Cisco Growing SDN Business as Net Neutrality Threat Looms

Cisco CEO John Chambers is optimistic about his company’s future, but he’s also realistic about the impact that potential network neutrality rules could have on the business.

Cisco reported first quarter fiscal 2015 earnings on November 12, with revenue coming in at $12.2 billion for a 1.3 percent year-over-year gain. Net income was reported at $1.8 billion, a decline of 8.4 percent year-over-year. During the earnings call, Cisco CFO Frank Calderoni announced he was leaving his position effective January 1, 2015.

During Cisco’s earnings call, Chambers emphasized the strength of Cisco’s growing Software Defined Networking (SDN) business. Cisco now has more than 900 Nexus 9000 customers, up from 580 last quarter. The Nexus 9000 is a key switching platform in Cisco’s Application Centric Infrastructure (ACI) SDN effort.

“The Nexus 9000 and ACI continue to see strong demand from customers, who are seeing the significant advantage of ACI in their application deployment and management,” Chambers said.

The Application Policy Infrastructure Controller (APIC) is at the core of Cisco’s ACI efforts, and it is also growing.

“A year ago we were fighting an SDN perception battle, with competitors using PowerPoint instead of products,” Chambers said. “Today with ACI, we are bringing programmability and automation to networking on a scale well beyond what competitors define as SDN.”

While SDN is a bright spot, not all of Cisco’s business units were growing during the quarter. Cisco’s enterprise business grew by 16 percent year over year. In contrast, Cisco’s service provider business declined by 18 percent.

“Service provider is the big challenge, let me be very explicit, that’s due to two to three U.S. service providers, who have dramatically slowed the order rates, and I mean dramatically slowed the order rates with us,” Chambers said.

Chambers implied that the service provider slowdown is related to the current discussions around net neutrality.

“In my opinion, it would be a very disappointing in result if we moved back to regulation, like we did voice many decades ago,” Chambers said. “It would dramatically slow the ability of service providers to be on our broadband.”

Sean Michael Kerner is a senior editor at Enterprise Networking Planet and Follow him on Twitter @TechJournalist.

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