Cisco Optimistic About SDN as Revenues Grow
Cisco switching revenues impacted by 2 percent decline in the third quarter of FY 2013, though CEO John Chambers sees opportunity in SDN.
Thanks to strong data center business and the growing shift towards 10 GbE and SDN, Cisco has good fiscal news to share. The vendor reported its third quarter fiscal 2013 earnings late Wednesday, showing overall growth and optimism for the rest of the year.
For the quarter, Cisco reported net sales of $12.2 billion, a 5 percent year-over-year gain. Net income was reported at $2.5 billion, or $0.46 per share, representing a 15 percent year-over-year increase. Moving forward, Cisco provided guidance for fourth quarter revenue growth in the range of 4 to 7 percent on a year-over-year basis.
Switching revenues down, data center up
Cisco did show some mixed results in its switching business. Cisco CEO John Chambers said during his company's earning call that overall switching revenues decreased by 2 percent during the quarter. This is not the first time that Cisco has had a quarterly decline in switching revenues. Cisco first quarter fiscal 2013 results also suffered a 2 percent switching revenue decline. The decline in Cisco's switching revenues has not been limited to just 2013, either. The trend surfaced during 2011, when Cisco experienced a 2 percent switching decline in both the second and the fourth quarter of the year.
While the vendor's overall switching business has slipped, Chambers stressed that in the data center, the Nexus switching product line grew by 12 percent. Chambers added that Cisco also saw good customer adoption and growth on its fully converged wired and wireless Catalyst 3850 platform. Cisco announced the Catalyst 3850 in January as a unified access device for both wired and wireless connectivity. At the core of the Catalyst 3850 is the new Unified Access Data Plane (UADP) ASIC. The UADP is a piece of silicon that Cisco has invested over $100 million to bring to market.
Cisco's overall data center business is growing at a rapid pace.
"As we execute on our unified data center strategy, we are seeing our UCS plus Nexus business now on a combined run rate of approximately $5.5 billion annually, growing over 35 percent year-over-year."
Demand for 10 GbE grows
Cisco's numbers demonstrate a movement towards 10 Gigabit Ethernet (GbE).
"We see demand for faster speed ports driving switching upgrades, cycles, and in Q3, a record number of 10 gig ports, growing 35 percent year-over-year," Chambers said. "We do see budget shifting from wireline to wireless, benefiting our wireless business, which delivered another strong quarter of record revenue growth, up 27 percent year-over-year."
During the earnings call, Chambers also provided some insight into Cisco's Software Defined Networking (SDN) customer adoption.
Chambers said that Cisco now has over 50 customers in beta with Cisco ONE agents and controllers. Cisco ONE is the vendor's overarching SDN strategy, first announced in June of 2012. Chambers also noted Cisco's leadership in the OpenDaylight project, an open source effort to build an SDN framework.
"Customers are telling us that they strongly prefer the breadth and openness of Cisco’s approach and ability to build upon existing network investments and run across hybrid environments," Chambers said. "We feel very confident in our leadership position in this market.
Sean Michael Kerner is a senior editor at Enterprise Networking Planet and InternetNews.com. Follow him on Twitter @TechJournalist.