” Morgan wrote in a recent report.

Two of the more pressing networking rivals are Juniper Networks-fortified Hewlett Packard Enterprise (HPE) and Extreme Networks.

Extreme Networks is the smaller of those two but packs a bark that shows it’s not afraid to at least taunt those larger rivals. Extreme Networks CEO Ed Meyercord has repeatedly claimed there was a lot of space to operate under Cisco’s pricing model, with CTO Nabil Bukhari more recently questioning Cisco’s ability to provide a coherent package to the market.

“The key is … you can't throw money at it,” Bukhari said during that vendor’s recent analyst day. “It's a multi-year execution. It is ground up. You need to break those silos. You need to bring those products together. And that's not a money problem. That's almost like a political will problem, if you would, … and anybody's guess is better than mine whether Cisco will be able to do that or not.”

Then there is HPE, which management from both Cisco and Extreme have repeatedly needled due to expected integration challenges.

“When it comes to HPE, they're just restarting this journey with the acquisition of Juniper, so, sure, you can make your own bet whether they will do a little bit faster than us or a little bit slower, but either way, it's a multi-year difference between us and them,” Bukhari said.

Cisco has repeatedly echoed this sentiment, with former CFO Scott Herren stirring the pot during an investor conference last year by stating HPE’s Juniper acquisition was causing “uncertainty” in the market.

“I think for sure that's created just a degree of uncertainty and a question of, hey, should I consider if I was previously a vendor or a customer of either of those, now is the time to kind of open up and look at other opportunities,” Herren said. “And we've seen our wireless business, our orders greater than $1 million, grow more than 20% in the fourth quarter.”

HPE, for its part, has tried to get in front of those concerns by touting what it views as a leadership position in AI that has it head of its networking rivals.

“I think the industry is sort of a little bit tainted right now because our peers in the industry have taken years to try to figure out how to integrate portfolios and we're showing our customers, much to their amazement, that we can do it in a much, much less period of time,” Rami Rahim, who was Juniper CEO and is now president and GM of HPE’s Juniper-infused networking business, told analysts at HPE’s recent Securities Analyst Meeting.

Cisco’s latest results show that it remains comfortably the market heavyweight both in terms of share and ongoing growth, but these executive jabs underscore simmering competitive dynamics that are actively being probed for weakness.