The cornerstone of Cisco Systems' Network Intuitive platform has taken off like a shot, accelerating the networking giant's transition to selling on a consumption-based model and providing a clearer outlook for revenue stability.
Since its launch in June, Cisco's subscription-based Catalyst 9000 family of switches has been adopted by more than 1,100 customers, said CEO Chuck Robbins. "We see a tremendous opportunity to benefit from the shift in customer demand from stand-alone products to integrated platforms with our intent-based infrastructure portfolio providing unmatched benefits," Robbins said during a call with investors to discuss the San Jose, Calif., company's first-quarter results.
Robbins said the "vast majority" of Catalyst 9000 customers are buying Cisco's most advanced software subscription offering, and that he expects the line's early momentum to carry through the rest of the fiscal year.
"We're pleased with where we're going right now with this product portfolio," Robbins said. "Our sales teams, partners, and customers are very excited about the architecture we announced. It's one quarter, but as more customers have the opportunity to test, we would hope the platform continues to accelerate."
Cisco in late June brought a subscription-based strategy to its core networking portfolio with the launch of an automated, intuitive networking system designed to evolve and learn to anticipate actions and stop security threats.
The Catalyst 9000 family of switches are at the center of the network intuitive, or intent-based networking effort. The switches lean on hardware and software innovations to meet customers' demands for mobility, cloud, IoT and security, Cisco says.
The new strategy also illustrates Cisco's key challenges, namely, the need to adapt to a market rapidly moving away from expensive, proprietary hardware in favor of software-based solutions purchased on a subscription or pay-for-consumption basis.
And while Cisco may be turning the corner, some solution providers say they're yet to gain traction with Cisco solutions in the software-defined IT world.
"Our Cisco business is down," said a top executive at a large, national solution provider that works with Cisco. "From a switching standpoint, our business has moved to the SaaS provider or hyperscale space, and we see Juniper and Arista much more than Cisco. UCS is not a prime target for most of our customer base. We have a good Flex Pod business, but I would not describe it as robust."
Cisco CFO Kelly Kramer said Wednesday that the company's first quarter product revenue declined 3 percent year-over-year, the "vast majority" of that decline coming in its traditional router business.
Total revenue for the quarter was $12.1 billion, down 2 percent year-over-year. Net income for the quarter was $2.4 billion, up 3 percent year-over-year, and good for per-share earnings of $0.61, flat with the year-ago period, but beating Wall Street's expectations by about a cent.