John Chambers, CEO of network equipment maker Cisco, has dismissed the notion that recent developments in the software-defined networking (SDN) threaten its business.
SDN allows companies to create ‘virtual networks’ based on switches from multiple suppliers. Some have argued that this challenges Cisco’s near monopoly of the data centre IP switching market by allowing its customers to use cheaper alternatives.
The field of SDN received a significant boost last month when virtualisation vendor VMware acquired SDN pioneer Nicira for $1.3 billion. Soon after, Oracle acquired network virtualisation vendor Xsigo for an undisclosed sun (although there is some debate as to whether Xsigo’s technology ‘counts’ as SDN).
Cisco Systems’ CEO Discusses F4Q12 Results – SeekingAlpha.com
In yesterday’s earnings call with investment analysts, Chambers said that Cisco has three advantages when it comes to SDN.
First, he argued, customers want networking systems in which software and hardware are optimised to run together. "Customers understand that optimising for the hardware-and-software combination to drive consistent experience, policy, quality of service, security and mobility, is the only way in our opinion to meet their total cost of ownership, reliability and scalability requirements."
Secondly, its Open Network Environment – announced in June – will include SDN functionality, allowing customers to program network switches at every layer. "The customer and partner reception has been very positive and we have a quite a bit more of our sleeve as you’d expect in this area," Chamber said.
And thirdly, he said, "Cisco pioneered network virtualisation in 2009, when we introduced the Nexus 1000V, the first virtualised switch." The 1000V is a software switch that interoperates with VMware’s virtualisation software to allow users to allocate network resources to virtual machines.
"Today, while [the] startups in this space can generally count their production customers on at most two hands, Cisco has more than 6,000 Nexus 1000V production customers using the distributed virtual networks to deliver highly secure, multi-tenant data center environment," said Chambers.
Cisco’s partnership with VMware will not be threatened by its move into SDN, Chambers insisted. Cisco’s UCS data centre stack include VMware software, and the two companies, alongside EMC, jointly own a ‘private cloud’ systems and services provider called VCE.
Chambers said that SDN will not have an impact on the networking business for "multiple years out, and our ability to handle transitions with our partners when it times compete and times partners has been unprecedented in the industry."
Chambers made the remarks as he discussed the company’s financial performance in the final quarter of its fiscal year. Revenues were up 4% to $11.7 billion, beating analysts’ estimates. The company’s switching business was flat year-on-year, however, and its collaboration division continued to shrink, down 8%.
Product orders in the UK fell 13% year-on-year during the quarter.