Cisco’s software-defined networking business booms

Cisco’s Application Centric Infrastructure customer base doubles in three months as its software-defined networking model gains traction

Cisco’s Application Centric Infrastructure (ACI) customer base has almost doubled in the space of three months as the network supplier’s software-defined networking (SDN) proposition gains market traction.

Speaking during an earnings call to mark the close of the second quarter of Cisco’s fiscal 2015, CEO John Chambers said year-on-year growth on its Nexus ACI portfolio, including Nexus 3K and 9K switching, and APIC controllers, was topping 300%.

On the call, transcribed by investment research platform Seeking Alpha, Chambers said: “We have seen the Nexus 9K and ACI customers grow each quarter from 580 customers two quarters ago to 970 customers last quarter to 1,700 this quarter. APIC customers grew to over 300 and the Nexus 9K passed the one million installed port mark this quarter, less than a year after the first shipments.

“We are pulling away from our competitors and leading in both SDN thought leadership and customer implementations. The market has recognised the benefit of ACI as compared to the concepts of aspirational competitors.”

Cisco has previously been criticised for its SDN strategy, with rivals accusing it of purposely missing the boat. Due to the sheer size of the installed Cisco base, critics have argued that the company was actually holding the market back out of fear that SDN would erode its bread and butter network hardware sales.

At the Cisco Live 2015 event in Milan, SVP of marketing and business development for Cisco’s Insieme business unit Soni Jiandani countered that Cisco was in a different place to its competitors and that its ACI proposition would help customers protect the investments they had already made in network infrastructure as bandwidth demands increase, as well as running network virtualisation and cloud projects more efficiently.

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“Symantec’s CIO talked about how from start to production it took them four and a half months to build the foundation of a policy-driven network, protecting their networking assets, delivering security across two different companies – a security company and a storage company. This would not have been possible without ACI,” Jiandani said.

“I would not like to respond to the startups. I would prefer to have customers talk about what is now possible with ACI that would not have been possible before, about why they picked the Nexus 9K over competitive startup alternatives as they were moving towards modernisation, and how this way of doing things is going to get them ready to deal with the speed of applications that are being deployed in their environments, while taking their current applications and protecting their assets.”

Rok Podgrajsek of Cisco customer and partner Qbranch, a network services provider based in Stockholm, Sweden, told Computer Weekly: “No other SDN solution is as complete as ACI. There is not a single thing you can buy on the market that does it the same way.

As a network architect I feel like we skipped a generation of infrastructure

Rok Podgrajsek, Qbranch

“We have both the APIC, the controller, for all of the hardware that you installed, and then you have the fabric, which you build from the Nexus 9K series, and this is what makes it so powerful because it’s a complete product. That’s what we sought and what we found.

“We have several customers in production. Some are pure ACI deployments. We have integrated ACI to legacy solutions [Catalyst 6500-based networks]. We have stretched traditional VLANs to ACI.

“For me as a network architect I feel like we skipped a generation of infrastructure.”

Jiandani added: “SDN is about speed, agility, full visibility on physical and virtual networks, security and automation. If you look at where the market wants to go with SDN, we’re not only embracing it with ACI but we’re giving our customers choices on how they get there. We allow our customers to take their existing Layer 4 through 7 services, physical and virtual, and automate it as part of a policy-based framework. Our competitors are not able to do that.”

Cisco profit skyrockets

The stand-out figures from Cisco’s latest earnings release paint a picture of a business in robust shape, as profits expanded by over 60% to $2.4bn, and revenues rose by 7% to $11.9bn, both on a year-on-year basis, with GAAP taken into account.

Chambers said Cisco’s strong momentum was a direct result of having embraced cloud, mobility, big data, security and collaboration, as well as the internet of everything, over the past few years.

“Every nation, every company, everything is becoming digitised and the network is at the centre of this transformation,” he said.

Among Cisco’s quarterly highlights were the signing of a collaboration agreement with the Metropolitan Regional Government of Santiago, Chile, to build a smart city infrastructure; a number of acquisitions, notably security services firm Neohapsis; the unveiling of Project Squared, a business collaboration app; and last but not least, its 30th birthday.

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